With friends like these... Business turns against the coalition

George Osborne can't quite get the economy moving again
George Osborne can't quite get the economy moving again
Alex Stevenson By

Company bosses are pointing the finger at the government as the recession drags on, with a poll out today condemning all the coalition's major reforms to have been completely ineffective.

Today's survey for the Institute of Directors is the loudest warning yet from the business world that ministers' efforts to stimulate growth are falling short. Labour has pointed to the research as justification for their claim that ministers have not been listening to their concerns.

A majority of the 1,300 business leaders surveyed said the government had been ineffective on reducing taxation, tax complexity, cutting business regulation, simplifying employment law, improving the education system and improving energy infrastructure.

The survey will come as a hammer blow to coalition ministers. David Cameron has insisted he is relentlessly pursuing growth, but 65% think there is a zero or low probability of the UK coming out of its double-dip recession this year.

"The government's reform agenda is pointing in broadly the right direction, but the overwhelming opinion of our members is that they are doing too little, too slowly," the IoD's chief economist Graeme Leach said.

"If the coalition wants to break this cycle of low economic confidence, then they need to take some bold steps that will make a real difference to the cost and complexity of doing business in the UK."

Company bosses also said the coalition had been on balance ineffective when it comes to simplifying the planning system and improving ICT infrastructure.

Fifty-two per cent said they expected growth to be lower in 2012 than it was in 2011. But the same number felt GDP would perform better in the second half of the year than it did in the first two quarters, when the economy contracted by 0.3% and 0.7% respectively.

Shadow business secretary Chuka Umunna accused the government of having ignored the concerns of firms.

"Instead of implementing a proper plan for growth and the active industrial strategies to get our economy going again which Labour has been calling for, out of touch ministers press on with the same failed policies, accusing businesses of 'whinging' and needing to 'work harder' when it is the government which is the problem," he commented.

Labour pointed to other business organisations voicing their doubts about the government's approach to underline its point.

CBI director-general John Cridland said he was disappointed by the length of time it was taking to get "momentum and urgency into the growth plan" last month. The British Chambers of Commerce's director-general John Longworth, writing in the Observer in July, accused ministers of "political short-termism, electoral calculation and presentation coming before substance".

"The government could act far more boldly to improve the UK's infrastructure, which is the essential underpinning of economic growth," he wrote.

"At the same time, it must take a tough decision on aviation capacity, without which our ability to trade with the rest of the world will suffer."

Businesses' renewed calls for a third runway at Heathrow, or expansion elsewhere in London or the south-east, has divided the coalition and forced ministers to delay key decisions until later in the year.

Speculation is now growing that the decision on airport expansion may be deferred until after the next general election in May 2015, to the frustration of company executives. Just 17% of those surveyed by the IoD poll felt the coalition had an effective policy on improving transport infrastructure.


Load in comments
Politics @ Lunch

Friday lunchtime. Your Inbox. It's a date.