Coalition’s tweaks and gimmicks won’t reboot our economy

Allister Heath
SO was that it, then? When it comes to measures affecting our ailing economy at least, the coalition’s programme unveiled by the Queen yesterday can only be described as yet another damp squib. It contained a list of modest tweaks of the kind that a complacent government in the middle of a frenzied boom might pursue, and failed to back any of the radical, game-changing supply-side reforms that today’s faltering UK economy so desperately requires.

Don’t get me wrong. None of this was surprising given the state of the coalition, and it’s not as if the policies are all bad – some are good, others useless, and a fair few nonsensical. But at the very least the programme lacks oomph, ambition, urgency and coherence, and it will make no perceptible difference one way or another to our trend rate of economic growth over the next few years.

So what were the good parts? Several silly proposals ended up being dumped – there was nothing in the Queen’s speech on minimum alcohol pricing, on compulsory plain packaging for cigarettes or a snoopers’ charter for the internet, policies for which there is no place in a free society.

Positive announcements include the extension of choice in the water market, with companies able to switch suppliers more easily, a promising development; a few useless pieces of red tape will be axed, and regulations merged or simplified as part of a (massively exaggerated) set of deregulatory measures; tenants will only have to live in a council house for three years (not five) to be able to purchase their home under right to buy; there will be more referenda on local tax hikes; and the old pay scales in state schools are being wiped away, replaced by greater freedom for heads to negotiate performance related pay.

The £2,000 lump sum cut to employers’ national insurance – announced at the Budget – will help, but is complicated, gimmicky and won’t boost the incentives of anybody bar one or two person bands.

The problem is that the bad policies will do more to hurt the economy than the good ones will do to help mend it. The energy reforms are breathtakingly stupid, will do nothing to reduce prices and are a backward step. They are paternalistic; instead of empowering consumers, they treat them like children. The changes to consumer rights are a mixed bag: some parts are helpful, others not. We need a real consumer agenda, and that is not it. The childcare scheme, as previously announced, discriminates against one-earner families in a nasty and vicious way.

The help to buy policies are madness: subsidised credit will push up house prices, while the lack of planning reform means the supply of new homes won’t increase. The care for the elderly bill saddles the taxpayer with huge liabilities, while protecting those with more expensive homes and assets; it’s a regressive extension of the welfare state that doesn’t solve the underlying problem. The coalition’s decision to shift the burden of detecting illegal migrants onto landlords will entail higher costs and risks for hundreds of thousands of small scale buy to let entrepreneurs, and is a major increase in bureaucracy. Tragically and reprehensibly, some rogue landlords may even start to discriminate against foreigners. The HS2 high-speed rail will turn out to be outdated before it is even launched, and will be horrendously expensive.

I could go on, but will spare you. Had this Queen’s speech been written by the Labour party, it would have been even worse – but that is no excuse for such a poor effort from a coalition that has lost its way.
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