SEVEN months after coming to office promising “growth, growth, growth”, it seems Keir Starmer and Rachel Reeves have come to appreciate that it is not good enough simply to preach about a vibrant economy.
They need to make sure that every government department helps make it easier for businesses to invest and grow, as well as to improve the efficiency of the public sector.
Kirsty O’Connor / TreasuryLabour have come to appreciate that it is not good enough simply to preach about a vibrant economy[/caption]
GettyTo accommodate growth, Starmer and Reeves must sacrifice some sacred cows – starting with their net zero plan[/caption]
Yesterday, we learned that the plan for a third runway at Heathrow has been revived.
A lower Thames crossing is to be approved.
The PM declared he would cut through “thickets of red tape”, while the Chancellor promised welfare reforms to make sure people are not dumped on to sickness benefits for years without anyone ever asking whether they are fit to work.
These are all good and necessary things.
If the Government can achieve them, it may well revive its fortunes.
Labour’s planning reforms, too, are a move in the right direction.
Make enemies
Starmer seems genuinely shocked to learn the builders of HS2 had to spend £100million building a tunnel for bats.
But if they are to grow the economy, the Prime Minister and Chancellor will also have to be prepared to ditch some cherished Labour policies and to make enemies within their own party.
Labour donor Dale Vince is already bleating about a third runway, claiming it will cancel out Ed Miliband’s efforts to decarbonise the power grid by 2030.
But Starmer needs not only to rebuff Vince — he also needs to relax the 2030 target for “green” electricity.
While Miliband has claimed that his plans will save households £300 a year, the real cost of an energy grid dominated by wind and solar is already becoming painfully clear.
If green electricity really was cheaper we would already be seeing the effect on our bills, given that we already generate more of our power from wind and solar than almost any other large developed country.
Yet we also have the highest electricity prices in the world, with UK businesses paying four times as much for their power as America.
High energy prices are rapidly killing off what remains of our manufacturing industry.
Ineos chief Jim Ratcliffe has warned that the UK chemical industry, too, is on its way to extinction.
One of the Government’s priorities should be to bring down the cost of energy, even if it means delaying the holy grail of Net Zero.
There is no point in Britain sacrificing its economy in the cause of reaching a target which few other countries seem to be in a hurry to achieve.
I appreciate that Reeves will be loathe to revisit the employers’ National Insurance hike she announced in the Budget.
But she must.
It is not too late, as the changes do not take effect until April.
There is little time, though.
Sainsbury’s, for example, announced last week that it is cutting 3,000 jobs, partly as a result of the changes to NI, which it says will add £140million a year to its costs.
Many businesses, such as those in hospitality and agriculture, need to be able to expand and contract their workforces rapidly in order to take advantage of bursts in demand
Ross
Another thing that will have to be revisited is the new Employment Rights Bill.
The Government’s own analysis admits that it will add £5billion a year in direct costs to employers.
But that is only part of story.
The far bigger cost will come in terms of the jobs that won’t be created, and economic activity that won’t now happen.
The biggest problem is the ban on zero-hours contracts and the requirement for guaranteed hours for every worker.
Many businesses, such as those in hospitality and agriculture, need to be able to expand and contract their workforces rapidly in order to take advantage of bursts in demand.
I appreciate that a Labour government will want to do something for the workers, but why are zero-hours contracts such a problem?
ReutersThe Prime Minister and Chancellor will also have to be prepared to ditch some cherished Labour policies and to make enemies within their own party[/caption]
Only three per cent of the population are on them, and many of those are very happy with the arrangement because it provides them, as well as their employer, with flexibility.
Reeves quite rightly identified lousy productivity as a brake on growth.
What she didn’t say is that the problem is mainly in the public sector.
Disgracefully, the average worker in public services is producing less now than they were when Tony Blair came to power 28 years ago.
If we are to have growth, this is going to have to be put right.
Pay rises
That will mean no more waving through above-inflation pay rises without any requirement for workers to adopt improved working practices, as Reeves did with the train drivers last summer.
Of course, that will mean a battle with the unions, but if we are going to have growth it is one the Government must fight and win.
It needs to remind workers that no society can keep on awarding its workers above-inflation pay rises without improving productivity.
Without the latter, pay rises will always be eaten away by inflation.
Many people will be cynical about Starmer and Reeves’ focus on growth. I am prepared to believe their sincerity.
But what they have announced so far, while good, does not go far enough.
They must be prepared to slay Labour’s sacred cows.
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