View from Brussels / Whitehall

Welcome to a blog by Edward Simpson, FLA  Director of  Government Affairs & Stakeholder Engagement, which considers developments from across The Channel and closer to home on an alternate monthly basis. 

31 August 2021

So what does post-Covid recovery hold for the UK?

My June blog considered the Government’s commitment to Net Zero and what needs to be done to achieve the ambitious targets that have been set. Beyond that, how many Conservative Manifesto promises are being brought forward?

For instance, the Manifesto highlighted the Red Tape challenge whose aim was to “ensure that regulation is sensible and proportionate, and that we always consider the needs of small businesses.” A report in June from the  Taskforce on Innovation, Growth and Regulatory Reform chaired by former Party Leader Sir Iain Duncan-Smith was asked to do just that. Disappointingly, the section on financial services focuses on ideas to stimulate wholesale investment in pensions and private equity and generic recommendations on regulation. Of course, these areas are important but this was a missed opportunity to improve the environment for consumers and small businesses for whom reform of consumer credit rules is long overdue.

FLA members’ customers need streamlined, modern measures when they take out a loan or lease or when they fall into financial difficulty. The FLA hopes that HM Treasury’s review of the Future Regulatory Framework for financial services (which was not a pre-election pledge) earmarked for the last quarter of 2021 will address this.

“Levelling up” has been prominent in the Government’s narrative but it remains unclear whether this mantra will deliver concrete examples of support for under-served regions or is more of a slow-burner designed to create a change in approach by investors and businesses. Recent media reports that part of the HS2 project may be scrapped do not provide any clues.

The Business Secretary, Kwasi Kwarteng, recently trailed that a national enterprise strategy will be published by the end of the year. This will reset the Government policy away from the necessary intervention to support business hit by Covid towards a free market philosophy which it hopes will encourage entrepreneurship and investment.  

Then there is the super-deduction scheme. The Chancellor’s policy to encourage the acquisition of plant & machinery by providing a 130% capital allowance captured the headlines. The reality is that HM Treasury missed an opportunity by not including leasing and short-term rental. The FLA has written jointly with six other representative bodies to the Chancellor proposing an industry roundtable to explain how the market works, why the super-deduction could do more than it is and how to make the change.

As we approach the halfway mark of this Government’s term (assuming they call an early election), it’s time for concrete action to support what are worthy political aspirations.