John Longworth is a businessman and entrepreneur, Chairman of the Foundation for Independence and of the Independent Business Network, and a former MEP for the Brexit Party and the Conservatives.
Boris Johnson has survived a vote of no confidence. But for the Conservatives to survive an election it is essential that they pull together to deliver their manifesto and go for growth. It is the economy that will make or break both the Prime Minister and the Government.
The PM famously said f*** business. I suspect this was born of frustration with the vested interests of the multinationals rather than a cart blanche judgement on business. There is, nonetheless, a dearth of experience and knowledge of business at the top of our government – not only amongst Ministers, but also amongst civil servants.
This matters. It is only business which can efficiently deliver goods and services and that can create wealth and growth. When I was appointed Director-General of the British Chambers of Commerce in 2011, I said in my first interview that there was no political party of business.
Typically, Labour are dominated by the unions and ‘woke’ anti-capitalists, the Liberal Democrats by the minor professions and polyglot riders of hobbyhorses, and the Conservatives represent the City (not business), country landowners, and to some extent multinationals (not enterprise).
Post-Brexit Britain has every opportunity to prosper and recover strongly from the recent pandemic. Countries that prosper in the long term embrace creative disruption, even destruction. They are pluralist and inclusive; they are centralised but not extractive.
In the short-term, the growth vital for this government’s survival can be achieved without destruction. But it is essential to have innovation for long-term growth and prosperity. Britain has recently been moving in the wrong direction – an awful mismanagement.
We have seen a massive increase in the size of the civil service, including in the NHS. This is an extractive section of society: it does not create innovation. Instead, it is a block to change and sucks out resource. It is, in essence, a state within a state, a double-bind, forming a drag on growth at a time of labour shortages in the private sector, whilst increasing taxes which disincentivise private investment and hard work. The government is right to decide to cut the civil service, but it should go further and also tackle the NHS.
The choice of the government to take the most expensive route to net zero is an example of dogma overriding free markets. We have ample supplies of gas and oil beneath the seas around Britain and beneath our feet in the form of British natural shale gas. This act of folly has been highlighted by the rise in energy prices and the cost of living crisis, which apologists for green zealotry try to mask the root cause of by deploying the useful cloak of the war in the Ukraine.
This immediate folly is compounded in that the British nuclear industry, the only realistic solution to net zero, has been allowed to atrophy. It is the deepest of ironies that the zealots of yesteryear, CND and the like, destroyed a leading U.K. industry, while people from the same “political gene pool” now want net zero and desperately need that same industry to have any realistic chance of achieving it.
The obsession of successive governments with decentralisation also typifies the current weakness of the political class. The creation of devolved administrations by the Blair administration has demonstrably led to disaster (as with so much of New Labour’s constitutional meddling). This is now being compounded at the micro-level via the creation of mayors: another layer of costly government. What people and businesses really want is opportunity, investment and wealth creation. More government is never the answer.
That the Government has not established many new, enhanced trade deals, or unilaterally removed tariffs is another failure. Free trade is both a counter to the cost of living crisis and a way of improving U.K. productivity and wealth – as well as of levelling up. Yet many in government choose to stick close to the EU. Why would we choose to shadow a Eurozone less competitive than ourselves?
It is nearly two hundred years since the Great Reform Acts and the repeal of the Corn Laws heralded an unprecedented century of wealth creation and a British world system encompassing a third of the globe. To be productive and wealthy we must urgently embrace trade and competition, and the Government must imitate its Victorian predecessors in removing the barriers to this.
Over two centuries ago, Parliament removed the hearth tax, a tax not on large properties but on manufacturing. At the same time, they placed a tax on land even though the gentry and the aristocracy held sway. Britain did what no other country was doing – it rewarded work, industry and innovation, and taxed ownership. Fast forward to a present day Chancellor deciding to raise corporation tax and to continue to tax investment in commerce and production via increased business rates – the hearth taxes of the 21st century.
At the same time unproductive farmland is acquired by the wealthy to avoid inheritance tax, thus rewarding idleness rather than innovation and industry. This Chancellor seems hellbent on pursuing a high tax, large state economy, the antithesis of what is needed and his appointment must rank as one of the PMs errors of judgement.
Rules are a burden. They are inherently anti-enterprise, anti-competitive, and anti-innovation. The accumulation of rules weighs on real business. While it might protect the lumbering private bureaucracies of the multinationals, who hold the same monopolistic tendencies as the Royal monopolies of yesteryear, they act as a drag on the family businesses who make up 85% of enterprises in Britain, and as a brake on the innovators who will disrupt and destroy, but also create enormous opportunity and wealth.
The Government currently aims to remove one billion pounds’ worth of regulation. This is mere window-dressing The economist Patrick Minford estimated as much as 2% of GDP could be generated by removing regulation.
But where is the ambition? The answer so far has been more government – more bureaucracy, more spending, more tax, more rules. These are socialist solutions shown to have failed again and again.
The record of government, in particular the Treasury, on enterprise and the economy has been pathetically disappointing. The UK has an opportunity for growth that matches or exceeds the global average. If we are not to face relative decline, the Government must be brave and resolute in pursuing an environment which stimulates free trade, free markets, investment, and innovation.
He is wounded but our Prime Minister has the capacity to be bold and visionary. Free of the encumbrances of pandemics and cakes, he now needs to seriously stimulate enterprise and innovation, to boost business – but certainly not in the way he has previously suggested. The level of his determination to go for growth above all else will determine the future of his government and of his legacy .