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Chancellor addresses CBI

UK needs to ‘manage migration’ and balance pay

 

Philip Hammond: ‘need for shared understanding’


Chancellor Philip Hammond tonight said he wanted a Brexit deal that would provide for free trade and allow British businesses and public services to hire the migrant labour they needed.

In a further indication that he was pushing for a soft Brexit he told business leaders at a CBI dinner in London that he wanted a  “comprehensive free trade deal in goods and services” but hinted at conditions on the movement of people.

His comments were welcomed by the CBI which urged the government to continue working with business to achieve the right solution to the Brexit talks.

He told the organisation’s Presidents’ dinner that a deal needed a customs arrangement “that minimises friction at the border”.

It would be part of a future relationship that “acknowledges our need to manage migration…but allows British businesses and public services to continue to recruit the labour they need to deliver both economic growth and our social objectives.”

His reference to Britain being able to “manage” migration fell short of full and free movement and hinted at limits on entry.

He said a deal should also acknowledge the “legitimate concerns” across the EU about regulation and supervision of cross-border financial markets and commits to agreeing a cooperative supervisory structure to address those concerns, based on international best practice.

“We seek a shared understanding on what the future relationship looks like as early as possible and an agreement with our EU partners that it will be in our mutual interest that there will be a smooth and orderly path to the new arrangements, rather than a disruptive and dangerous cliff edge.”

Mr Hammond also spoke of the need to boost productivity. Government, he said, must invest in skills and infrastructure and ensure that incentives for private investment in productivity enhancement are right.

He urged businesses to invest in raising the productivity of their employees and in developing the innovations that will drive wider productivity gain across the economy.

Josh Hardie, CBI deputy director-general, said: “Businesses will welcome the Chancellor’s commitment to sound public finances at home and a smooth exit from the EU that will support our economy in this time of change. 

“Companies will want to see transitional arrangements that prioritise protection of the free-flow of trade across borders agreed as soon as possible, and will also want to understand more about how continuity for companies can be secured until long-term arrangements can be established.

“A new migration system allowing firms to access the skills and labour they need to succeed globally is of the utmost importance as the UK seeks to renew its trading relationships around the world, and the Chancellor’s commitment to this will be warmly received. 

“We hope that companies up and down the country, of every size and every sector, will heed the Chancellor’s call to continue playing their part in promoting free trade, open markets and a business environment that will drive productivity and raise living standards for people living in all parts of the UK. 

“Now more than ever it’s critical that the whole of Government works in partnership with business to make a success of Brexit – that means putting economics before politics to safeguard our economy and prosperity for future generations.

Pay cap – striking a balance

Mr Hammond said the government’s policy on public sector pay “has always been designed to strike the right balance between being fair to our public servants, and fair to those who pay for them.”

He said: “That approach has not changed; and we continually assess that balance. But we do, of course, recognise that the British people are weary after seven years hard slog repairing the damage of the Great Recession.

“Once again, some are questioning whether we should abandon the economic plan that has brought us so far and take a different path.

“A path of higher taxes on business and wealth creators, higher spending, nationalisation, and higher borrowing.”

“We must retain a credible path for the public finances – one that will underpin a strong and growing economy.

“Because without strong economic growth, we cannot support the improvements to public services that people want to see.

“That does not mean we can’t have a debate in Britain about the level of funding of public services. But it does mean that it has to be a grown-up debate where we acknowledge that borrowing to fund consumption is merely passing the bill to the next generation and reject the fallacy that the burden of additional taxation can always fall on someone else.

“Then, hopefully, we can build a consensus that the only sustainable solution is to increase the trend rate of growth.”

His comments came after Scotland’s finance secretary called on the UK government to end the public sector pay cap.

Derek Mackay announced last week the 1% pay cap for public sector workers in Scotland will end.

Mr Mackay said: “In Scotland the pay cap will come to an end and ahead of the next budget we will discuss a new approach to give public sector workers across Scotland a new pay deal. 

“However some public sector workers in Scotland are covered by UK-wide pay policies and we want to see the cap come to an end for them as well.” 

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