There is understandable frustration that the Uk economy is not growing. It gives everyone interested in economics and government policy the opportunity to fly their favourite kite, offering it as a solution to the big question of how do we achieve a decent rate of growth. There is a danger in such a situation. Some of the ideas mooted have little or nothing to do with promoting growth. Some will be positively harmful. Yet they all get a showing on the media because it is the fashionable topic.
Recently we have heard the idea that we need a wealth tax. I know of no countries that have taxed themselves into greater prosperity. We already have three wealth taxes in this country – Capital Gains Tax, Stamp Duty and Inheritance Tax. Income Tax is steeply progressive, with the top 1 % of income earners paying 25% of the total tax take. The Chancellor is right to rule out the idea that an additional wealth tax would solve the problem.
We have also been told that building a third runway at Heathrow would do the job. As critics of this scheme have pointed out, even if the government did suddenly accept this proposal, no construction work would take place this side of the election, given the long delays which the planning process would impose. There is a big issue over London’s airport capacity which the government needs to solve, but this is no quick fix for growth in 2o13.
The Chancellor lets it be known that he is not suprised to be unpopular. He did in Opposition regularly predict just this development. He also used to predict that by now Conservative MPs would be queueing up to ask him to go easy on the cuts, pleading with him to spend more. Instead, more Conservative MPs are pleading with him to control public spending, and offering him list after list of items they would like to see cut, usually starting with some of the items in the overseas aid and EU budgets and going on to cutting subsidies to nationalised businesses.
This autumn will see, we are told, a new Bill to promote economic growth. It needs to centre on curbing the appetite of the state for more spending and regulation. It needs to allow the private sector to supply the broadband links, the new roadspace, the power stations and the gas and oil flows from domestic sources that we need to power an industrial and commercial recovery.