Business gives lukewarm verdict on Conservative manifesto

Business has delivered a lukewarm verdict on the Conservative election manifesto, praising the commitment to low taxes, infrastructure investment and economic prosperity but criticising the failure to address concerns over immigration and Europe.

"Business wants to see a managed migration policy that makes sure we are open to the world while also controlling our borders," said John Cridland, director-general of the Confederation of British Industry. "A one size fits all, net migration target is not an effective tool to achieve this."

Some of the party's flagship policy ideas - such as extending the "right-to-buy" house purchase scheme to 1.3m people living in housing association properties - also drew criticism from Britain's biggest employers' federation.

"We desperately need bold action to get on with building 240,000 homes a year by 2025 to meet demand," Mr Cridland said. "Extending the Right to Buy scheme doesn't solve the problem of boosting the supply of affordable homes."

Terry Scuoler, head of the EEF which represents industrial companies, said that while there were "some very positive aspects for business", skill shortage problems and uncertainty about an in-out referendum on EU membership "would temper our view".

The decision to maintain the cap on skilled non-EU workers and further reforms on student visas would "cause great frustration among employers", he said.

British business has been increasingly concerned by the government's crackdown on immigration, which is exacerbating already severe skills and labour shortages in industry and agriculture.

There is also widespread anxiety about uncertainty for business investment sparked by the Conservative promise to hold a referendum on EU membership by 2017 if the party wins a majority in May's general election.

Mike Hawes, chief executive of the Society of Motor Manufacturers, said the UK automotive industry welcomed the manifesto's aim of delivering a competitive economy. But competitiveness for his sector depended in part on easy access to the European market, he said. "We operate within a global automotive market," he said. "Being part of Europe is fundamental to that."

Several business people said that while there was deep concern about the Labour party's plans to intervene in the labour and energy markets, the Conservative manifesto also displayed a worrying tendency to what one person described as "populist" intervention. The promise to freeze rail fares was little different from the Labour party's demand that energy prices be frozen until 2017.

"Political intervention in regulated markets, such as rail fares, could have negative impacts on investment," said Adam Marshall, executive director of the British Chambers of Commerce.

In assessing the difference between the Labour and Conservative positions ahead of the general election, business people said there was a degree of common ground on big issues such as infrastructure and fiscal prudence.

Both also created "some uncertainty: Conservatives on the EU referendum and Labour on its unfunded fiscal plans," said one executive from a big UK industrial company.

A defence industry insider said that even on defence issues there was little difference, though the Conservatives had given more detail. The key for the industry was how scarce resources would be allocated.

It was encouraging, he added, that the Labour party had highlighted the importance of the defence industry for the nation's security, given that in the 2010 manifesto the sector had not been mentioned. "That recognition is vital," he said.

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The Conservative manifesto only pledged to respond to the commission's advice on whether Heathrow or Gatwick should have a new runway, rather than to enact its recommendation.

Companies fear this will mean further delay to addressing the severe congestion that British business argues is holding back trade.

"Neither of the major parties will give business the comfort they want that airport expansion will actually be delivered," said Mr Marshall of the BCC.

"Business wants unequivocal commitment to expansion which is critical for export prospects and international trade."

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