Dial “Enterprise, Enterprise, Enterprise” for this economic emergency
Never before has a chancellor had to stand in the House of Commons and present quite such dire economic news: the largest fall in output in 300 years; the highest level of borrowing in our peacetime history; and unemployment set to rise by over a million in the next six months.
Amid this economic emergency and the painful new restrictions replacing the second lockdown today is some good news. The recent success of vaccine trials means that the rollout of vaccines may be faster than the Office of Budget Responsibility predicted. That should hasten how quickly restrictions are completely relaxed and boost growth a little more next year.
But even when the government lifts all the restrictions, the only way of avoiding lasting harm to the economy, jobs and tax revenues from Covid is with a mantra of “Enterprise, Enterprise, Enterprise”.
It is for this reason that I have set up the Campaign for Economic Growth with Andrew Griffith MP, who served as Boris Johnson’s chief business adviser before being elected to parliament last December, and Lord Young of Graffham, who earned his spurs by bringing Margaret Thatcher “solutions, not problems” and was rehired by David Cameron to be his enterprise czar helping to unleash the jobs miracle we witnessed in the last decade.
So what should the government do to ensure that businesses can thrive?
First, we need to start with a competitive tax environment. We must resist at all costs the temptation to think we can just tax our way out of the deficit. Economic growth is the most effective tax raising tool you can find: every extra one per cent of economic growth delivers another £8bn of recurring tax revenue.
Second, we should ease the regulatory burden on businesses and completely digitise the remaining administrative burden. Leaving the EU gives us an opportunity to have a spring clean of regulation, by setting up an Office of Regulatory Assessment ensuring that we only keep existing regulations where they deliver a real net benefit.
Third, we should reduce the cost of hiring people and growing businesses by temporarily lowering employers’ National Insurance contributions and by extending business rates relief.
Fourth, we should re-introduce an Enterprise Allowance paid to unemployed people who want to start their own business, as well as upgrading Lord Young’s successful Start Up Loans scheme.
And fifth, the government should use its convening power to help fix the bottlenecks to growth and to promote an unapologetically pro-business agenda to entrepreneurs and investors in the UK and around the world. The new Office of Investment, chaired by the successful business leader Lord Grimstone is a great start — but there is more that can be done.
Most importantly, once it has cleared the hurdles and set the tone, the government should step back and let business succeed.
Growth through enterprise is our only way out of this economic hole. Every new business that starts life and grows is creating jobs, prosperity, and the tax revenues that fuel our public services and will repay our public debt.
As a vaccine is rolled out and restrictions lifted, making Britain the best place in the world to start and grow a business needs to be the government’s next central mission.
Main image credit: Getty