SEUK’s External Affairs Director, Andrew O’Brien argues ahead of the Budget that we cannot ignore the the difficult but necessary job of reforming our economy.
On Monday at 3.30pm the Chancellor has a choice to make. He can decide to repeat the Budgets of previous years which have put off significant reforms until after Brexit or he can begin the difficult but necessary job of reforming our economy and making business better.
When the Prime Minister stood on the steps of Downing Street in 2016, she said that she wanted to create an economy that worked for everyone. She even created an “Inclusive Economy Unit” to try and build a fairer economy. The Business Secretary has spoken of his vision of more “responsible businesses”.
Yet the Chancellor has consistently avoided taking big decisions that would back up this agenda. He has repeatedly said that Brexit is creating uncertainty, but we can’t wait till Brexit has been settled before we take steps to fix our broken economy.
We have already seen in the years since the referendum how Brexit has eaten up all the government’s thinking capacity. Yet things are not going to get any easier when Britain moves into the implementation phase, if we even get a deal.
When people voted to leave the European Union in 2016 they didn’t vote for the government to ignore the big issues facing our economy and our society. We need to start the work of reforming our economy before Brexit rather than hoping that following Brexit, we will suddenly have the breathing space to get our economy into shape.
The scale of the problems that we face is growing through inaction.
UK productivity remains very low by historic standards and compared to our peers internationally. Although pay is starting to increase, workers are still £800 a year worse off compared to before the financial crisis. Inequality has either increased or remained frozen over recent years, depending on the stats you use. Social mobility is so slow that according to the OECD it will take five generations for the poorest families to reach the average income. All of this must be tackled in the context of the continued threat of climate change.
This isn’t going to solved by government spending alone. We need to change the way that business works so that rather than creating social problems which government has to solve later, we have responsible businesses that deal with issues at their source.
Today, together with 130 social enterprise business leaders, we have written to the Chancellor to ask him to stop using Brexit uncertainty as an excuse for inaction and use the Budget to begin a journey to truly reforming our economy for the better.
We have asked for one simple step, announcing a review into the tax system so that we reward companies which make a positive social and environmental impact. At present social enterprises are fighting with one arm tied behind their back. They are building their business models that make a difference but at the same time they are paying more tax than other businesses who pull out all the stops to avoid it. As our Hidden Revolutionreport referenced, the largest co-operatives in the UK pay more in tax than Amazon, Facebook, Apple, Ebay and Starbucks combined.
The system isn’t fit for purpose and is rewarding the wrong types of business. Reviewing the tax system would send an important signal to the market and make businesses which have a positive social and environmental impact more competitive.
We can’t expect government to change the economy overnight, but we also can’t keep putting off big decisions hoping that there will be a better opportunity around the corner.
The Chancellor may not have another opportunity to lay out an ambitious agenda. We’ll see on Monday whether he has the courage to take it.
Director of External Affairs, Social Enterprise UK