Election debate: What we can expect next
As the results were coming in last week, members of AccountingWEB and BusinessZone members gathered online to discuss the policy outlook for the next five years. Rachael Power provides a round-up of their views.
Ahead of the news on Friday morning of the Conservatives’ election victory a group of accountants and entrepreneurs gathered in a live panel chat to discuss the policies presented by the different parties. Joining the AccountingWEB editors were Della Hudson from Hudson Accountants, Richard Murphy of Tax Research UK, Nigel Harris from Burton Sweet and Norman Younger of Formations Direct.
The first issue on the agenda was how small businesses were likely to fare under a new government. The Conservative small business manifesto set the pace here with proposals such as:
- Trebling the number of Start Up Loans and launching Help to Grow
- Conducting a review of business rates
- Raising the small business target share of central government procurement to one-third.
According to Younger the Tories “understand business and are not hostile”, but this claim did not was with tax campaigner Richard Murphy. “The Tories are going to extract very large amounts of income from the economy and destroy demand. How can this possibly help small business?” he asked.
Murphy's comments will now be put to the test as the Conservatives take assume sole control of UK government for the next five years.
Labour and the Lib-Dems both put forward proposals on business rates, procurement and national insurance, but suffered in our panel - and at the polls - for not putting more specific costs against their policies. The Greens won some plaudits on this score on the panel due to the transparency of their manifesto and costings, and because they had “more policies aimed at individuals”.
While good natured, the panel did present a good examination of the main conflict taking place across the country with exchanges between Richard Murphy and Norman Younger, who blogs on AccountingWEB as the Flying Scotsman.
In an assertion that might raise eyebrows among his accounting peers, Murphy argued that regulation was not the bane of a small business: “The shortage is good ideas. The government can’t solve that, but it can create markets. When consumers aren’t spending, most business is not investing and export markets are sluggish. [Government investment] will get us out of the trough we are still in.”
In Murphy’s view, the Conservatives’ focus on reducing government debt deficit is a mistake when it can be funded at negative real interest rates. “People are effectively paying the government right now to save money with them because they can’t find a better place for it. What businesses should be worried about is that they cannot provide a better offer than a native interest rate,” he said.
Key tax policies
Turning to his research into taxation, Murhpy said tackling the tax gap is “vital” to ensure everyone is on a level playing field.
Younger said the best way to close this gap is to simplify the rules. “Rip up the book and levy the flat rate at 15%. This will remove the incentive to mess around.”
Where the two protagonists did agree, however, was on late payments to small business.
“Late payment strangles SMEs, they don’t like to rock the boat with big customers. I don’t think regulation is the answer, it should be education with naming and shaming in annual surveys,” Younger said.
Murphy agreed, and wondered whether they should be ‘named and shamed’ on tax too.
While the Conservatives would rate their long-term reduction in the corporation tax rate to 20% as one of their most successful pro-business policies, Murphy wanted to raise the corporation tax rate back up to the “common” rate of large companies around the world of 30%.
On this point, Burton-Sweet’s Nigel Harris challenged the government’s underlying assumption by asking whether there had been any evidence the 20% rate had brought business to the UK.
“Brexit” - Europe takes centre stage
Under the Conservative government, a referendum on EU membership is very likely, with the very real possibility of British exit from the union. In spite of UKIP’s relative success at the polls, most accountants aren't convinced it's a brilliant idea.
As Harris put it: “As much as I don’t want to be in Europe, that’s where we are. I don’t think it’s sensible to leave the EU, but we should try to fix some of its daftness.”
Younger agreed that leaving the EU would have “collateral damage”, but felt Brussels is out of touch. A trade partnership would work as well, he suggested.
Della Hudson worried that many voters wouldn't understand the real implications of an EU membership vote. “A referendum scares me as most people will vote on emotion invoked by headlines and soundbites. How many will really research and understand the issues?” she asked.
In common with most observers of the election campaign, the AccountingWEB panellists were underwhelmed by the leadership qualities of the different parties. For accountants, however, Harris noted the really important leader was not the man behind the number 10 door, but rather the person behind the numbers.
George Osborne, Labour's Owen Smith and Danny Alexander from the Lib-Dems were named as good candidates. But as Alexander suffered the fate of most Lib-Dem ministers, Osborne was the one who made the cut and has taken up residence in Downing Street again as Chancellor.
What are your views on last week's events?