Yesterday our Prime Minister wrote in the newspaper of record that he will ‘kick down the barriers to building, clear out the regulatory weeds and allow a new era of British growth to bloom’. The Chancellor of the Exchequer later stood in front of a TV camera and promised ‘to grow the supply-side of our economy’ and recognise ‘that first and foremost it is businesses, investors and entrepreneurs who drive economic growth’. Just rejoice at that news.
Some serious ground was made up in the battle against the NIMBYs yesterday. The Government displayed not only a strong understanding of one of the biggest brakes on our economic growth, but a plan to tackle it. We should not count our chickens before they have hatched, given the fate of previous attempts to build the third runway at Heathrow or link up Oxford and Cambridge. But for the same reason, we should give credit both to the politicians who have decided to tackle the NIMBYs head on, and to those who created the intellectual space for them to do so.
However, there is always a however. Not only should we not claim victory just yet – the knives are already being sharpened in the NIMBY fightback – we should also zoom out. The Government’s rhetoric on growth may help them overcome resistance to building key national infrastructure, but it cuts directly against much of what it is doing elsewhere.
Rachel Reeves and Keir Starmer have been pointing out at every opportunity that growth is their top priority, and if you listened to yesterday’s speech in a vacuum you would be forgiven for believing them. But putting aside the fact that this focus on growth through supply-side reform seems to have come about more through necessity than fundamental belief, it doesn’t square with their plans in other arenas.
Take the Employment Rights Bill. The Bill does a number of things to strengthen employee rights, limit employer flexibility and increase the power of the trade unions who helped to write it – to the detriment of a free and growing economy. They range from banning zero-hours contracts to burdensome new obligations on businesses, not to mention a greater role, protections and promotion for the unions themselves. Rather than allowing employer and employee to enter into mutually beneficial agreements as part of a dynamic economy, this Bill gives the state a role not just in setting the base guidelines for these agreements but dictating much of the terms. The cost will be borne by businesses, and felt by employees.
In isolation, one may argue this Bill is not enough to undermine the progress made elsewhere. Perhaps businesses need infrastructure and the investment that follows more than they need flexible employment law. They may take the trade-off. But then we zoom out again, and the Budget comes into view. It will soon be just as expensive to hire an eighteen-year-old just out of school as it will be to hire a twenty-two-year-old just out of university, and both their wage bills will be higher thanks to the minimum wage changes announced in October.
Even that, the Government might argue, is outweighed by the Oxford-Cambridge Arc, and the new Heathrow runway, and a cut in damaging environmental regulations. But then we zoom out once again. It’s not just the minimum wage changes that the Government announced in October but a raise to Employer National Insurance Contributions too. The Government is purposefully and directly making it more expensive to hire new people. According to the Centre for Policy Studies, £2,367 more expensive. When you combine this with the employment rights changes, suddenly the picture is not looking so rosy for business.
The business world operates differently to the political world. Businesses care more about actions than they do about words. And though the words coming from the mouths and pens of the Government are indeed encouraging, their actions are telling a different story. We just need to look at the behaviour of businesses to see that it is Labour’s actions that have been cutting through.
On one hand, the Prime Minister dictates that all government policy will have to be assessed for its impact on growth and anything that hinders growth will be deprioritised. In the next breath, Starmer and Reeves recommit to the changes at the Budget and to their plans on workers’ rights. That’s not even to mention the race to Net Zero which is showing no signs of slowing, despite the impact of increased energy costs on business and the economy’s ability to grow.
The Government has decided that growth is the number one goal. They’ve declared it like a new year’s resolution. They’re on a new diet and they’re not going to let anyone, or anything knock them off course. But when every other day is a cheat day, voters would be forgiven for questioning whether their heart is really in it.
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