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‘Boring’ policies will address economic challenges

Author: ICAEW Insights

Published: 19 Apr 2024

New policy solutions to problems facing the UK economy will be prosaic but important, Conservative Party Forum Chair John Penrose MP told a round table this week.

The state of public finances will impact the scale and ambition of the next government, according to John Penrose MP, Chair of the Conservative Party Forum.

Speaking at the Conservative Business Policies for a Future Manifesto event at Chartered Accountants’ Hall, Penrose said that new policies might not be headline-grabbing as a result, but could still be very important in terms of providing solutions to the challenges facing businesses and the economy.

Regulation was a key area that Penrose identified as having the potential to make a difference. The government has an upcoming white paper on improving regulation, he explained. Attendees agreed that deregulation is not the answer; it must be smarter and proportionate.

Also in attendance at the round table, organised by ICAEW in partnership with the Enterprise Forum, was ICAEW CEO Alan Vallance. He explained some of the challenges faced with starting, running and growing a business, based on ICAEW member experience. While forming a company is straightforward, he said, fledgling businesses are held back from launching by HMRC delays to VAT registration and challenges in opening a bank account. 

As outlined in ICAEW’s manifesto, poor HMRC service performance – including long waits for calls to be answered and delays of a whole year or more for replies to letters and other correspondence – undermines the day-to-day running of businesses. 

Vallance pointed out that when it comes to growing a business, a complex tax system only creates disincentives to invest, which dampens productivity.

HMRC services key

All delegates agreed that improvements to HMRC service standards, streamlining the process of opening a bank account and simplification of the tax system were all important areas of focus. They discussed the importance of improving the VAT registration process and HMRC service standards and added that digitalisation will be key in streamlining processes and improving service standards.

As smart data could significantly improve the efficiency of the registration process for bank accounts, it was suggested this should be extended beyond personal banking to business banking. Penrose cited The Data Protection and Digital Information Bill, currently making its way through parliament, as a sign that things were moving in that direction.

While simplifying the tax system is a challenging task, participants agreed that it represents an opportunity for the next government – which will be hamstrung by the state of public finances – to raise money by closing loopholes in the tax system. 

Delegates raised the issue of diversity and inclusion. Measures are needed to facilitate equal participation of women and men in the economy and at senior levels within businesses, they said. They also discussed the need for greater flexibility in sharing parental leave.

Opportunities and threats 

AI safety was discussed: AI presents opportunities but also threats that the government needed to be aware of. The race to innovate could come at the expense of safety and security concerns. Measures are required to ensure the authenticity of AI-generated information, guard against deepfakes and protect intellectual property in the face of potential infringement by large language models.

Regarding support for young people in choosing careers, attendees felt there was a need for better access to apprenticeships and training, and it was important to encourage vocational qualifications alongside services. Better and more open data on things such as course costs, employability and expected starting salaries would also offer students greater transparency in selecting careers. This would encourage a more balanced consideration of higher education options and high-quality vocational courses.

ICAEW will continue to engage with all political parties in the run-up to the General Election, highlighting the recommendations and vision for the UK economy set out in the ICAEW Manifesto. Alan Vallance was due to discuss the importance of AI to the accountancy profession with ICAEW member Saqib Bhatti MP, Parliamentary Under Secretary of State for Tech and the Digital Economy, in a meeting on 18 April.

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