6 February 2022

Weekly Briefing: The growth imperative


While attention this week has understandably focused on the Prime Minister’s immediate political fate, there was also much to ponder when it comes to the country’s longer term prospects.

On the one hand, we had a ‘Benefits of Brexit’ paper ostensibly focused on deregulation, on the other a Levelling Up White Paper that puts the state front and centre of regional economic development.

The Government’s approach to Britain’s unbalanced economy could probably be best summed up as ‘let a thousand funds bloom’. Whether your thing is parks, seafood, high streets, brownfield land, decarbonised council houses, safe streets or, simply, towns, there’s a fund for you in Michael Gove’s 330-page mega-paper.

The aim of the project, spreading prosperity and letting people make the most of their lives wherever they live, is a noble one. The means, however, leave room for scepticism – not least because previous governments have embarked on similar projects with only limited success.

There’s a concerning emphasis on the public sector, rather than the private. As Matthew Lesh wrote on CapX, for all the funds and programmes, references to private sector growth are much thinner on the ground.

Monday’s ‘Benefits of Brexit’ paper, on the other hand, majored on the Government’s plans to make Britain the ‘best regulated advanced economy in the world’. However, as Robert Colvile noted on our pages, while there are many welcome elements – freeports, simpler reporting requirements for SMEs and growth objectives for regulators – the prospectus is often frustratingly vague and short on accountability.

There is, Henry Hill suggested, a simple way to get rid of unwanted EU rules while retaining the ones that make sense – sunset clauses, whereby regulations simply expire after a given time period unless ministers want to keep them. Again, the paper suggests they will be used, but doesn’t spell out how often or for what purpose.

But however successful the Government is in unwinding EU rules, they will only be scratching the surface. Because while it might have been comforting to pretend that pettifogging rules were something bestowed by Brussels, we have long been more than capable of strangling ourselves in red tape.

From the startlingly inconsistent patchwork of British devolution (now with Added Mayors!), to our byzantine planning rules, hulking tax code and sprawling network of quangos, successive British governments have created a Gordian knot of complexity.

And measures intended as short-term fixes only add to the morass. The upcoming Health and Social Care Levy, for instance, means we will soon have three different taxes on income, to no obvious purpose.

This might be forgivable if we were all getting richer, healthier and safer, but we aren’t. As CBI Director General Tony Danker pointed out at a joint event with the Centre for Policy Studies, the UK has long been stuck in a holding pattern of chronic low growth. Shovelling about the proceeds of the OBR’s estimated 1.3% and 1.7% annual GDP growth is not a sustainable path.

There’s no end of distractions and challenges for the Government at the moment, but if it is serious about delivering on voters’ priorities, getting that sluggish growth rate up is still by far the most important task.

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John Ashmore is Editor of CapX.