An increasingly bitter leadership contest will decide the UK's next prime minister, but what are the implications for the world of procurement and supply?
The country faces a number of challenges including the cost of living crisis and net zero, so the next leader of the Conservative Party must ensure supply chains, inflation and sustainability are at the heart of their agenda, according to business leaders.
Rishi Sunak and Liz Truss have taken opposing stances on the economy, with Truss promising large tax cuts and Sunak offering a more cautious approach, but experts agree on the need to tackle inflation and the necessity of developing a long-term industrial strategy.
Almost 160,000 Conservative Party members will vote this month to choose the next leader, with the winner announced on 5 September, when MPs return from the summer recess.
Simon Geale, executive vice president of procurement at procurement consultancy firm Proxima said: “Rishi Sunak and Liz Truss have outlined opposing approaches to the economy, tackling inflation and unblocking the UK’s supply chains.
“Rishi Sunak’s perspective is that we need to maintain fiscal discipline and that the UK will naturally ride out these tricky conditions, while Liz Truss’s viewpoint is that a short-term stimulus in the form of tax cuts will provide the UK with much-needed breathing room and that issues around higher spending levels can be addressed later down the line.”
He said short term priorities for the new leader should mitigate the inflationary impact of situations like the impact of the Russia-Ukraine War, while long-term priorities should include understanding what supply chains look like in a “de-globalised and more purposeful world”.
Geale further said: “There is no question that striking new trade deals will be at the heart of improving the UK’s international commerce and that, over the long-term, this will help to provide the stability and focus for industry, and supply chain investment.”
However, he warned the policies of the next prime minister are “not going to be a silver bullet” for supply chains and procurement teams.
“Businesses are still going to need to work hard to improve their engagement across the value chain, explore new technologies, innovate ways of working and exploit the power of the ‘external enterprise’. These are complex issues and government policy and stimulus will not replace the need for business leaders to place their bets, make their plans and navigate their path. Informed spending will be key.”
Stephen Phipson, chief executive of manufacturing trade body Make UK, said Johnson’s successor must work in partnership with industry to develop a long term economic vision which has an “all-encompassing” industrial strategy.
“This is essential if we are to boost growth, drive innovation and create the high quality, highly skilled jobs the economy urgently needs,” he said.
The Federation of Small Businesses national chair Martin McTague warned “time is of the essence” to support businesses and tackle supply chain inflation. “Unless policymakers act fast, history is set to repeat itself,” he said.
“Firms desperately need help with the charges that hit them regardless of profitability: business rates, national insurance, utilities, fuel and those linked to supply chain disruption.
“We’re looking to prime ministerial candidates for unequivocally pro-business, pro-growth commitments. There is still time to act, but time is of the essence.”
Tony Danker, director-general at the Confederation of British Industry told the Financial Times the new prime minister would represent a “reset moment” between business and government following years of Brexit tensions.
Danker said: “We can’t afford old arguments about Brexit or immigration or green [issues]. We need a radical plan for growth, informed by companies. We have had a lost decade, and there is a risk of another lost decade.”
He further urged Sunak and Truss to put sustainability at the heart of their business strategy, and said recognising green opportunities was not a “woke” issue.
“The candidates need to be careful. I understand the politics but being a green sceptic now is eroding the platform you will have as prime minister for what we think is the biggest economic and business opportunity for the UK.”
Truss has said she supports the UK’s target to become net zero by 2050 but added: “We need to reach net zero in a way that doesn’t harm businesses or consumers.”
Sunak has similarly committed to net zero targets by overseeing an expansion of offshore wind farms, and also promises to make the UK energy self-sufficient by 2045.
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