Growth Commission response to the Spring Statement

The Growth Commission has issued the following response to Rachel Reeves’ Spring Statement:

Shanker Singham, Chairman of the Growth Commission, said:

“While we applaud the Government’s pro-growth rhetoric and commitment to ‘tearing down regulatory barriers’, ministers must be judged by their actions rather than their words. On present form, after two successive quarters with contractions in GDP per capita growth – the yardstick against which to judge whether living standards are improving for British families – the rhetoric is failing to live up to reality. What Rachel Reeves announced today amounts to tinkering at the edges when a fundamental reshaping of policy in numerous areas is required.

“Rachel Reeves is right to identify that we live in a ‘changing world’ and the imposition of tariffs by the new US administration would certainly have a wide-ranging impact. But that provides an even more compelling reason to commit to a comprehensive trade deal with the US and undertake widespread domestic regulatory reform as part of an effort to restore the UK’s historic economic strength.“

Growth Commissioner Ewen Stewart added:

“If delivering growth is the Government’s ‘number one priority’, as the Prime Minister asserted after taking office, why are they pressing ahead with the growth-killing Employment Rights Bill? Why have they not revisited the 2008 Climate Change Act, which has helped burden UK families and businesses with the highest energy prices in the world, four times those seen in the US? Why have they not urgently reviewed the policies which are driving wealth creators (and the tax revenue they used to contribute) to leave the country at an alarming rate?

“The overall state of the economy and the public finances remains in a very delicate position, in no small part due to a successful private sector being eclipsed more and more by a weakly productive public sector. Twenty years ago the private sector represented two thirds of the British economy, but today it is just over half. To grow the economy once again, the confidence of the private sector needs to be rebuilt, rather than being taxed and regulated into oblivion. Borrowing also needs to be brought back under control, having reached eye-watering levels, despite the highest tax burden in seventy years. Public spending needs to be constrained and recycled into tax cuts in order to break the death spiral.“

Shanker Singham concluded:

“It is also increasingly clear that the Chancellor, like her predecessors, has been unreasonably boxed in by the Office for Budget Responsibility, whose forecasts are consistently incorrect and based on a Treasury orthodoxy which is not rooted in reality. The wild changes in the numbers handed to Rachel Reeves by the OBR on a week-by-week and even day-by-day basis in the run-up to today’s statement will have made the hole into which she has dug herself seem even more intolerable.

“There needs to be a transfer of power from the unaccountable technocrats in a body like the OBR to elected politicians who should be the ones empowered to set out a long-term economic plan and the policies they wish to pursue. The current apparatus sees ministers who were voted in by the people having to play second fiddle to faceless bureaucrats who never get held to account for work that so often turns out to be inaccurate and whose past advice has helped drive us into the economic doom-loop we are currently enduring. The Chancellor talks about not wanting to mark her own homework – but this is not homework, it is the economic policy of the government of the day on which she should be taking the lead and held to account in due course.”