I was listening to Talk Radio a couple of weeks ago discussing the Bath pub landlord that refused entry to Sir Keir Starmer because of his lack of opposition to Lockdown. The radio presenter kept referring to Starmer, amusingly, as the ‘no-opposition’ leader. In a similar vein, I am beginning to wonder if we have a ‘not-Conservative’ government.
On economics, the two key things most Tory voters want, especially those running family businesses (a group which accounts for over 80 percent of businesses in the UK) are low taxes and the government interference – that is, less red tape.
Yet, what have we got? A government which has created the most burdensome regulations ever known in this country; even during wartime, we never shut down our economy by law, nor have we ever made hugging illegal. This is on top of a government which sees the route out of this dystopia as increasing taxes on businesses, resulting in a form of punishment for all; the failures which never survived lockdown and the successes, which did. It is a strange sort of levelling up.
Yet levelling up is what the government seems focussed on, wasting £120 billion on HS2 when we are already more indebted than ever in our history. What I find odd about the ‘levelling up’ strategy was that so much energy was expended in our negotiations with the EU to remove ourselves from their level playing field, yet we seem to want one internally. If it was obvious to us then, that the best way to grow and succeed was through competition and survival of the fittest, why are we not adopting this strategy internally?
If we think that free ports are a good idea, where regulations will be light-touch and taxes will be low, why are we limiting these to downtrodden parts of the UK rather than super-charging the entire UK with this strategy? Levelling up deliberately shifts resources from one location to another, rather than allowing the entrepreneurial spirit to make those decisions based on what is best for the business. Surely, we should want our businesses to be business-efficient rather than tax-efficient? Lower taxes and less complexity will mean businesses can focus on what business does best.
The smoked salmon industry demonstrates how levelling up does not work and how governments should allow businesses to compete without interference. Whilst many think it an ancient Scottish tradition, the origins of smoked salmon as a gourmet food arose when immigrants from Eastern Europe, like my great grandfather, started smoking Scottish fish in London’s East End. This industry grew and thrived, exported globally, without government assistance, right the way through to the mid-70s.
However, at that point the salmon farming commenced and this new green sustainable industry, which would mitigate the depletion of wild salmon, was also seen as a great opportunity to create jobs. Government funding by way of grants for factories and machinery were awarded and new plants sprung up around Scotland. Over a period of years, all the old-fashioned, artisan producers tried to compete paying higher London wages and overheads, against the subsidised industry in deprived areas, and they all died. Giving with one hand, taking with the other.
There is only one way out of the mess we find ourselves in. Yet it is the same strategy even if there was no Covid. Government should think less about how to raise taxes and more about how to spend them wisely. Greater tax revenues will come by letting business thrive; and it is not just business taxes either. Everything flows from a successful economy: more income tax revenue, VAT from extra consumption and capital gains from greater valuations.
At the pandemic’s peak, the UK had about 11 million people on furlough and that number has now halved, but we live with a false sense of security. When furlough ends, many people will not have jobs to go back to and that is when the economic long Covid will start to hurt. This government needs to start acting like a Conservative government, or face ruin.
Lance Forman is a former MEP and current Vice Chairman of the Independent Business Network.