A busy start to September
It may still feel like summer this week, but Autumn is already here bringing the usual surge in meetings, priorities and deadlines. Westminster is no exception. Parliament is meeting face to face for the first time since the pandemic began and so is the Cabinet.
We can expect business to be intense and the tone of debate to be feisty. Over the coming months, the Government wants to shift its focus to issues beyond Brexit and Covid – but will have to do so under the close scrutiny of some rebellion-prone Conservatives who are keen to see that the Government sticks to its Manifesto. Meanwhile, the Labour leadership also needs to make its mark.
The Government has kicked off with a big bang – commitments to increase National Insurance to fund social care reform and to pump money into the NHS over three years to compensate for the impact of Covid are huge and controversial. Many of its own supporters will challenge the tax hike, fearful that it will not be reversed once the NHS is back to normal. They are unlikely to be numerous enough to overturn the Government, given its a large majority, but they will raise the temperature nevertheless.
Social care and the NHS may be the biggest ticket items but there are many more. The Chancellor has an extremely difficult Budget to launch in October. In education, transport and the courts, Government needs to tackle the challenge of post Covid catch up. The Universal Credit uplift will be a hotly argued topic. A White Paper on levelling up is also promised, and a successful conclusion to COP26 needs to be delivered.
All of these are difficult issues. Money is short. Some policies conflict with each other, such as net zero and levelling up. Some are out of the Government’s control. At the moment, it is not certain that China will even turn up to COP26.
What does this all mean for business and financial services?
On the positive side, the Government must stimulate the economy and keep the revival going. Without growth it will not be able to fund any of the things it wants to do. We can hope therefore that it will also stick to its promise of reforming regulation to make it more efficient for business, although the weight of the Government agenda may mean the things business want get squeezed out of the Parliamentary timetable.
On the negative is the sheer level of uncertainty that business faces. The most obvious are the key economic factors such as inflation and taxation. Political uncertainties are harder to assess but need to be considered: if COP26 is a failure, will the Government maintain its commitment to net zero; will the Conservatives of the South lose patience with the costs of investing in the North; and, for all of us in business and financial services, will our vital role in the economy remain appreciated as Government works to define its profile as a champion of change and social reform.
On this last point, the FLA has much to say. Credit is a powerful engine of our economy and society. Lending must be responsible and affordable. Regulation and industry best practice have made great strides in this respect. In consequence, credit can be a trusted means to tackle many of the issues that Government faces. It drives business investment and innovation, needed now more than ever. It helps the less well-off to manage their budgets, and it will be absolutely vital to the Government achieving its net zero ambitions because it puts green options, be they electric vehicles, new boilers or home improvements, within the reach of more consumers. In the intense debates that we can expect over the coming year, we urge Government to recognise our industry’s contribution, and to listen to our ideas about how we can do more.
Published 08 Sep 2021