JEREMY HUNT'S VISION FOR LONG-TERM PROSPERITY

 

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JEREMY HUNT’S VISION FOR LONG-TERM PROSPERITY

 

 I have been reading Jeremy Hunt’s speech at Bloomberg which, the Treasury tell me, “Set out his vision for long-term prosperity in the UK”.  Unfortunately, it seems little more than that; a dream with little real prospect of ever being realised.  There was also a lot of self-congratulating back-slapping about how great the economy is doing compared with other countries.  Unfortunately, most of us know that its not doing very well.  The ICAEW has just published its latest quarterly Business Confidence Monitor report and its headline is “Business confidence crashes to 13-year low”.

 

I think that Kwasi Kwarteng (and Liz Truss) got the diagnosis right in the Autumn Statement, albeit that they got the prescription for the cure horribly wrong.  His growth plan had three priorities:

 

a)      Reforming the supply-side of the economy

b)      Maintaining a responsible approach to public finances

c)      Cutting taxes to boost growth.

 

Unfortunately, growth requires all three and his proposed tax cuts without first addressing (a) and (b) (indeed calling into question his commitment to (b)) spooked the markets.  But we still need growth, and the three priorities are still necessary to achieve growth.  His plans to address the supply side (albeit not revealed) we were told would cover the planning system, business regulation, childcare, immigration, agricultural productivity and digital infrastructure.

 

Many would agree that these problems need to be addressed.  We need a planning system that does not delay major infrastructure projects for decades; we need one that builds houses for employees where the jobs are – which even with the levelling up agenda is mainly in London and the South East; we need to eliminate unnecessary regulation and streamline the rest; we need to reduce regulation on childcare to free women who want to work to do so; we need an immigration system that enables foreign workers to bring their skills to this country but not to add to the vast pool of home grown unskilled labour fighting for fewer and fewer unskilled jobs.

 

Jeremy Hunt addresses none of these.  Indeed, he tells us that “Our Chief Scientific Advisor, Sir Patrick Vallance, is currently reviewing how the UK can better regulate emerging technologies in high-growth sectors”.  I can tell him the answer.  Regulation is a prescription for strangling high-growth sectors at birth.  Mr Hunt acknowledges that “we will not build the next Silicon Valley unless we nurture battalions of dynamic new challenger businesses”.  But Silicon Valley was not built on the back of regulation; it developed in a regulation-free environment, so starting with “how can we best regulate new innovative businesses” dooms his dream to failure.

 

While emphasising the UK’s reputation for innovation he adds, “and as you [Meta, etc]look for funding to expand, we offer one of the world’s top two financial hubs and are the world’s largest net exporter of financial services”.  That would be good if they were amenable to nurturing start-ups but we all know that is not the case.  A lot of our start-ups are sold to US companies at a fairly early stage because those companies understand that nurturing start-ups is a balance of risk and reward, whereas, as the Chancellor acknowledges “we need a more positive attitude to risk-taking”.  He acknowledges that but has no suggestions for achieving it.  And is Mr Hunt’s own prescription in his mini budget of cutting R & D relief for small innovative new businesses really the way to encourage innovation?

 

The Chancellor also tells us that education “is an area where we have made dramatic progress in recent years” but then admits, “We have around 9 million adults with low basic literacy or numeracy skills, over 100,000 people leaving school every year unable to reach the required standard in English and maths”.  I shudder to think where we would be without that “dramatic progress”.  There are around 49.5 million people between 15 and 64 years old in the UK, so 9 million is around 20% of the working population.

 

The Chancellor’s growth plan embraces Enterprise, Education, Employment, and Everywhere.  Sadly, he ran out of time to explain what “Everywhere” envisages.  But it probably does not matter because everyone knows that a fundamental of growth is addressing Kwasi Kwarteng’s supply side issues, and we all know that this is not going to happen because doing so requires tough decisions which the heavily divided Conservative parliamentary party will veto.

 

I don’t know what “the lenders from Meta, Microsoft, Amazon, Apple and Google”, all of whom Mr Hunt tells us were in his audience, made of the speech.  I would be amazed if you were even a tiny bit impressed.

 

ROBERT MAAS