18 June 2023

Weekly Briefing: Naysayer nation


Is Britain an opportunity society?

It’s a broad question that encompasses education, social mobility, skills, entrepreneurship and, crucially, risk-taking. On the latter theme, I was particularly struck by a panel at our annual Margaret Thatcher Conference this week, on the theme of the ‘opportunity economy’ (you can watch the discussion here).

According to Tracy Blackwell of the Pensions Insurance Corporation – whose company scours the country looking for investment opportunities – both institutions and individuals have become ‘incredibly risk-averse’. Blackwell puts that down not to Covid or Brexit, but something longer term:

‘The financial crisis left very big scars on this country, not just in terms of regulation but also in terms of people’s psyche – and that is something that needs to change.’

Writing for CapX this week, veteran market strategist Bill Blain echoed that sentiment, saying: ‘The inbuilt anti-risk culture that’s taken hold since the Great Financial Crash means it’s become easy to say no’. Add in the decision of chipmaker Arm and Irish construction firm CRH not to list in London, plus the collapse of the WE Soda float, and the mood music around the Square Mile feels decidedly melancholic.

It’s not news that the sheen has come off Britain’s financial crown jewels. In February of this year the City of London Corporation announced a sweeping review of regulation, while the Government announced its so-called ‘Edinburgh reforms’ in December – an attempt to revamp financial regulation that some have called ‘Big Bang 2.0’. The struggle the Government faces is neatly set out in today’s Sunday Telegraph, which notes that Jeremy Hunt is set for a battle with the Financial Conduct Authority over his plans to change rules on short-selling.

The gloomy appraisal of the City’s risk appetite, combined with a predictable regulatory tussle between politicians and regulators feels typical of a country where saying ‘No’ seems to be the default response.

Sometimes this takes the form of pettifogging rules: for example, Natural England producing rules on nutrient neutrality that block thousands of houses (something the Government once professed to support); or public health quangos producing progressively barmier suggestions for taxing and controlling our food and drink intake, even while the PM and Chancellor promise to zero in on the cost of living. (The Government postponing the ‘buy-one-get-one-free’ ban this week was a rare bright spot).

It would be churlish to blame this all on regulators though. Politicians themselves have proven adept at stalling in the face of any perceived difficulty.

Just look at HS2, a project that took more than a decade to get shovels in the ground and has seen what should have been a high-speed network reduced to a few disjointed stubs. And that’s all to build a bit of infrastructure most of our continental peers had in place decades ago.

Or take onshore wind. As the former Levelling Up Secretary Simon Clarke noted in CapX this week, the Government has relaxed the de facto ban on new turbines, but done very little to actually implement them. Indeed, last year war-torn Ukraine managed to build more turbines than the UK.

Or our old favourite, housing, where local politicians wilt at the first sign of a well-organised protest group, however representative of ‘local people’ they actually are, with schemes often dismissed on startlingly spurious grounds.

Nor should we forget the projects, like a third runway at Heathrow (or Gatwick!), which have never even got off the drawing board. True, that’s not unique to Britain. The Dutch have also just ruled out an extra runway at Schiphol – but it would have been the airport’s seventh.

Taken together, this national shake of the head means fewer jobs, more expensive energy, housing and transport – and less opportunity for the next generation.

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John Ashmore is Editor of CapX.