People and Prosperity

People and prosperity The business vision for a better Britain

Making growth work for everyone to raise living standards Securing our global future to capitalise on the changing world Getting Britain building to meet our infrastructure needs Forging our future economy to unleash business potential Shaping the state to deliver growth now and for the future

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Foreword John Cridland, director-general Elections are about the choices people make which shape this country’s future. From parents with mortgages to school leavers deciding what to do next; from entrepreneurs with big ideas to executives in the boardrooms of successful companies: people make their choices based on what they think will deliver the best future for themselves, their families and our country as a whole.

These choices aren’t made in a vacuum; the context is hugely significant. Today, the global economy is going through major shifts which will profoundly change the world we live in and affect the UK’s position within it.

Emerging markets now account for a majority share of global GDP and will hold onto this position in future. Opportunities for Britain to strengthen its role as a trading nation lie in all corners of the globe, but realising them is not guaranteed.

At home, our economy is only just emerging from a significant period of downturn which has lasted many years and taken much hard work – from our businesses, households and policymakers – to get through. Households have seen prices and wages grow apart.

There is still much more to do to rebalance our economy away from growth reliant on consumer spending and debt, towards business investment and exports.

Making growth work for everyone to raise living standards

Getting there will require us to tackle our major economic challenges head on: shaping the state to deliver growth whilst balancing the public finances; forging a future economy which unleashes the potential of our businesses to invent, invest, export and expand; taking the difficult decisions to get Britain building; and securing our global future in a changing world, founded on being in a reformed Europe.

Securing our global future to capitalise on the changing world

The next election is not just about the next five years but about the next fifty. Business has an ambitious, long-term vision for Britain.

Getting Britain building to meet our infrastructure needs

Business has an ambitious, longterm vision for a Britain in which opportunity and prosperity are shared by all. A country with a world-class education system to give our young people the best start in life, get them on the first rung of the career ladder and keep climbing. A country where great ideas and inventions succeed; where our roads, railways, and energy and digital networks are fast and effective. A country which is open to the world and has a voice in the global debates that matter to its people.

These things won’t be achieved overnight, some not even by the end of the next parliament. But we can take major steps towards them in the next five years. To do so, we have to be honest about the scale of the challenges facing us and serious about what needs to be done to tackle them.

Forging our future economy to unleash business potential

The choices we make have to be underpinned by a sense of where we’re trying to get to as a country; the next election is not just about the next five years but about the next fifty.

Dealing with these challenges will best enable us to make growth work for everyone, becoming a country where people have the chance to reach and increase their potential.

Shaping the state to deliver growth now and for the future

Positive GDP figures in the short-term must not distract us from laying the building blocks to secure our economic future in the long-term.

Looking ahead, we should neither expect things to stay the same nor should we assume that our standing in the world and standards of living are inevitably set to decline. Far from it. Learning from what has served us well as a nation in the past – an openness and willingness to embrace the world – and applying it to the realities we face today will help us maximise opportunities in future.

Many of the solutions lie in the dynamism and entrepreneurialism of the private sector because our prosperity as a country is so closely linked to the success of our businesses. But for its part, business recognises that it hasn’t always got it right and its contribution has sometimes been brought into question since the recession. The political parties must focus on implementing policies, with detailed thinking about how they will be delivered on the ground from day one of the next parliament.

The solutions will take leadership, collaboration and thinking in timescales beyond the next political cycle. And they will require us to make choices that get us towards achieving that long-term vision.

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Will this be easy? No. Is this vision ambitious?

Unashamedly. Can we achieve it? Absolutely.

And making the choices at the next election that get us there is in the best interests of everyone in our country.

How to deliver prosperity for all in the next parliament and beyond

Shaping the state to deliver growth now and for the future

We need to balance the public finances now and for the future in a way which maximises our prospects for economic growth.

Forging our future economy to unleash business potential

We need to get the right conditions in place for our businesses to drive economic growth, unleashing their potential to invest, invent, export and expand.

Getting Britain building to meet our infrastructure needs

We need to take difficult decisions today to meet the needs of tomorrow, building homes for the future, powering the economy and keeping the lights on, and connecting our people and businesses to each other and to the world.

Securing our global future to capitalise on the changing world

We need to renew our role as a trading nation and reinforce our position on the global stage by making the most of the opportunities that come from a rapidly-changing and increasingly interconnected world.

Making growth work for everyone to raise living standards

We need to give everyone opportunities to participate fully in a prosperous economy and society, so we make the most of the UK’s potential and the benefits of economic growth are widely-shared.

Unlock the potential of our medium-sized businesses with targeted ideas to improve productivity and increase access to finance, helping them grow et UK businesses seizing opportunities and selling more overseas with an ambitious export strategy G targeting key markets and exploiting UK successes Focus on strengthening key sector supply chains by deepening industrial strategy, recognising and promoting interdependencies rather than arbitrarily dividing the business community into ‘big’ versus ‘small’ Boost business investment and UK competitiveness by extending the UK’s capital allowance regime Take a pro-competition and pro-consumer approach to markets, and allow regulatory bodies to do their jobs free from unnecessary political interference Enhance the R&D tax credit so the UK is the best place to invest in research, innovation, science and product development: key components of a highly-skilled economy Support diverse sources of business finance and ensure financial regulation has, as part of its core purpose, the objective of sustainable financing for the economy Establish an independent body to determine future infrastructure needs and how they should be met, without delaying projects already underway Get 10 new garden cities completed or underway by 2025 to tackle the chronic housing shortage Implement all elements of Electricity Market Reform to secure the necessary levels of investment in our power sector, and put energy efficiency at the centre of a future energy and climate change strategy

Making growth work for everyone to raise living standards

et the most out of our public finances and improve people’s experiences by reforming our public services G to deliver better value and higher quality services

Securing our global future to capitalise on the changing world

Lock in recent improvements to our tax system, then focus on reforming the distortive business rates system and exploring the increasing National Insurance burden facing business and employees

Getting Britain building to meet our infrastructure needs

Set out a roadmap for increasing capital spending – once the deficit is eliminated – as a percentage of UK GDP in the next parliament and beyond

Forging our future economy to unleash business potential

Direct public spending towards capital spending and innovation: the things that will best unlock economic potential and help our businesses grow

Shaping the state to deliver growth now and for the future

et the deficit down and assess all areas of public expenditure to focus spending on measures that will G boost long-term growth

ommit to implementing the recommendations of the Airports Commission to bring an end to the hiatus C over UK aviation capacity with spades in the ground by 2020 ake the case for the UK staying in a reformed EU so we maintain our access to the world’s largest single M market, developing alliances with other member states to achieve reforms that encourage enterprise and identify where the EU should do less et the EU to work for all member states by not regulating on things better done at national level and G safeguarding the interests of non-Eurozone members in the Single Market rioritise progressing the EU single market in digital and services as part of the UK’s efforts to make P Europe more outward looking and competitive Renew our role as a trading nation by helping get the Transatlantic Trade and Investment Partnership over the line, while ensuring EU trade talks with Japan and key emerging markets also deliver results Equip our businesses for global success by playing to our strengths here at home, boosting competitiveness in all UK nations while maintaining the integrity of the UK’s internal market Re-shape our education system so it encourages development of the behaviours and attitudes that prepare rounded and grounded young people for success beyond the school gates, not just a focus on exam results End the presumption that the same education will suit all young people by treating academic and vocational routes equally, starting with the creation of a vocational A-level and a shift away from GCSEs Scrap the unhelpful net migration target, be prepared to raise the tier 2 skilled visa cap and deliver high service levels on visas and work permits so that skilled immigration can continue to add value to our economy Set a target for reducing the gender pay gap by 2020 to show we’re serious about tackling years of inequality in the workplace

Don’t meddle with labour market flexibility, which would risk pricing young people and the low-skilled out of opportunities

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ut improving productivity – the real route to boosting pay and opportunity – at the centre of a long-term P labour market strategy

Shaping the state to deliver growth now and for the future We need to balance the public finances now and for the future in a way which maximises our prospects for economic growth.

A recovery that is felt by all in the UK can only be based on solid economic foundations.

The starting point is continued action to get the public finances in order because, with £68bn of savings still to be found by 2018/19, we have a long way to go to balance the books in the short-term. With an ageing population putting pressure on health spending and pension provision, we need a sustained effort to keep the size of our national debt down.1 With difficult and potentially politically unpopular decisions ahead, we’ve got to be honest about the scale of spending restraint required in order to foster a discussion about how we best use our limited resources.

Tough choices must be taken with care, in order to maximise our prospects for economic growth – for now and the decades to come. We have to assess all areas of public expenditure, so that spending can be focused on the areas which will secure longterm sustainable economic growth.

Spending on capital and innovation will generate the best return on investment and unlock the UK’s economic potential, so shrinking the capital budget further as a proportion of GDP in the next parliament would hit the recovery just as it’s getting started. But halting a scheduled decline won’t be enough. As a first step public sector net investment (PSNI) should be prioritised and we need to put a plan in place to increase the proportion of PSNI in the next parliament, giving business certainty beyond the next political horizon.

Tough choices must be taken with care, in order to maximise our prospects for economic growth – for now and the decades to come.

Lock in recent improvements to our tax system, then focus on reforming the distortive business rates system and exploring the increasing National Insurance burden facing business and employees et the most out of our public G finances and improve people’s experiences by reforming our public services to deliver better value and higher quality services 3

Making growth work for everyone to raise living standards

Set out a roadmap for increasing capital spending – once the deficit is eliminated – as a percentage of UK GDP in the next parliament and beyond

Securing our global future to capitalise on the changing world

Direct public spending towards capital spending and innovation: the things that will best unlock economic potential and help our businesses grow

Getting Britain building to meet our infrastructure needs

et the deficit down and assess all G areas of public expenditure to focus spending on measures that will boost long-term growth

Forging our future economy to unleash business potential

Pro-growth tax and spending decisions must be coupled with bold thinking about how our public services are going to meet the unprecedented demands which will come from a changing and ageing population. By 2030, there’ll be 4.4 million more over-65s in the UK than today, presenting a big challenge for our state and services.2 Avoiding tough choices or delaying new ideas on how we can provide services would be a hugely irresponsible and ultimately costly choice, leaving us without essential services or support for those we need to take care of.

How we shape the state to deliver growth in the next parliament and beyond:

Shaping the state to deliver growth now and for the future

The competitiveness of our tax system sends a strong message abroad about whether or not we are open for business. Recent changes should be locked in: reducing the headline rate of Corporation Tax to 20% (the most competitive in the G20), introducing the Patent Box and revising the Controlled Foreign Companies rules all send out positive signals about the UK. Further steps should be taken to reform the distortive effects of the business rates system and to tackle the increasing National Insurance burden on businesses and employees.

Internationally, we must avoid sending the wrong signals by taking unilateral action that would put us at a disadvantage to our global competitors.

Moving ahead of international agreement on the OECD BEPS project would be a case in point.

£68bn additional savings that need to be found from day-to-day to spending between 2015/16 and by 2018/19

4.4 m the increase in our over-65s population by 2030

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Forging our future economy to unleash business potential We need to get the right conditions in place for our businesses to drive economic growth, unleashing their potential to invest, invent, export and expand.

Businesses are the engine of the UK’s economic success. The ideas developed, designed and sold from the UK are second-to-none worldwide and in high demand across the globe. Getting businesses investing and exporting more is the only way to rebalance our economy away from the over-reliance on consumer spending and debt, which existed before the financial crisis and is still in evidence today.

This isn’t about shifting growth from one part of the country to another, it’s about maximising the strengths and specialisms in all regions of the UK.4 Fostering an environment in which entrepreneurs and established businesses can prosper, and which is open to investment and individuals with ideas from around the world, is absolutely essential.

Key to this rebalancing is unlocking the potential of the UK’s medium-sized businesses. With annual turnover of £10-100m these firms have been the forgotten army of our economy for too long. Especially when they are responsible for 22% of economic revenue and 16% of UK employment, despite making up just 2% of our businesses. Due to their size, these firms have huge potential to scale-up but also have specific needs. Financing is a particular issue, with equity finance vastly underused, despite

it being one of the most effective ways for these firms to access capital. With the right support, these firms can grow at home and sell more overseas to become drivers of the UK’s economic future.5 As of 2013, the developed world accounts for a minority of the world economy.6 Future global growth will mainly come from emerging markets. These shifts in global economic geography create more opportunities for our firms to export, with UK strengths in services, advanced manufacturing and high-quality brands ideally-placed to tap into demand from growing middle classes in emerging markets.

Despite this, the UK’s recent export performance has failed to match the scale of our ambition and the export-led recovery which was our aim has not taken root. Export support has improved, but there’s still too little awareness amongst businesses about what services are available. We need a renewed sense of purpose on an exports strategy to get businesses of all sizes growing abroad.

Industrial strategy is essential to positioning our firms so they’re best able to take advantage of new opportunities. Strategies should be led by the businesses themselves, working in partnership with the government to deliver them. Making sure that strategies run right through supply chains is the next step, as well as recognising the industries which underpin all these sectors. The everyday interdependence within supply chains is a prime example of why it’s arbitrary to try and divide the business community. Setting small business up against big business misunderstands the nature of commercial relationships.

Rebalancing the economy will not be completed until decades of underinvestment by businesses are reversed, boosting productivity, innovation and GDP in the process. While there’s no single solution, making capital expenditure more attractive is a good place to start and would bring about a significant economic prize. Bringing our capital allowances regime in line with other G7 economies could boost investment by around £50 billion in the long-term.7

Focus on strengthening key sector supply chains by deepening industrial strategy, recognising and promoting interdependencies rather than arbitrarily dividing the business community into ‘big’ versus ‘small’ 9 Boost business investment and UK competitiveness by extending the UK’s capital allowance regime Take a pro-competition and pro-consumer approach to markets, and allow regulatory bodies to do their jobs free from unnecessary political interference

Making growth work for everyone to raise living standards

Enhance the R&D tax credit so the UK is the best place to invest in research, innovation, science and product development: key components of a highly-skilled economy Support diverse sources of business finance and ensure financial regulation has, as part of its core purpose, the objective of sustainable financing for the economy 10

22% £50bn of UK economic revenue is driven by medium-sized businesses

extra long-term investment that would be unlocked by getting our capital allowance regime up to the level in the G7

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Growing businesses must be underpinned by a healthy market in financial services – focused on customers’ needs and providing the patient capital, insurance, export support and other services that will help them prosper. But the financial landscape is changing. To finance tomorrow’s economy, we need to find new ways to support alternative and innovative sources of finance, and make sure regulation has the objective of securing sustainable financing as part of its core purpose.

et UK businesses seizing opportunities G and selling more overseas with an ambitious export strategy targeting key markets and exploiting UK successes

Securing our global future to capitalise on the changing world

Future prosperity can only be secured through continued innovation – generating new ideas and smarter products, and reacting faster to changing trends and opportunities. Investment in innovation creates a virtuous circle whereby new product innovation leads to higher productivity which, in turn, helps firms to grow.8 The R&D tax credit is a success story which has boosted investment in innovation, but we should now go further so that it encourages the high-value production associated with the R&D that takes place here. This will help us reap the benefit of innovation taking place in the UK and use it to build up our supply chains.

Unlock the potential of our medium-sized businesses with targeted ideas to improve productivity and increase access to finance, helping them grow

Getting Britain building to meet our infrastructure needs

Well-functioning markets aid investment and are the best way to deliver lower prices and better quality, more innovative products for consumers and businesses. With some markets understandably under scrutiny, it’s right to look at where they aren’t working as well as they could be, and for businesses to step up and offer solutions. The approach to this must be both pro-market and proconsumer in addition to allowing regulatory bodies, including the Competition and Markets Authority, to operate independently and free from political interference.

How we forge our future economy in the next parliament and beyond:

Forging our future economy to unleash business potential

Getting businesses investing and exporting more is the only way to rebalance our economy away from the overreliance on consumer spending and debt.

Getting Britain building to meet our infrastructure needs We need to take difficult decisions today to meet the needs of tomorrow, building homes for the future, powering the economy and keeping the lights on, and connecting our people and businesses to each other and to the world.

Infrastructure is a crucial element of the UK’s economic and social fabric: affordable homes for people to live in and raise families; roads, railways and ports connecting people, taking them to work and enabling businesses to move products to market; digital connections allowing information to be shared at speed; and energy to power it all. It’s easy to take these things for granted and too often we only notice when things don’t work as expected.

Above all, we can’t live without them.

Building infrastructure is by nature difficult and complex. It delivers significant benefits but requires hefty planning and financing and brings the prospect of disruption and political headaches. As a result, politicians have got into the habit of putting off big decisions until they’re overdue. But this is holding back the economy and substantially impacting upon our everyday lives. We need action now.

With only 22% of the public trusting politicians to say what infrastructure we need compared with 64% trusting independent experts, it’s clear there must be a better way to approach making these big decisions. An independent system that identifies pinch-points early on, works out what’s needed and builds public understanding would give investors the confidence to finance and build the infrastructure of the future. An integrated approach which looks at our future road, rail and aviation requirements in the round will ensure the UK’s infrastructure strategy is more than the sum of its parts.11 Being able to find and afford a home – to rent or buy – is important not just for people to have roofs over their heads but for them to be able to move around to find work. But every year for the last ten years we have only built half the number of homes we need and the strain on the market is showing. Prices have jumped 56% on average in the past decade, and the average age of buying a house without assistance from family is 33. This costs households across the country £4bn a year as a result of rising housing and transport costs.

We need bolder ambition: by the end of the next decade, we should be building up to 240,000 homes a year. Achieving this requires measures across the planning, land and tax systems, including looking at building on low quality greenbelt in addition to getting construction completed or underway on at least ten new garden cities by 2025. It also means making tough choices about where best to focus public money – investing to fix the problem rather than paper over the cracks. So the next government should look to rebalance part of the housing benefit bill towards greater capital investment in new social housing stock.12

Implement all elements of Electricity Market Reform to secure the necessary levels of investment in our power sector, and put energy efficiency at the centre of a future energy and climate change strategy ommit to implementing the recommendations C of the Airports Commission to bring an end to the hiatus over UK aviation capacity with spades in the ground by 2020

64%

of people trust independent experts to set infrastructure requirements, compared to just 22% of people who trust politicians

£4bn £100bn cost to households across the country of rising housing and transport costs from the failure to build enough homes

private sector investment in our energy infrastructure is needed by 2020 to keep the lights on and decarbonise our energy supply

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Our transport networks are under strain – with roads congested, key rail links reaching their limits, and all the while the long-standing hiatus on new runway capacity rumbles on. Positive developments are on the horizon, including in the current package of road reforms, growing confidence around High Speed 2 or the work of the Airports Commission. This represents the right direction of travel, but to make a tangible difference we need to see decisions made swiftly and progress on the ground. With capacity full at the UK’s hub at Heathrow, and other London airports set to reach capacity by 2025, we need construction underway by 2020 once the Airports Commission publishes its final conclusions.14

et 10 new garden cities completed or underway G by 2025 to tackle the chronic housing shortage

Making growth work for everyone to raise living standards

Politicians have got into the habit of putting off big decisions until they’re overdue. We need action now.

Establish an independent body to determine future infrastructure needs and how they should be met, without delaying projects already underway

Securing our global future to capitalise on the changing world

Above all the energy market needs investment and stability. To achieve this, the most important thing is to successfully deliver Electricity Market Reform. A swift and thorough conclusion to the Competition and Markets Authority’s review can build consumer confidence, but to do so, politicians must not intervene so that the process can conclude unhindered. A renewed push on energy efficiency in the next parliament should be seen as critical infrastructure investment as it’s crucial to meeting both energy security and affordability goals.13

How we get Britain building in the next parliament and beyond:

Getting Britain building to meet our infrastructure needs

Keeping the lights on and tackling the challenges of climate change won’t be simple either. £100bn of private sector investment is needed by 2020 to diversify the sources of power generation and secure them for the future. The low margins between the extra capacity power stations need compared with expected demand must be addressed, as well as how to keep costs manageable and rebuild trust in the market.

Securing our global future to capitalise on the changing world We need to renew our role as a trading nation and reinforce our position on the global stage by making the most of the opportunities that come from a rapidly-changing and increasingly interconnected world.

In today’s world we are increasingly inter-connected: both at home and with people across the globe.

Everyday activities like visiting the supermarket, sending money to family overseas, streaming music online or – for a business – hiring the best person for the job, depend on people and information being able to cross borders easily and quickly.

Future economic success and influence in the global debates that matter will come from seizing the chances afforded by our fast-changing world, not pretending it’s possible to retreat from them. We need to engage with the world as it is, not as it might have been in years past.

Europe is not perfect but the answer to the questions posed by the march of emerging markets and slowing growth in the developed world is not shutting ourselves off but boosting Europe’s competitiveness.

The EU needs to do more of what it does well and fewer of the things it does badly that often cause

Future economic success and influence in the global debates that matter will come from seizing the chances afforded by our fast-changing world, not pretending it’s possible to retreat from them.

The EU supports UK business and the British people to realise our global ambitions – 8 in 10 CBI members would vote to stay in the EU in a referendum.15 Our membership is an important part of a future that is focused on connecting us to the world; so it deserves a quality of debate to match. As part of the Single Market of 500 million consumers, UK businesses can operate with a single set of rules and without barriers which would raise prices or slow delivery. And it provides the first export destination for most of our firms to cut their teeth before tackling markets further afield.

headlines and headaches. Adopting the principle of ‘Europe where necessary, national where possible’ should be the default. In practice this means focusing on what will make a difference to growth – like trade deals and progressing the single markets – alongside efforts to restore the principle of subsidiarity and keep the budget and bureaucracy in check.16

Our strength on the world stage can only be secured if our markets are open to investment and individuals from around the world. In a global marketplace, the signals we send abroad are hugely important, so things like the top rate of income tax and our immigration system really matter. This also applies to the City of London, our world-leading financial hub which is successful precisely because it is open to the world. To maintain this position, domestic regulation must not put the City at a disadvantage to its competitors, and we must use our influence in Europe to steer the right course through increasing Eurozone integration.

Debates about sovereignty and citizenship are live in Europe and here at home. The debate around Scotland’s future brings this into sharp focus, but poses broader questions which impact everyone in the UK. Devolution settlements across the UK will continue to be debated and are likely to develop over time.

Any future proposals for the devolution of further powers should be assessed according to key principles which include whether they would support enterprise and job creation – without hampering the ease of doing business – across all the UK’s regions and nations.

ake the case for the UK staying in a reformed EU so M we maintain our access to the world’s largest single market, developing alliances with other member states to achieve reforms that encourage enterprise and identify where the EU should do less et the EU to work for all member states by not G regulating on things better done at national level and safeguarding the interests of non-Eurozone members in the Single Market rioritise progressing the EU single market in digital P and services as part of the UK’s efforts to make Europe more outward looking and competitive 17 Renew our role as a trading nation by helping get the Transatlantic Trade and Investment Partnership over the line, while ensuring EU trade talks with Japan and key emerging markets also deliver results Equip our businesses for global success by playing to our strengths here at home, boosting competitiveness in all UK nations while maintaining the integrity of the UK’s internal market

Making growth work for everyone to raise living standards

Maximising UK influence in the EU must be a central pillar of our foreign policy if we are to reform Europe for the better. Being active and influential can help deliver policy outcomes and steer the policies in Europe that can support UK business ambitions.

Engagement in order to influence is essential.

How we secure our global future in the next parliament and beyond:

Securing our global future to capitalise on the changing world

As an EU member we get trade deals more likely to unlock new market opportunities much more easily than if we tried to make it on our own. Closing the deal on the Transatlantic Trade and Investment Partnership (TTIP) could be worth at least £10bn a year to the UK economy, and alongside this we need to ensure talks with Japan and key emerging markets deliver results. Making progress on the digital single market as well a smoother market for services would unlock untapped potential.

8 in 10

CBI members – including 77% of SMEs – said they would vote for the UK to remain a member of the EU in a referendum

500m £10bn customers in the EU Single Market

potential annual boost to UK GDP if the Transatlantic Trade and Investment Partnership is signed

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Making growth work for everyone to raise living standards We need to give everyone opportunities to participate fully in a prosperous economy and society, so we make the most of the UK’s potential and the benefits of economic growth are widely-shared.

It can be easy to think about jobs in numbers, like employment, hours worked, tax, National Insurance, and wages in our pockets. But in reality it is all about people and the quality of their daily lives. Everyone has a contribution to make to build a more prosperous country, and this contribution should be supported and rewarded.

Getting people into work is important, but not enough on its own. Who does well in life says a lot about a society – success is still too much determined by a person’s background. More can be done to open up opportunities for all to aspire, achieve, improve their prospects and ultimately those of the economy as a whole.18 It all begins with education. Gaps in attainment open up at an early stage so by the age of seven many, particularly from low-income families, are already falling behind. Two out of three children from low income families who are behind their classmates at age seven will not go on to achieve five good GCSEs. Our education system must set clear goals on academic achievement as well as the attitudes and attributes that will set young people on the right track – with schools judged accordingly.19 Building up the skills of young people and adults in need of retraining will position them well in the jobs market as well as tackling the skills shortages in industry that hold our economy back – 28% of employers are reporting shortages today and 58% are not confident of meeting future needs.20 Part of the solution lies in increasing access to, and standing of, vocational education. It must not be seen as a second rate option, when in fact it is a passport to highly skilled and well-paid work.21 Every young person should be on a path to either a high status vocational or academic qualification at 18. Individual learning plans at 14-18, reforming the exam structure with vocational A-levels and shifting away from GCSEs at 16 will make this happen. Progress on apprenticeships should be built on.

More can be done to open up opportunities for all to aspire, achieve and improve their prospects.

Skilled immigration adds value to our economy and directly supports jobs and investment in the UK, whether by giving business access to individuals who can bridge skills gaps temporarily or by allowing the UK to operate as a global hub. The next government should avoid onesize-fits-all policies that send the wrong message about the UK – like the net migration target – whilst ensuring high levels of service on visas and work permits.

Making the most of our people also means tackling the gender gap which has for too long blighted many workplaces, especially in science, technology, engineering and maths (STEM) sectors. We’re losing out on the contribution women can make because too many girls at school, college or in the workplace are writing off – or are written off from – particular jobs for no good reason.22 Addressing the shameful state of careers provision in English schools is essential to fix this. Choices should not be closed off to anyone, and the full facts about earnings and opportunities need to be available to all, especially women. While the full-time pay gap for women under 40 is now close to zero, the overall gap is proving more stubborn, stuck at 19.7% in 2013.23 So setting a target for reducing the gender pay gap will help show we’re serious about getting the right balance of representation and recognition across businesses, from top to bottom.24

Debates over current wage growth rightly reflect the pressure people are feeling, but this is an aspect of our slow economic recovery and wages should gradually rebound. Politicisation of the debate on pay will do vastly more harm than good. The National Minimum Wage has been a success in large part because the Low Pay Commission has been able to get on with its job without political meddling. Politicising this process risks higher unemployment, loss of business support, and creating a less-effective policy on protecting the incomes of lower-waged workers.

How we make growth work for everyone in the next parliament and beyond: Re-shape our education system so it encourages development of the behaviours and attitudes that prepare rounded and grounded young people for success beyond the school gates, not just a focus on exam results End the presumption that the same education will suit all young people by treating academic and vocational routes equally, starting with the creation of a vocational A-level and a shift away from GCSEs Scrap the unhelpful net migration target, be prepared to raise the tier 2 skilled visa cap and deliver high service levels on visas and work permits so that skilled immigration can continue to add value to our economy Set a target for reducing the gender pay gap by 2020 to show we’re serious about tackling years of inequality in the workplace ut improving productivity – the real route to boosting P pay and opportunity – at the centre of a long-term labour market strategy 26 Don’t meddle with labour market flexibility, which would risk pricing young people and the low-skilled out of opportunities

Making growth work for everyone to raise living standards

The resilience of our labour market helped keep people in jobs during the economic downturn. While wages and hours have taken the strain in recent tough times, the UK has a better record on pay and jobs when compared to our major competitors.25 Our flexible labour market is a strength to be built on, not a weakness, and the next government would be ill-advised to shackle it with new regulation which is likely to undermine both job creation and pay growth.

The focus should be on improving productivity, the real route to boosting pay and opportunity.

2 in 3 58% 19.7%

children from low income families who are behind their classmates at age seven will not go on to achieve five good GCSEs

of employers are not confident about meeting their skills needs in future and 28% of employers currently report skills shortages

the overall pay gap between working men and women in 2013

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Delivering prosperity for Britain Identifying where we want to get to as a country and the ideas that will help us get there are the vital first steps towards achieving a prosperous future for Britain.

But we need an equal focus on turning these ideas into reality.

Governments of every colour come into office with ambition, but many in the past have struggled with the realities of making change happen. Setting out policies in manifestos is one thing but successfully implementing them on the ground is another. As delivery is what will make the difference, politicians must attach as much importance to thinking through how their policies will be implemented as to the development of the policies themselves.

More information about our latest ideas and the online version of this document is available at www.cbi.org.uk/election2015

A clear plan and timetable for how the next government will go about implementing its policies and when they will be achieved is essential. This will help businesses, policymakers and the public understand and engage with the next government’s policy programme. It should also give a sense of priorities, focusing those in government and Whitehall on the most-pressing policy areas. With an agreed plan and set of priorities, we must ensure that the machinery of government can deliver it, placing people with the right capabilities and commercial focus in roles to oversee it.

Business wants to work with politicians of all parties ahead of the election to help turn these challenges and choices into concrete change. In support of this, the CBI will be bringing forward further ideas in the coming months, including setting out the business community’s priorities for the first 100 days of the next parliament in spring 2015.

Politicians must attach as much importance to thinking through how their policies will be implemented as to the development of the policies themselves.

5 F uture champions: unlocking growth in the UK’s medium-sized businesses, CBI, 2011. The CBI has championed the role of mediumsized businesses and provides support through our network of M-Clubs. For the detail on the CBI’s equity finance proposals read Slice of the Pie: tackling the under-utilisation of equity finance, CBI, 2014 6 Our global future, CBI, 2013 7 Invested interest, CBI, 2014 8 https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/293635/bis-14-p188-innovation-report-2014revised.pdf 9 The CBI will be publishing new research on the next stage for the UK’s Industrial Strategy in October 2014. For more information on CBI’s work on industrial strategy go to www.cbi.org.uk/campaigns/ industrial-strategy 10 New CBI research on financial services will be published in Q1 2015. For more information on the CBI’s financial services work go to www.cbi.org.uk/business-issues/financial-services/ 11 The CBI conducted polling on the public perceptions of infrastructure in our report Building trust, CBI, 2014 12 Housing Britain: building new homes for growth, CBI, 2014 13 The CBI will be publishing proposals on how we meet our energy and climate challenge aims, in the next parliament in September 2014. For more information go to www.cbi.org.uk/business-issues/ energy-and-climate-change

18 The CBI has published research on the UK labour market, who does well and who risks being left behind in Making Britain work for everyone, 2014 19 The CBI’s reform agenda for the schools system is set out in First Steps, 2012, with a stocktake of the government’s progress towards improvements in First Steps: end of year report, 2013 20 Gateway to growth: CBI/Pearson education and skills survey, 2014 21 The CBI’s proposals for increasing routes into higher skills are contained in Tomorrow’s Growth, 2013 22 The CBI’s ideas for increasing the number of STEM students and closing the gender gap in STEM careers are set out in Engineering the future, 2014 23 Annual Survey of Hours and Earnings, based on median gross hourly earnings (excluding overtime) for all employees (full-time and part-time) in 2012, published November 2013.

24 The CBI paper Building on progress, 2014, sets out priorities for business and government to improve diversity in the workplace 25 Making Britain work for everyone, 2014 26 The CBI will be publishing research and proposals on improve progression and productivity in November 2014. For more information on this work go to www.cbi.org.uk/campaigns/ ensuring-growth-makes-a-difference-for-everyone/

Making growth work for everyone to raise living standards

4 The next regeneration: unlocking local growth, CBI, 2013

17 The CBI will be publishing work on how the EU can make progress on the Single Markets in digital and services in Q4 2014.

Securing our global future to capitalise on the changing world

3 The CBI is publishing a new report on how our public services will be fit for the 21st Century in October 2014. For more information on the CBI’s work on public services go to www.cbi.org.uk/ publicservices

16 The CBI published Our global future in November 2013, examining what Britain’s global role should be and the relationship which British business wants with the European Union.

Getting Britain building to meet our infrastructure needs

2 T he future of public services, Centre for Economic and Business Research (CEBR), April 2014

15 CBI/YouGov survey, 2013, http://www.cbi.org.uk/media-centre/ press-releases/2013/09/8-out-of-10-firms-say-uk-must-stay-ineu-cbi-yougov-survey/

Forging our future economy to unleash business potential

1 The Office for Budget Responsibility project that national debt’s share of GDP will fall from a peak of 79% of GDP in 2015-16 to just over 53% of GDP in the mid-2030s, before rising to 84% of GDP in 2063-64. (OBR: Fiscal Sustainability Report, July 2014)

Shaping the state to deliver growth now and for the future

Where to go to find out more

14 For more on the need for UK hub capacity read the CBI’s position paper Boosting capacity where it matters most – the nub is the hub, CBI, 2014

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For further information on this report, or for a copy in large text format contact: Pippa Morgan Senior political and campaigns adviser T: +44 (0)20 7395 8168 E: pippa.morgan@cbi.org.uk

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