24 January 2025

Britain needs more than words to get back to growth

By

What a week. Donald Trump has returned to the White House promising a new golden age for America, and issued a blizzard of executive orders that are shaking both America’s domestic order and the international system. In Britain, meanwhile, Rachel Reeves and Keir Starmer have leaned into their pro-growth rhetoric: promising to expand Heathrow, tackle frivolous judicial reviews and go easier on non-doms and high-skilled migrants. Next week, Rachel Reeves is set to make a landmark speech on Labour’s growth agenda. 

Is this a sign that this country is about to unleash its potential and shake off the blockers that have held it back for decades?

Not so fast. It’s welcome to hear Labour making the right noises. But in politics, talk is cheap, and results are much, much harder. Just look at Trump’s experience in his first term, where he turned up in Washington without the insider knowledge to take on the status quo and struggled to navigate the swamp, much less drain it.

Whether or not you welcome Trump’s policy agenda, it is already clear that things are very different this time around. His executive orders on energy, for instance, are detailed and specific, unpicking, among much else, a disastrous order that has been in place since the Carter administration. This is not just words but action: the environmental reviews that have been hobbling government-backed development in the US will never be the same.

As Dr Jake Scott pointed out in CapX this week, Britain’s system of parliamentary supremacy means that such decisive action is also possible in this country. Yet there is little sign that Starmer’s Government has the stomach to take advantage of the powers it possesses.

Between the camps of words and action, Starmer and Reeves prefer saying the right things. All too often that is accompanied by actions that achieve the opposite. They talk up the case for investment, while squeezing firms with an increase in employers’ National Insurance Contributions. They celebrate our AI industry, but have denied it the cheap energy it needs by empowering Ed Miliband’s sprint to decarbonise the grid.

As Tim Worstall writes, the only way to keep state bureaucracy in check is to constantly prune it back. Empty declarations of intent just allow the monster to grow.

So it is, among much else, with judicial reviews, now in Keir Starmer’s sights. Plenty of good ideas about how to tackle these have been proposed over the years, not least by my colleagues at the Centre for Policy Studies. The Government is taking forward the Banner Review recommendations from last year, which is welcome. But this is not the first government to express its keenness to act on the problem of judicial reviews. Back in 2023, Jonathan Jones wrote for Linklaters on the paradox that ‘a government determined to restrict judicial review ended up expanding it’. Until we see a change in that ever-expanding trajectory, tough words from Starmer mean little.

Likewise, on past experience, we should assume a Government determined to expand Heathrow is more likely to end up perpetuating the status quo. Crossing the chasm between words and action will mean facing down powerful adversaries, not least Sadiq Khan, Ed Miliband and the owner of British Airways.

Last week, Starmer backed Matt Clifford’s Artificial Intelligence strategy, which has the potential to see Britain play a leadership role in the coming AI revolution. But when it comes to hard decisions, will Starmer really push through the changes that are needed? Not on current evidence.

The missing piece at the centre of the Government’s commitment to AI is a policy of energy abundance. This week, the man Ed Miliband appointed as head of the UK’s mission for clean power told the Lords’ environment and science committees that this wasn’t a problem, as he thought AI’s power demands would go down due to efficiencies (despite the well-known economic paradox that efficiencies drive increased use).

In Trump’s America, they aren’t just talking about their quest for AI supremacy. This week the OpenAI Stargate project announced a $500 billion investment plan, and Trump’s executive orders unshackling energy production are designed to work hand-in-hand with that ambition.

Trump is often dismissed as an empty showman, but like it or not, he has already shown that he is capable of taking unprecedented action. In the UK, our political class has spent years making promises it had no ability to keep. A rhetorically pro-growth Labour government that in practice drives wealth-creators overseas and crushes business with red tape is not what Britain needs. But nor was a Conservative Party that talked about controlled immigration and tax cuts while delivering the opposite.

Britain has so much potential. The policies that would unlock growth are no mystery. What is missing are politicians willing –and able – to act rather than to talk about acting. Until that changes, our stagnation will continue.

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Marc Sidwell is the editor of CapX.