Thursday 27 October 2016 6:45 pm

Theresa May must get serious about economic reform for Britain to weather Brexit turbulence

The Prime Minister must begin to explain Britain’s role in the world outside the EU – something ambitious enough to match the enormity of the public’s decision to vote Leave. But she must also start explaining the need for a more dynamic and competitive domestic economy outside the EU.

The two are inextricably linked. Britain will face an unpredictable transition period as we exit. We need a round of economic reforms that will give us the opportunity to capitalise on the wealth of options open to us – reforms that will also give us the best chance to weather any turbulence.

What should such domestic reforms look like? Let us be realistic. We know the government will not be unleashing aggressive capitalism in the regions, despite the opportunity to do so with Labour in chaos. With disaffected Northern Labour votes in mind, the Tories are developing a self-consciously “responsible” and interventionist economic model. The merits of that decision are questionable, but this experiment must play itself out.

Read more: May's shift Left risks returning the UK to the corporatist mess of the 70s

Within these political parameters, there is still room for major domestic reforms that will boost the economy. Four come to mind. First, and most obviously, we need major deregulation of the planning system so we can get more homes built. Others have explained the nature of the reforms required on these pages, so I will not rehearse them here.

Average House Price In The UK Rises 8% In The Year
We need major deregulation of the planning system (Source: Getty)

But if the government is truly on the side of those “just about managing”, it must extend the same opportunities to young families to own their home as their parents enjoyed. We cannot tolerate a situation where vast numbers of ordinary people are priced out of London, the South East and now many of our other major towns and cities because of a straightforward lack of supply.

Read more: How Theresa May can achieve a truly radical housebuilding revolution

Second, we need an end to the delays – and to expand shale gas exploration and drilling. This will help keep energy bills down for businesses and consumers and also help to develop a new industry that will spread jobs and wealth. While the government has been quietly supportive of shale, if it truly believes in a cheaper and more secure energy supply, it needs to come out and make the case – and pass legislation that will make it happen.

Third, alongside the very welcome commitment to a third runway at Heathrow, we need a major expansion of our regional airports so the whole country has links to crucial commercial hubs abroad. The government has indicated some interest here – quite rightly, as it is surely a basic minimum requirement if it is committed to making us a great exporting nation. Expansion should be considered “expected”, rather than putting the onus on regional airports to spend millions making their case publicly.

Birmingham Bullring
Cities like Birmingham need bigger airports too (Source: Getty)

Fourth, we need investment in regional roads and railways. Voters are right to be nervous about politicians using the word investment when they just mean spending, but in this case it really is about investment. As George Osborne previously noted, the great Northern towns and cities are barely connected. This needs to change so people can travel for jobs and to market their businesses more easily across the North – although clearly this is not simply a Northern problem.

Are these things really politically viable, given the fact that government has been so slow to push them ahead in the past? Housing is surely the simplest: the lower middle class that have long cherished home ownership are being stuffed by the rise in house prices deriving from excessively tight planning laws.

The other three are more complex but Brexit completely changes the context. If we are to continue to deliver a prosperous economy, we need serious reform not more of the same. Politicians are going to have to tell the public straight – and to mobilise as many sympathetic groups as possible to help make the case with them.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.