Tomorrow Britain starts to set its own rules, free of the directives of imperial Brussels. Boris Johnson said recently that his government kept deliberately quiet in 2020 about how it would unleash the British tiger lest it scare Michel Barnier during the free-trade negotiations. Perhaps that is true but it is alarming how much more time this government has spent talking about banning things (gas boilers, petrol cars, trophy hunting, live animal exports, junk-food advertising, beer consumed without Scotch eggs) than liberating them. I can think of no example of a ministerial speech this year that urged less regulation of anything.
At the moment we look like a country that is more Euro-dirigiste than the EU itself, ready to enter into trade disputes with the Commission about their disgraceful failure to be sufficiently bossy to the consumer, while demanding the freedom to give in to industries that refuse to grow unless they get generous “state aid”. That would be a shame. If Britain is to have a roaring Twenties, accelerating economic growth through innovation as a science superpower, then we need a government relentlessly committed to removing obstacles faced by entrepreneurs and to resisting the demands for subsidy from corporatists. Enterprise is sometimes the opposite of capitalism.
Virtually all economic growth comes from innovation. New technologies, new habits, new ideas are what drive up living standards. Innovation is the parent of prosperity but it is the child of freedom. History shows that innovation happened where people were free to experiment, fail, try again, change their minds and back themselves. Again and again innovation came from an unexpected source and went in an unexpected direction. A vaccine made from molecular messenger RNA was Katalin Kariko’s futile dream for several decades till this year. Sir Alec Jeffreys’ work on repetitive DNA sequences was an esoteric irrelevance till he invented DNA fingerprinting and transformed forensics. Who are the equivalents today? The mandarin in Whitehall does not know.
Everybody is in favour of innovation in theory but many are against it in practice. King Charles II tried to ban coffee. Hansom cab drivers demanded the abolition of the umbrella. Headlines in 1907 said the new craze for teddy bears “destroys motherly instinct and leads to race suicide”. Bicycles were accused of causing insanity. As Sir William Petty put it in 1662: “Pity the poor inventor. He runs the gauntloop of all petulant wits.” Big business, being bad at innovation, lobbies government to raise barriers to entry against entrepreneurs. Big pressure groups make hay with people’s fears of the new. Big government loves banning things to justify bigger budgets enforcing the bans.
The prime minister should tell his cabinet to discover their radical instincts and take the side of the innovator against big companies, big NGOs and big regulators. This is all the more crucial in the wake of a devastating pandemic that will leave us poorer, more indebted and at far greater risk of unemployment. Business as usual is not an option. Here are four policies that could unleash the British tiger.
An innovation principle is needed in law to require government to consider each new law’s effect on innovation. This would balance the precautionary principle, which has been wrongly twisted within the European Union as meaning that governments should consider the hazards of a new technology but not the benefits — even if those include reducing the hazards of an existing technology.
Faster decisions by government are vital. By far the biggest problem for entrepreneurs is not that regulators say no but that they take ages to say yes. Setting deadlines for responding does not work, because planners and other bureaucrats treat them as targets not long-stops. Instead, cut the budgets of those who make slow decisions and reward those who make fast ones. As Trevor Mundel, the head of infectious diseases at the Gates Foundation, put it to me recently, the big difference in the pandemic has been that medical regulators return your calls about approving new vaccines at once, rather than saying they might fit in a meeting in three months. He adds: “We must not go back to the old way.” The rapid approval of vaccines in the UK, contrasted with the EU’s lethargic approach, shows what can be done.
Simpler taxes would be a huge boon to entrepreneurs. Britain’s tax code is 15 times the length of War and Peace, which leads to entrepreneurs spending time ensconced with their tax advisers instead of innovating. If Rishi Sunak were to strip away all the tax breaks and loopholes that favour the rich and politically well connected, he could cut tax rates without cutting revenue, as Nigel Lawson did.
Energy prices must fall. Energy is not just another sector of the economy, it is the thermodynamic lifeblood of prosperity. We have some of the highest electricity prices for business in the world and the effect is to drive innovators such as Sir James Dyson and Sir Jim Ratcliffe to manufacture abroad. Current government policy is pushing energy prices up in order to virtue-signal at a climate summit in November that we are on course to meet the commitment to net-zero emissions by 2050. No other country will take a blind bit of notice.
Give the entrepreneurs of Britain cheaper energy, simpler taxes, swifter planning decisions, no subsidies and fewer rules and within a decade we’ll be swimming in revenues for a more generous NHS.