David Cameron’s mixed bag on economic growth
Today’s speech on economic growth by the Prime Minister, David Cameron, contained some interesting ideas (albeit in need of more detail), some good common sense, some subtle politicking, some disappointments and a bit of economic nonsense. Not bad, all in one speech!
Let’s get the nonsense out of the way first.
It is well known that the TUC’s attitude to cutting the deficit is very much at odds with that of the Government, but it is simply not true to say that “balancing the books over this Parliament is absolutely essential to restoring confidence in our economy”. We are all agreed that the deficit must be tackled, but it must be done in a way that is timely and in a way that is fair. Cutting too fast threatens to undermine economic growth. Increasing VAT, the same tax that is paid by pensioners, the very poor, middle Britain and millionaires, is not fair. To describe the Government’s strategy as a “credible plan”, as if the more temperate plans of so many respected economists are not credible, doesn’t get us very far and to say we’d be in the same danger zone as other European countries if we hadn’t followed this Government’s strategy is just scaremongering.
Moreover, to say the government has an “over riding resolution to help drive growth and create jobs right across the country” may be over-egging the pudding, as the expected Growth White Paper was downgraded to a review and Andrew Tyrie MP, the Conservative Chair of the Treasury Select Committee has described this document as “an insubstantial document” that is “well short of a strategy”. To be fair, the Prime Minister has seemed more enthusiastic about a genuine growth strategy than some others in government, but nevertheless the Coalition has a lot of catching up to do before it’s attitude to growth is taken seriously.
Which brings me on to the more positive parts of the Prime Minister’s speech, of which there were a number. I know nothing more about the proposed Patent Box, offering a ten per cent tax rate on patent income, to encourage companies not just to innovate in the UK but to invest and employ people here too, than the words in today’s speech. So more details are needed, but on the face of it, this looks interesting. The idea of an Entrepreneur Visa looks good too, although again, more details are required. The Prime Minister is absolutely right to make sure the whole of Whitehall, not just the Treasury and the Business Department, is geared up to support enterprise. He is also right to be clear about which are the high growth industries and to work strategically to support them. Initiatives described in the speech in the Department for Local Government, DECC and the Foreign Office to boost enterprise are all worthy of support. I’d like one more initiative and that would be to prevail upon the Office of Government Commerce, responsible for procurement policy, to encourage public sector contracts that boost apprenticeships, are sustainable and provide job opportunities to those who need a helping hand into the world of work. That would help to promote growth, support UK plc and be perfectly legal under European law.
It is welcome to hear the Prime Minister speak of his determination, when discussing the global green energy market, for the UK to “have a big piece of that pie”, but disappointing that the Green Investment Bank was notably absent from his list of green initiatives to be pursued by the Government.
It was also good to read that, after listing lower taxes and less red tape, economic stability and low interest rates, David Cameron said: “But government’s support for business cannot end there. That’s laissez faire – and that is not what this coalition is about.” David Cameron will probably have said that to fire a warning shot across the bows of some of his more zealously Thatcherite backbenchers. He didn’t say it to make me happy. But it made me happy anyway!