Business leaders have voiced concern over Liz Truss’s plans for a bonfire of Brussels regulations, after she said that slashing EU red tape would be “a priority” in her plan to tackle the expected recession.
Speaking ahead of a business round-table on Friday, the frontrunner to succeed Boris Johnson announced plans for a working group of industry leaders to help draw up new UK-only regulations in time for a “sunset deadline” of 2023 for the abolition of EU-derived laws which she believes are holding back the economy.
Ms Truss said the UK had not moved fast enough to “take full advantage of Brexit”. As prime minister, she would “make it a priority to slash EU red tape” in order to boost economic growth.
But the Institute of Directors made clear that diverging from EU rules was not a demand of companies facing a cost of living crisis which the Bank of England believes could result in inflation above 13 per cent and five consecutive quarters of negative growth.
IOD director of policy and governance Roger Barker said: “The scrapping of laws based purely on the fact that they derive from the EU is not a priority for business.
“UK business needs law and regulation which is effective and proportionate. Regulatory reform should not be driven by the political motive of seeking to justify the UK’s exit from the EU.”
Ms Truss said that reform of EU finance sector controls known as Solvency II and MiFID would be a crucial part of supply-side reforms which she hopes will attract new investment to the UK.
She has promised to create new low-regulation investment zones and “full-fat freeports” across the UK to encourage business activity.
And she has sought to woo the business community by promising to reverse Mr Sunak’s 1.25 per cent hike in national insurance and scrap his plans to increase corporation tax from 19 to 25 per cent.
“As prime minister, the British people can trust me to unleash investment and boost economic growth right across the country,” she said.
“For too long, we have allowed those who create wealth and high-quality jobs – dynamic businesses and hard-working people – to be weighed down by onerous EU bureaucracy.
“We haven’t moved fast enough to take full advantage of Brexit. I’ll make it a priority to slash EU red tape and ensure we have the right tools in place to attract investment and deliver growth.
“This is just one way we’ll tackle the cost of living crisis and put money back into the pockets of hard-working people.
“The way to tackle the cost of living crisis is by growing the economy and we cannot tax our way to growth. My economic plan will get our economy moving by reforming the supply side, getting EU regulation off our statute books, and cutting taxes.”
Dr Barker said: “Measures which reduce the burden of business taxation would be welcomed by the business community. The priority should be to reverse April’s hike in national insurance, which imposed higher costs on business at precisely the wrong time.”
Meanwhile, Mr Sunak unveiled plans to boost house-building by making it less attractive for developers to build up “land banks”.
The former chancellor said he would require developers to build on land which already has planning permission before being granted more permissions in the same area.
Councils would be given enhanced compulsory purchase order powers to buy back land at a discount if it is not built on within an agreed timeframe, and a levy would be imposed where permissions are not used within a certain period.
The measures are designed to make the Conservatives more attractive to a younger generation of voters unable to buy their own homes, while sticking to his promise to end the green belt development opposed by many Tory members.