King’s Speech sends mixed messages on growth
The sheer size and spectacle of the King’s Speech should be enough to humble any politician. After the fanfare of the campaign and the ecstasy of election, Parliament opens by reminding MPs of the seriousness of their work. Immediately, they are made palpably aware of their connection to centuries of constitutional tradition as the agenda of the upcoming session is announced to them by none other than His Majesty the King.
But recent years have not seen King’s Speeches live up to the occasion. The past decade plus of Westminster politics has been defined by a refusal to tackle the biggest challenges facing our economy – chief among them planning laws. Britain’s absurdly burdensome system has not only caused high house prices and rents but also a whole host of secondary effects dragging Britain’s economy down, from suppressed worker productivity and higher energy bills, to lower social mobility and higher carbon emissions.
But we may look back on this week’s King’s Speech as a significant turning point. After loosening planning restrictions on the building of solar panels and onshore wind farms last week, the Labour Party is making good on its promise to liberalise planning laws on house building and for crucial national infrastructure.
Proposals to free up ‘Greybelt’ land for development and make it tougher for local NIMBYs to block new developments are most welcome, as are plans to designate more projects as ‘Nationally Significant Infrastructure Projects’ in order to circumvent local governments altogether. The devil will be in the detail on this and the government has a long way to go, but this was a major step.
But the news wasn’t all positive. Almost 40 other measures were announced in the King’s Speech, many of which threaten to tangle the economy in even more red tape and government meddling. As our chief operating officer Andy Mayer explained in City AM this week, the ban on new North Sea Oil and Gas drilling will merely make us poorer and less secure. The government cannot change the reality that Britain will continue to be reliant on fossil fuels for many years to come.
UK businesses and workers seem set to be hit with a raft of new employment regulations. Our flexible and dynamic dynamic labour market is one of the shining successes of our economy, allowing us greater innovation and lower structural unemployment than most of our European neighbours. Each new mandate erodes that competitive edge.
The state looks set to take a much more active role in planning crucial sectors like energy and railways. ‘Mission-led government’ (the new term for old fashioned industrial strategy) is certainly en vogue but it still suffers the same old problems. Central planners lack the knowledge or incentives to direct resources better than competing market actors. The government forgets this age-old lesson at its peril.
To add to all this, the new government is set to plough on with the ill-conceived generational tobacco ban, whilst cracking down on vaping, the most effective means we have yet discovered to safely quit smoking.
The King’s Speech may have heralded a breakthrough on planning reform. But the government should be wary of undermining the consequent growth with stultifying and counterproductive regulations.
