Tinkering with Britain’s economy won’t drive the growth we need

Simon Walker
DEBATE has raged for days over Adrian Beecroft’s proposed employment law reforms, exposing some fundamental problems in our politics. Having been asked to apply his expertise and intelligence to a serious issue, and having volunteered his time, the savaging he has received from some quarters shows why many of our finest minds outside politics are reluctant to get involved in public policy, causing Britain to miss out on new ideas that it sorely needs.

But even more serious is the exposure by the Beecroft debate of Westminster and Whitehall’s instinctive tendency to tinker, rather than to take serious action.

The full details of what has been discussed behind the scenes are not fully clear, but we know that elements of the civil service and of the government itself are pressing for a compromise position on employment regulation. They would like Beecroft’s proposals to be watered down, despite the strong support of business for his policies to be implemented in full.

The same tendency towards tinkering can be seen in the reaction of some to the proposals of the 2020 Tax Commission, which was jointly run by the Institute of Directors (IoD) and the TaxPayers’ Alliance – and chaired by the editor of this newspaper.

The Commission’s findings were two-fold: that the tax system should be drastically simplified, and that the level of tax as a proportion of GDP should be reduced to 33 per cent. These are radical ideas, but also practical – the entire project was focused on identifying not only what should be done but things that can be done.

The report has been received as a serious proposition – at 400 pages based on 18 months of detailed research, it should be. But all too often the first question on the lips of some in the corridors of power is not “Is this the right thing to do?” but “Isn’t this a rather ambitious idea?” And they mean that in a bad way.

But history is not littered with examples of those who succeeded by prizing small ideas. There are very few mighty economies of whom people say “The great thing about them is, they think small.”

On Tuesday, I was in Nottingham, meeting IoD members. Drawn from every imaginable sector, their concerns were as varied as you’d expect.

Some were worried green taxes were driving their energy bills to business-killing levels. Some feared taking on new staff due to the £10,000-a-time cost of employment tribunals. Others felt the tax burden was deterring customers, investors and their own expansion. All of them wanted drastic action – not a single one said they wanted the government to moderate its plans, and that a watering down of policy was what the nation really needs.

And yet it is precisely that – overly moderated, excessively diluted and insufficiently radical policy – which our political system seems to prize.

Radical ideas are looked at as opportunities to cherry-pick some elements to produce changes that are visible but not too exciting or eye-catching.

Consensus is talked about as an unalloyed virtue, when all too often, as Abba Eban once said, “consensus is when everyone agrees to say collectively what no one believes individually”.

We face challenging economic circumstances, in which sitting on the fence is simply not good enough. Particularly when the economy has flat-lined for the last 18 months and confidence is damagingly low, it should be clear that to break the pattern we need strong policy-making which provides a clear signal that things are going to change.

Not frightening the horses is an oft-cited principle, but the alternative which has been pursued so far is one of boring the horses to death. And it isn’t working.

To get the economy growing again, customers on the high street, foreign investors and UK companies with cash in the bank need to be shown that the government means business. That cannot be achieved by tinkering, nor do we have the time to wait for pennies to add up into pounds through incremental small steps.

We need drastic action – on employment regulation, on taxation, on fiscal policy, on infrastructure and on energy. It is time for British policy-making to rediscover its ambition, and unlock the power of radical ideas.

Simon Walker is director general of the Institute of Directors.

Read more on the 2020 Tax Commission report at www.2020tax.org