Wouldn’t it be good if we could hear a message of hope from the government – hope that we could have a faster recovery, hope that it could be more worthwhile to work hard and be successful, hope that we might earn and innovate our way out of the national poverty we see all around us.
The reason for the dreadfully slow and feeble recovery is as clear as can be – wrong government policy. The governent is obstinate. Its approach is to offer more of the same. As we see spending, borrowing and taxing too much does not do the trick , so they recommend taxing, spending and borrowing more! Why can’t they see that if you spend more in the public sector, you have to take more money away from the private sector to pay the bills? That does not fuel a strong recovery. If you borrow too much in the public sector, that can undermine confidence. It puts people and companies off spending more, because all they hear from politicians is talk of what new taxes they can impose. It worries markets that interest rates will be forced up, as investors become reluctant to back Britain and offer the huge sums the government wishes to borrow at low rates.
Worse still are the damaged banks, residing in the public sector, and the banks being punished for being banks in the private sector. The single biggest cause of the feeble recovery is the government’s approach to regulating them. Its current insistence that the banks find and hold much more cash and capital than they had to in the good days is acting as a great brake on the recovery. If Labour were serious about recovery they would change these rules immediately, to allow more lending to business and individuals to get things going again. We don’t want out of control private lending as we had in 2007, but we need more than we are getting at the moment.
The second biggest brake on recovery is the huge public deficit itself. We need immediate action to start to bring it under control, to stop the upwards drift of market interest rates we have been experiencing in recent months.
The third problem is the huge cost and intrusiveness of regulation. Some of it is a sledgehammer to miss the nut, and some is a nutcracker to crack a nut that does not need cracking. They need to make is easier for people to set up new businesses to run them.
The fourth problem is the UK is no longer tax competitive. We need lower corporation tax rates to keep and attract more larger businesses here. We need to tax the rich more, which means scrapping the 50p tax rate to stop the race for more people to leave or go offshore, and to send a message out again to the world that the UK is open for business.
If we made these changes in the budget, then we could turn our minds to providing sufficient reaonably priced energy, improving our transport systems and sorting out our planning system so the UK could once again be truly friendly to enterprise. We need to earn our living again. We have to start to repay the huge national debts Labour has piled up for us. The only way to recover from this is to have a more dynamic and successful private sector to pay the bills and create the jobs we need.