John Longworth was formerly Director General of the British Chambers of Commerce and Chairman of the Vote Leave Business Council and is now Co-Chairman of Leave Means Leave.
As a long-time reader of history I have come to believe that the success of nations is dependent largely on their economies. All other factors pale by comparison and even wars are won by those, not with the greatest generals or largest armies, but by those with the best economies. Only if the war has a quick victory can this golden rule be subverted. Brexit is not going to be quick. So if Britain is going to win by Brexit, we will need to be the best place in the world to do business and, therefore, have the best economy.
Everything that happens in politics and the economy, in the next five years at least, is going to be defined against the backdrop of Brexit.
There is no doubt that Mrs May’s apparent commitment to Brexit is to be commended. If she is going to succeed in delivering Brexit and making it a success, it will be vital that the outcome is a strong economy. It is business, the people who work in business and therefore the economy, that fund all the good things that Mrs May says she desires for the British people. It is not government that produces the “goods”. The role of government (and government does have a role) is to create the environment in which enterprise and innovation can thrive.
This is the real solution to the existential threat of global debt. The creation of wealth through innovation and productivity gains, through the creation of new markets and new efficiencies, are the things that will make Britain prosper, pay for government spending and keep us ahead of the debt curve, out of the valley of despond and on the sunlit uplands of prosperity and growth. Britain needs to be in the lead, not a laggard in future economic revolutions.
One thing that is crystal clear from past experience must be that the antithesis of this, is the conceit that somehow government can pick winners through “industrial strategy”. The only way winners will come forth is if the winners pick themselves and nobody can predict this, least of all Whitehall. What we need instead is an economic primordial soup from which new enterprise can spring.
Some of the Prime Minister’s recipe is full of entrepreneurial nutrients. The focus on infrastructure is vital; energy in the form of fracking, roads, housing, rail and airport capacity are all essential for a thriving economy and some of these are economic multipliers. But what about the essential of digital connectivity, fibre and wifi? We should be aiming to be the best in the world. If South Korea and Estonia can do it, why not Britain?
Access to capital remains a major impediment to the growth of small- and medium-sized businesses so that they can become the medium and large businesses of the future. Mrs May is right to want to protect major sector leaders from foreign takeover if it would be a detriment to the UK’s long term economic development, but it is even more important to nurture the businesses and technologies of the future.
What about R&D, intellectual property and investment in skills, productivity improvement and growth capital? Where are the tax breaks and government encouragement for these?
It is undoubtedly right that we should see corporate governance curbs on the obscene rewards for failure, lavished on corporate executives by remuneration committees, no doubt in exchange for fat non-executive pay on the boards of PLCs. But what about the tax incentives and rewards to entrepreneurs who are the bedrock and future of our economy and who should incentivised to be the wealth creators? Having said this, let us not forget that the corporates are our pension funds and need encouragement, not brickbats.
And where is government when it comes to the hard yards of encouraging and assisting exports, as opposed to the easy pickings of so-called inward investment, all too often a euphemism for selling the “family silver” to fund, and in so doing add to, our unsustainable current account deficit.
Finally, there is the golden Brexit gift of deregulation, which is the equivalent of a massive tax cut for business. The Government should be making plans to implement this on Brexit Day plus one. Of course Whitehall will hate it and, worryingly, we have so far heard nothing of this.
I would hope the Prime Minister will encourage the Chancellor to consider all these points; then he can look to produce a radical Autumn statement for growth while planning a business tax regime and operating environment to die for.
13th November, Brexit Central