Brown's olive branch to business
GORDON Brown has pledged to slash red tape by a third and to throw out European Union plans for a 48-hour working week in an urgent bid to prevent Labour's relationship with business turning sour.
In his first speech since his reappointment as Chancellor of the Exchequer, Brown admitted that the Government had been guilty of over-regulation and promised that it would apply a 'more humble' touch in the future.
It followed a lukewarm reception by business leaders to the measures laid out in the Queen's Speech and comes amid growing fears that the economy may stumble in Labour's third term.
Even as Brown spoke at the CBI's annual dinner last night, Bank of England Governor Mervyn King delivered a speech elsewhere in London that stoked fears of stagflation and warned of possible shocks to the economic system in the coming years.
The Queen's Speech yesterday confirmed that Brown's Budget promises on measuring and cutting back on regulation would be introduced as legislation. But fearing that this will not be enough to persuade businesses, Brown also said that the way authorities oversee companies would be overhauled.
All firms have to endure form-filling and inspections, but Brown said in future authorities would impose full regulations only on businesses with blemished or unproven records. He said this 'innocent until proven guilty' method would reduce inspections and form-filling.
Brown added that he would resist the opt-out being removed to the 48-hour working week, but did not rule out raising business taxes over the next year, as many fear he will.
Businesses remain sceptical and warned that a number of new laws previewed in the Queen's Speech would be detrimental to them. While it welcomed the forthcoming pensions bills, the British Chambers of Commerce said it was concerned about plans to increase flexible working rights and extend paid maternity leave to nine months.
Businesses are worried that economic conditions are starting to worsen - a particular fear being volatile inflation. King said that inflation could jump above 3% or fall below 1% in the coming years. He said it was surprising that the monetary policy committee had not strayed far from its 2% inflation target in recent years.
Economists have warned we may soon suffer mild stagflation, when prices rise but growth and employment prospects deteriorate. The inflation rate remained at a seven-year high of 1.9% last month, the Office for National Statistics said.
It said rising utilities charges and higher oil prices had kept it high, although food and furniture prices had a downward effect.
