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Rishi Sunak’s jobs plan needs a focus on sustainable business growthAugust 16, 2020
We should reconsider the UK regulatory burden from first principles, said David Sismey founding Director of the Campaign for Economic Growth
The Chancellor’s Plan for Jobs, unveiled on 8 July, marked a welcome evolution in the economic response to the pandemic: a philosophical shift away from the “command and control approach” initially required to schemes like VAT cuts for the hospitality sector and the innovative (and hugely successful) Eat Out to Help Out scheme, which allowed consumers to choose which businesses to support rather than Government writing the cheques.
But the most important stage of the response is yet to come.
This ‘main event’ will need to focus on sustainable growth and removing government-imposed obstacles to enterprise.
While the public and voluntary sectors have a vital role to play, only business can create sufficient jobs, investment and tax revenues to ensure the nation’s continued prosperity.
Thousands of new private sector enterprises across every part of the UK will be needed to fill the void. Where better to find advice and ideas than by ‘crowdsourcing’ the practical expertise of entrepreneurs, investors and business people?
This week sees the launch of the Campaign for Economic Growth, which will promote policies designed to boost economic growth, drawing ideas from those with experience of helping businesses thrive.
Chairing the campaign will be Andrew Griffith, Boris Johnson’s former Chief Business Adviser, who sat on two high-growth UK company boards before entering Parliament.
In the coming weeks and months, we will set out practical measures, beginning with a call for a new Office of Regulatory Assessment to improve productivity and the supply-side of the economy. Some regulation is of course necessary to protect employees, consumers and the environment.
However, like our lockdown spring cleaning efforts, a proper clear-out is needed every now and again. We should reconsider the UK regulatory burden from first principles.
Would we recreate the regulation afresh today? Is it still effective? Do its costs outweigh its benefits?
You might expect that this happens all the time, yet though there have been attempts to cut the regulatory burden, it has been the equivalent of a quick dusting rather than a deep clean.
In 2016 the National Audit Office noted that the Government did not know the total cost of existing regulation and therefore its ambition was unclear.
Other countries have had more success.
In 2001, British Columbia in (left-leaning) Canada began assessing every regulatory requirement and committed to a one third reduction. Within three years, they had beaten this target. Economic growth went from trailing the Canadian average by 1.1 per cent to exceeding it by 1.9 per cent.
The Canadian federal government then built on this success nationally with a Red Tape Commission. Australian lawmakers set up an Office of Best Practice Regulation to monitor the regulatory burden and established a Red Tape Committee in 2016 which assessed duplications and recommended a government-wide stocktake every three years.
We would benefit from an Office of Regulatory Assessment here in Britain. It could be modelled on the respected Office of Budget Responsibility (OBR) and work to illuminate the cost of the burden on businesses.
During the crisis, the government has given tantalising glimpses of what is possible.
Allowing restaurants to sell take-away food without mountains of paperwork or allowing local councils to speed up decisions via online video conferencing are just two simple examples with real benefits. The world has experienced pandemics before and bounced back stronger.
The Spanish Flu pandemic of 1918 was followed by a decade of widespread creativity and economic growth. Let’s give private enterprise the freedom and support it needs to spark our century’s very own ‘Roaring Twenties’.
David Sismey is the founding Director of the Campaign for Economic Growth and was previously a Managing Director at Goldman Sachs
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