“Stop Whingeing”, says Hague

There has been criticism from business leaders and organisations that the recent Queen’s Speech contained nothing that resembled a Growth Strategy, and that despite promises to tackle red tape, one of the key measures announced — transferable paternity leave — was yet another bureaucratic imposition on business, and especially damaging for the SMEs that politicians always promise to help.

William Hague was not having any of that.  In a full-page interview in the Sunday Telegraph, he insisted that governments don’t create growth — industry does.     It was time for business leaders to get on their bikes — or on their Jumbo Jets — and travel the world promoting British exports.  To be fair to Hague, he has focussed his Foreign Office on trade issues, with some degree of success.  British exports do seem to be going up (as they ought to be, given the relative devaluation of Sterling).

Hague is of course partly right.  It is businesses that create growth.  It is up to business leaders to bang the drum for exports, and for workers and the unemployed to get stuck in work harder (as many of the unemployed — but not all — would dearly like to do).  It is right that IDS is trying to reform welfare, and to ensure that “idleness is not a lifestyle choice”.

But the whole tone of Hague’s interview was “Nothing to do with me, Guv”.  It’s not the government’s job to generate growth, he seemed to say.   Here he was entirely wrong.  It is the fundamental duty of government to create an environment conducive to growth.  The limited moves that Osborne has made on tax — the 45% income tax rate, corporate tax rates — are in the right direction, though far too timid.  Gove’s work on education is critical for growth — but may take years to bear fruit.

There are two key things the government should be doing, now, to promote growth.  First, de-regulation.  All parties in opposition promise to cut red tape: few do so in government.  While arguably 60%+ of our business regulation comes from Brussels, that still leaves a fair bit that’s home-made, while even on the Brussels regulation we could emulate some other member states, and stop gold-plating, and implement it with a light, permissive touch.

We should absolutely not be adding to the burden with own-goals like fathers’ parental leave.

The other area is tax.  Of course we have tight fiscal constraints, but there are things we can and should do that would stimulate employment and growth, but which would be cheap or even self-financing.  We read about National Insurance holidays for young people.  It would get youngsters off the dole, and put money in their pockets. They may not pay much income tax, but they’d pay VAT on purchases — and we’d save the job-seekers’ allowance (or whatever euphemism they use these days).  It’s time to stop talking about it, and do it.

Cutting the top rate of tax to 40% would also most likely be revenue-neutral in the short-term, and positive in the medium term.

There is a proposal around for reduced VAT in the hospitality sector (which might also defuse the pasty tax).  Hospitality is an industry that has the potential to provide large numbers of jobs for young people, and again the saving on social costs might largely off-set the loss of VAT revenue.

The message for Hague — and Osborne, and Cameron — is clear.  Government has a key responsibility for growth, and it should be looking for innovative ways to achieve it.  After two years, the comment on the Coalition’s school report under the “Growth” heading is “Must try harder”.

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4 Responses to “Stop Whingeing”, says Hague

  1. Hague’s comment about the leaders of British Industry getting abroad and drumming up contracts was spot on…it was not, as some seem to think, a criticism of, for want of a better phrase, the rank and file employee. HRH Duke of York has been a frequent visitor to my part of the Far East in his (unpaid) role for the Trade Industry paving the way and the scope is there for getting into the market but what do I see? Nothing in respect of a UK company getting a lucrative contract just a firm from Thailand likely to buy out Birds Eye!
    Sure we can all point the finger at government, whatever their colour, and at fringe parties with their manifesto and say “Could do better” – and UKIP is no exception!

  2. Andrew Shakespeare says:

    If business is not the government’s responsibility, why does it have a minister for it?

  3. The high cost of fuel and energy due to climate legislation is killing real growth in the economy. That’s the government’s doing not the business sector.

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