Source - Capx - 21/07/24
The world must think we’re bloody weird. As with many of our ancient traditions, there’s something slightly absurd about the King’s Speech. There’s a striking juxtaposition in the monarch, ensconced in diamond encrusted finery, sounding off about newfangled policy areas like artificial intelligence.
But regardless of the aesthetic contradictions, there was nothing all that surprising about the content of the speech itself. Economic growth, as promised, is at the centre of Labour’s agenda.
Quite right. For far too long, UK growth has remained stagnant. A grim combination of record taxation, high public spending and lacklustre investment in infrastructure means that this year’s projected growth rate is a measly 1.1%. This puts us behind a number of our G7 peers and towards the bottom of the OECD.
So it was welcome that the speech reaffirmed Labour’s commitment to planning reform – a decidedly pro-growth move. As Freddie Poser wrote in CapX this week, Yimbys should be cautiously optimistic about this government. The upcoming Planning and Infrastructure Bill will hopefully, finally get Britain building. Labour plans to override Nimbyism by giving local communities a say on ‘how, not if’ new homes will be built and will reimpose housing targets for local councils, meaning that they will have to allocate sufficient land for developers to build on.
Despite Liz Truss – the Queen of growth herself – decrying such measures as ‘Stalinist’, getting things built is vital for our prosperity. My colleagues at the Centre for Policy Studies have been particularly vocal on this issue, producing a trove of required reading on the subject. As CPS research shows, our unwillingness to build has stunted housing supply, allowing house prices to surge to historic highs. This has left us in a position where, since 1997, the number of young homeowners has plummeted. This is not a blueprint for sustained growth.
But while Labour’s commitment to housebuilding makes for welcome reading, other elements of their agenda could pull our economy in the opposite direction.
Also mentioned in the King’s Speech was Labour’s ‘new deal for working people’, which will apparently usher in a revolution in workers’ rights. While this might sound admirable, it essentially amounts to Labour being cowed by their union paymasters. Starmer has pledged to repeal the 2016 Trade Union Act and the 2023 Minimum Service Levels Act – key demands of the unions. The Government also plans on encouraging union membership by allowing recruiters into workplaces and introducing electronic strike ballots.
The impact that union militancy has had on our economy and public services in recent years has been disastrous. Repeated strikes in the rail, education and healthcare sectors have brought massive disruption to the areas we all rely on most – hampering economic growth. All the while, union representatives continue to make unreasonable pay demands which would cost the economy billions. Making it even easier for politically-motivated agitators to bring Britain to a standstill would be a grave error.
Many other policies in their agenda also give the sense that Labour are confused on how to achieve growth. Energy Secretary Ed Miliband’s apparent decision to ban all new North Sea oil and gas licences could prove damaging in the extreme. While there is now a general consensus on the need for decarbonisation, sweeping interventions like this are not the way to get us there. This decision will make absolutely no difference to the economies of ‘petrostates and dictatorships’, which Miliband claims we rely on, but could jeopardise an important element of the UK’s energy mix – risking higher bills.
I wrote last week that it would not take long for Labour’s instinctive interventionism to kick in. I didn’t think it would be this soon. After a certain level of disappointment under the Conservatives, pro-growth voices on the centre-right might find it all too easy to get caught up in Labour’s promising rhetoric. While we should of course hope that the new Government succeeds in its quest for growth, it’s vital that those on the side of free markets continue to call out populist statism whenever it rears its head.
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