It looks as if the JCBs will be out in force. Hi-vis jackets are going to be compulsory for every minister. And if you don’t like the sound of jackhammers you are going to be in for a rough time. Over the last week, Prime Minister Boris Johnson has started setting out his plans for rebooting the economy as it struggles to recover from the coronavirus. There were lots of big infrastructure projects. And some headline-grabbing industrial policies. But there was not a great deal in the way of small print.
Grands projets, as French presidents like to call them, are a Johnson speciality. As mayor of London, he was always trying to build something or other, and since taking office as PM he has been itching to start breaking ground. HS2 has been given the go-ahead, and a raft of new projects are planned, including new schools, hospitals and roads. His administration is increasingly taking its inspiration from the New Deal, and Johnson is already casting himself as the heir to Franklin D. Roosevelt.
Spectacular infrastructure projects can boost demand and lift productivity (although they can also turn into huge white elephants). Once the work starts, they create jobs, and by improving transport connections, or lowering energy costs, they can sometimes help make companies and regions significantly more competitive. But the most meaningful economic reforms are always at the micro level. And the UK could use a lot more of those. Such as?
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Streamline the planning system
One of the biggest challenges in the UK is that we don’t build enough, and what we do build is often not quite right. We have too many half empty shopping malls and not enough houses, and too many failing industrial estates and not enough shared offices for small businesses, or dark warehouses for tech companies. We need to strip away decades of overcautious zoning and green-belt regulations, and make it easier to change the use of existing buildings. That will unleash a building boom and make it easier for entrepreneurs to grow their businesses.
Do away with tech regulation
Next, we should be creating the most tech-friendly regulatory regime in the world. The EU has been waging a crazy war on technology, with regulations such as GDPR stiffing innovation. It is intent on controlling American tech giants such as Amazon and Facebook, but seems to have forgotten that while those companies can swat away new rules, it is start-ups that always suffer. The UK should be a laboratory for new ideas. That will drive a huge increase in investment – and spur growth.
Simplify the tax code
Our tax code it has doubled in length in the last ten years, and the system has become cluttered with tiny reliefs and exemptions that make no difference to anyone (seriously, do we really need a specific tax break for pet cemeteries?). Donald Trump has not had many good ideas. But one has been to insist that Congress repeals two regulations for every new one it introduces. We could adapt that, and force the Treasury to scrap two taxes for every new one it tries to impose.
Simplify employment law
Finally, we need to simplify employment law and regulations to help the growing army of the self-employed and gig workers. That army is close to overtaking the numbers of workers in the public sector, and many of them are high-earning professionals earning plenty of money. As companies lay off millions of workers, the numbers are set to soar even higher. Likewise, the “hustle economy” has boomed in the last five years, with up to a tenth of the workforce making money from a side gig. We could create a special tax and regulatory regime for the self-employed that would compensate them for not getting any of the benefits of staffers, and allow them to take on an assistant without facing all the complications of employment law. Likewise, we could create a hustle tax allowance. If you could earn £5,000 a year from a side gig free of tax, that would be a huge incentive – and some of those hustles would eventually turn into proper companies.
-
‘I installed a heat pump in my home – here are five things I’ve learnt’From the size and noise of a heat pump to how much it costs to run one, Ruth Emery reveals what she’s learnt after installing one in her home six months ago
-
3 ways to work out if a stock is good valueThe only thing you can really control in investing is the price you pay for an asset – but how can you tell if you’re getting a good deal when it comes to the price of a stock?
-
'Nationalisation is not the answer'Opinion Labour's enthusiasm for nationalising steel was met with approval across the spectrum. Political consensus is a sign that thinking has been abandoned, says Max King
-
Why did the government take over British Steel – and was it a good idea?The government has stepped in to take control, not ownership, of British Steel, citing national security and other factors. But does that make sense?
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
What caused the Birmingham bin strike – and what does it mean for British businesses?The Birmingham bin strike is the fallout from an equal-pay claim brought by female cleaners. That bodes ill for the rest of British business
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
A new wealth tax is a terrible idea. The rich are already being hit by sneaky taxes – Merryn Somerset WebbOpinion Ideologues want to squeeze more tax out of the rich with a wealth tax. They’re already wrung dry, says Merryn Somerset Webb
