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Autumn/Winter 2021 23 “Right now, there is a wall of investment waiting to be invested, with corporate cash reserves now over £900bn. Yet we know from our members that we can’t simply expect it to be deployed in the UK. We’re in a global race for investment in green technologies, innovation, and skills. We must create the right environment to unleash it. “When we look back on this decade, it’s crucial we see a Government that took decisive action and unlocked investment. A Government that went for growth and made big bets for the UK getting ahead of the international competition. A Government that resisted the easy, play-it-safe option, and showed the ambition needed to target the big wins. “If we miss this chance, we’ll fall back into old patterns of chronic underinvestment and regional inequality, and risk missing our net zero target. The prize on offer leaves no room for complacency.” Further CBI recommendations – grouped in four key headline areas – include: Smart taxation that rewards investment: • ‘Greening’ the tax system and pledging no further increases to the business tax burden to safeguard UK status as a leader in attracting global investment • Introduce full expensing for capital expenditure beyond 2023 and targeted ‘green’ investment-focused capital allowance mechanisms • Reform outdated business rates to reflect green ambitions and reward decarbonisation efforts • Boost the structures and buildings allowance to incentivise sustainable construction – putting homes, workplaces, schools and hospitals at the heart of the green economic recovery • Modernise R&D tax credits, widening the scope to include capital spending and building in flexibility to match rapid change across industries New skills for new markets: • Turn the Apprenticeship Levy into a Lifelong Learning Levy to unlock business investment in training • Turn Job Centres into regionally autonomous Jobs and Skills Hubs to encourage more people to take up lifelong learning and enable closer alignment with changing local jobs markets • Introduce individual training accounts for unemployed individuals and those with the biggest retraining needs to spend on accredited courses • Address skills shortages by removing barriers to recruitment; urgently updating the Shortage Occupation List and adding flexibility to points-based immigration Catalytic public investment: • Prioritise the UK establishing itself in new and emerging markets by speeding up the development of major infrastructure projects, new industries, and cutting-edge tech • Designate energy efficiency and heat as a national infrastructure priority by providing a comprehensive long-term package of funding to make buildings more energy efficient and move away from fossil fuel heating solutions • Provide long-term funding to decarbonise UK transport systems and develop a UK electric vehicle market. While also using public investment to stimulate private sector investment and R&D into technologies to decarbonise heavier modes of transport (such as freight, aviation and maritime) • Commit to a new Gigafactory plan to deliver increased capacity by 2040, delivering strong automotive sector and putting the UK at the forefront of low emission transport technologies Government as market maker: • Deliver on commitments to invest £22bn in direct domestic R&D funding by 2024- 25, frontloading funding to maximise private investment • Grow investment in business-led innovation, while requiring regulators to prioritise innovation, net zero and investment as part of core remits • Endorse the importance of economic clusters to regional growth in the Levelling Up White Paper – and commission CBI to write the cluster playbook and work with industry to develop a toolkit responsive to business demand to support and nurture clusters • Scale up the UK’s hydrogen economy by progressing policy on Hydrogen Business Models and allocating funding from the Net Zero Hydrogen Fund, with a view to increasing funding The CBI says action in these areas is imperative if the UK is to remain internationally competitive against peer nations where business investment levels – and public spending in areas like R&D and green initiatives – far outstrips our own. These four government drivers matter more to inward investors in this new investment cycle, than anything else. Rain said: “These CBI recommendations can put the UK economy on a strong footing, remedying challenges of under- investment and skills shortages, while creating new opportunities to build an economy of the future through catalytic public investments and by Government playing its unique role as market maker to unleash newmarkets. “Failing to enact the four enablers across Budget and CSR interventions will impact the UK’s recovery and ability to level-up. Inaction risks seeing the UK fall behind competitors, lose international investment, and miss our global commitments on net zero. “The reality is that while the UK is one of the best places in the world to do business, we do not have the same investment levels as international peers. “This Autumn is a once-in-a-generation opportunity to change the UK’s productivity and growth trajectory, and Government must do what it takes to rapidly unlock private sector investment. “The opportunity – and need – to forge a more dynamic, competitive, and future- focused economy has never been greater.” << “The opportunity – and need – to forge a more dynamic, competitive, and future- focused economy has never been greater.”