This week sees the government re-set. After months of talking down the economy, of creating mythical black holes in public finances, of burdening the private sector with £40 billion of tax increases, the Chancellor has now decided that the UK is a great place to invest and we must talk everything up.
Of course, she’s right. The UK is a great place to invest. Brilliant universities, innovative entrepreneurs, the third biggest tech sector on the planet. What’s not to like?
The government. Whilst they talk a good story, the reality is that it takes more than a U-turn on messaging to get the flat-lining economy onto its feet again. Some of their ideas for growth are sensible. When you consider that the new rail line HS2 had to spend £100 million to protect one bat – yes, just one very rare bat – by building a bat tunnel, you can see their point. But there will be lots of resistance when it comes to building second and third runways at southeastern airports.
Similarly, some of their ideas are just unfeasible. Take house building. The government has decided that we need another 1.5 million homes built by 2029. That is on top of existing targets, so it’s a lot. Yet the most houses we have built in on year since the war was in, I’m told, 1968 when 350,000 were built, of which 150,000 were council houses. Its true that housebuilding increases at the same time as the economy picks up, but housebuilding has always been a follower of an economic boom, not a starter. And housebuilders are worried about supply chains for labour and resources, as well as the need for 1.5 million more buyers at current prices to take up this extra supply (no housebuilder will create an oversupply to drive down prices, and thus their profit margins).
We’ve seen a flight of capital from our shores as international investors have been struck by new tax rules about global asset. An estimated 50,000 jobs have been lost due to the increased tax burden on employers’ staff. Business groups report a falling of confidence and drop of investment.
I hope the government turns things round. Despite having a political interest in seeing this Labour government fail, I don’t want to see our country do badly. I certainly didn’t come into this job to win an argument at my constituents’ expense.