Budget crisis – a moment of truth for responsible business

This piece first appeared on REACTION on 30th September 2022

Business leaders across the country will be worried about the economic turmoil as a result of last Friday’s mini-maxi budget.

Indeed, it’s the last thing needed, after the challenges of Brexit, COVID and the energy crisis. I haven’t met a business leader who isn’t craving some calm and certainty to help them better plan their business activities into the future.

We have to take it at face value that the mini-maxi budget was planned to provide some of this certainty and also acknowledge that the support provided to cap rising energy costs the week before was welcome. I don’t want to dismiss some of the help provided through the budget, such as reversing the increase in national insurance contributions, that many businesses had been calling for, at least as temporary help through difficult times.

However, I am puzzled by many of the other measures that have been announced. I am still searching for a businessperson that thinks abolishing the top rate of tax or removing the bankers bonus cap was a sensible move, especially at this time of a spiralling cost crisis. I also didn’t hear any business calling for these tax ‘incentives’, so why did a government, deliver a tax upside that business wasn’t asking for?

Business now has a choice on how to respond to this very confusing budget. The CBI was quick to welcome the budget as a new growth approach that ”we must make count and bring growth to every corner of the UK”. Many of the business communities I speak to are more cautious, as we have a responsibility to make such growth responsible, sustainable and frankly – economically viable.

I personally believe this is a moment of truth for us as business leaders.

We need to embrace the opportunity to drive growth, but we must make sure this growth is sustainable and inclusive of local communities. We should, for example, oppose fracking if local communities do not support it and if there is clear evidence that it will cause damage to the environment. We have plenty of other renewable energy sources to invest in that have a more positive impact. We should also ensure that investment zones provide long-term investments that create well-paying, green jobs, that local communities are proud of. In my former role as CEO of Siemens UK, I was fortunate to be part of such an investment in the Humber region, which has since spread well beyond the Humber and created UK’s off-shore wind revolution.

This is a pivotal moment for business to prove to the nation that we care about their communities and that our investments will be sustainable and responsible. That means shying away from quick profiteering based on short term tax incentives, ignoring the temptation to pay bankers and other executives who are already well rewarded huge bonuses. It also means us asking government to reverse the decision to scrap the high-rate tax rate and being prepared to pay an increased rate of corporation tax, as seems reasonable at this time. 

And instead, we should do more of what we are good at – engage with government, national and local, and work in partnership on an economic model that will bring more equality to our country, rather than raising inequalities. The business community I am listening to are not backing this budget and want to be more responsible at this time. It’s not too late for the government to listen, learn and change course to benefit not just for the frenetic markets, but for society as a whole.