Five ways the coalition has failed business

Despite attempts to portray Labour as hostile to business, the coalition has notched up its own failures

Ed Miliband will today set out Labour’s plans for business in a speech in the West Midlands.

Miliband will focus on what he calls ‘more inclusive prosperity’, highlighting how paying the living wage and banning zero-hours contracts can raise productivity.

The speech comes on the back of virulent attacks on Labour by the Conservatives and the right-wing press for supposedly being ‘anti-business’.

And yet despite attempts to portray Labour as hostile to commerce, the government has notched up its own glaring failures when it comes supporting business. Here are five:

Apprenticeships for young people

Despite repeated claims by the government to have ‘doubled’ the number of apprenticeship starts since 2010, the coalition has failed the under-19s when it comes to providing apprenticeships. The rise in the number of people taking up apprenticeships since 2010 is almost entirely down to 19+ learners, with over-25s taking up apprenticeships the most.

While the number of apprenticeship starts have indeed  risen overall since 2010, for young people they have fallen by over 11,000. According to figures from the Department for Business, Innovation and Skills (BIS), the number of apprenticeship starts by under-25s has fallen by 11,324 since 2010, meaning it is now twice as hard to get an apprenticeship as it is to get a place at university.

The High Street

Last year retail guru Mary Portas criticised the government for being slow to help struggling high streets. Two years after Portas’s 2011 review of the high street in which she made a string of recommendations, she noted that: “Progress from central government has been far slower than I’d hoped.” She also referred to “bumpy starts” at the 27 Portas Pilot towns on “vague supporting processes” and “insufficient guidance from government”.

Portas has also slammed the coalition after it emerged that out-of-town shopping centres were still being backed by local planning authorities. Portas said: “We are still building out-of-town retail space at an alarming rate, whilst many high streets have perfectly viable space available for new retail and other uses. This is a silly use of space and we can do better.”

The banks

It is important to remember that the Conservatives were lobbying for less regulation of the banks right up until the 2008 banking crash, at which point they rapidly changed their tune to reflect the prevailing mood. Indeed, once the crisis hit the Tories were keen to paint themselves as proponents of banking reform.

Since 2010 the stability of the banks has undoubtedly improved, but bonuses are still too high and George Osborne even wasted £43,000 of taxpayers’ money on a legal challenge to the European bankers’ bonus cap. According to figures published last year, bankers’ bonuses grew at double the rate of those of the average UK worker.

Youth unemployment

The coalition has won plaudits for reducing unemployment, but its record on youth unemployment is far less impressive, with the number of 18 to 24-year-olds out of work for over a year rising from 25,800 in April 2010 to over 73,500 in 2013 – only coming down slightly as the recovery has taken hold. Last month the number of jobless 16 to 24-year-olds also increased by 30,000 to 764,000.

Young people have fared worse than anyone since the recession. The jobless rate is 4.7 per cent among 35- to 49-year-olds, but nearly 36 per cent among 16- to 17-year-olds. This is storing up problems (and costs) for the future, as young people’s prospects are limited and the confidence which comes from a steady job is lacking. It was estimated that youth unemployment cost the government £4.8 billion in 2012. It is also predicted to cost a further £2.9 billion a year and £6.3 billion per annum lost output.

The government’s flagship £1bn Youth Contract – which provides temporary wage subsidies to employers worth up to £2,275 if they provide a six-month ‘job start’ for under 25s – has also been branded a failure by the Social Mobility and Child Poverty Commission.

Small businesses

The chancellor’s trumpeted Funding for Lending scheme was supposed to make it cheaper for banks to lend to small businesses. However net lending to small and medium-sized firms through the Funding for Lending scheme was down in the second quarter of last year, contracting by £400m. According to a recent report from the Federation of Small Business, 52 per cent of small firms find the availability of credit ‘poor’ or ‘very poor’. The Independent also reported in December that coalition programmes to boost financial support for British manufacturers and exporters have met only one quarter of ministers’ lending targets and fallen short by £1.5bn.

Despite Britain’s poor export figures, the chancellor has promised just £45m to encourage small businesses to export more. Such a small figure will do little to usher in the promised ‘rebalancing of the British economy’.

James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter

One Response to “Five ways the coalition has failed business”

  1. MattD

    The NAO gave a pretty lukewarm progress report on the Regional Growth Fund last year, not sure what’s been happening since. And it all seems to have gone quiet on the Enterprise Zones launched in 2010. On apprenticeships, they simply diverted the national apprenticeships funding to plug the gap after they scrapped Train to Gain. As such, its pretty much just a rebranding of existing support given to in-work training rather than anything to do with creating new apprenticeships.

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