Sir John Redwood is MP for Wokingham, and is a former Secretary of State for Wales.
The Government is adopting too many Labour policies when it comes to business and the economy. They will undermine growth, make combatting inflation more difficult, and are driving the Opposition further to the left.
Labour surely cannot believe their luck that the Conservatives make them look so moderate, and allow them to be even more socialist as they push the Government to go yet further.
The Government seems to think the answer to the problem of the railways is more state control and nationalisation, and the energy industry placed under strategic control via a complex mesh of price controls, windfall taxes, and requirements to do things that are not economic (with subsidies to stop bankruptcies).
It thinks the digital and communications sectors need more regulation, and a ministry of science and technology to direct and subsidise our way through the next five-year plan, and apparently that energy-intensive industries, from ceramics to steel and from petrochemicals to fertilisers, should be taxed to speed closure, so we can import instead and claim a win on our carbon dioxide accounts.
It wants literally to ban all our current motor car production industry from 2030, in hope that an electric car industry will appear miraculously to replace it. No wonder investment is drying up and going abroad, where you will still be allowed to make petrol and diesel vehicles.
Conservatives should know better – and can do better.
Privatisation revealed three great truths: introducing competition and giving consumers more choice gave a great boost to output and value for money; opening up nationalised areas for private capital greatly expanded the total investment we could afford to put in; and allowing many decision makers instead of imposing an answer led to much greater innovation.
The electricity-generating industry, freed of central control and state budgets, delivered a large increase in combined-cycle gas generating capacity to supplement, and then to replace, expensive and dirty coal. Power prices went down, we generated all we needed at home and had spare capacity just in case.
(Why hadn’t the nationalised industry understood how much more fuel efficient and cleaner gas was?)
The state telephone monopoly had backed a switching technology that no other country wished to buy, and was well behind the breakthroughs with electronic switching made in the USA. The privatised industry dumped Strowger switching and leapt into the electronic age, pulling the domestic supply industry with it.
In a less satisfactory privatisation, where rail competition was allowed it produced better and cheaper services – but was stifled in most places by continuing with top down controls.
Today we have to rediscover the old truths about nationalisation, not least that such businesses will regard the government, not the people who use the trains, or need the energy and communications links, as the main customer.
Managers will court and bully ministers for more subsidy to cover over bad management, and the unions will strike often, knowing that the taxpayer can end up paying their wages where customers do not.
Meanwhile major mistakes will be made about investment priorities, about technologies, and about levels and type of service to be provided, as they will be decided centrally following political rows rather than responding to consumer need.
I have no idea why some of my colleagues think a nationalised railway will work better. There is no sign of unions from the nationalised parts of the railway readily accepting pay deals, and certainly no evidence of their wanting to collaborate more with minister-led parts of the industry over improved work practices.
It is customers that keep businesses honest. It is the need to serve them better, to provide better value and enhanced service, that drives innovation, productivity growth, and the higher wages that can result.
The railway unions are striking against themselves. They have helped dissuade people from returning to the offices five days a week, undermining what was the railways’ most reliable source of revenue pre-Covid.
Now they are also out to wreck the alternative strand, people taking trains for leisure and pleasure; if you target strikes on days covering the Liverpool music contest and the cup final you will undermine your best chance of a growth business.
The truth is none of us have to use the railways. We can drive. We can take a commercial flight. We can stay at home and use an online link for a virtual meeting or entertainment download. If the unions do not cooperate in adopting new technology, improving service reliability and quality, and ensuring affordable tickets, then their industry will continue to decline.
Then, one day, taxpayers will say no more, and demand an end to excessive subsidies to pay for trains few are using and none can rely on.
The energy situation is more alarming. Ministers, encouraged by officials, seem to want to make us ever more reliant on imports though pipes and cables to European coasts, despite the shortages of energy on the continent and the clear dangers of relying on the goodwill of neighbours.
Some even want to introduce electricity rationing by price and to get people to only use power at certain times and days through sending price signals; business will be rationed anyway through actual cutoffs when there is not enough power. Aware of this danger many people in the UK refuse to accept a smart meter – even though it is supplied to each free of charge, paid for out of general taxation.
Many want us to keep our oil and gas under the sea, only to import far more liquified natural gas – which not only adds to our colossal import bill, but adds to world CO2 at the same time!
The money-go-round is now absurd. Generators facing high carbon taxes and price controls can then attract subsidies. Renewable energy suppliers, though they are still preferred, now face windfall taxes.
Labour clearly signal they love this system and would increase the taxes further, removing the remaining incentives to invest and making us even more dependent on imports.
Industry is suffering from the advent of expensive energy. Sectors such as steel and ceramics have to pay large carbon taxes on the gas they need to use to fire their furnaces; as the UK imposes higher carbon taxes,and charges than any other advanced country, the Government has to give some of the tax back as a subsidy.
Why on earth do they do this? Why not cut the tax and be done with it if they want some of our industry to survive?
So here is an easy way to win back lost votes and assist growth: cut the high taxes, and allow competition and private capital to do the rest in these crucial industries.