Three ways the PM can stop economic disaster

We can be sure that the damage suffered by the UK economy will dwarf the banking crisis of 2008. A more rapid healing process this time round is going to require more imaginative treatment and stronger medicine. Already some of the Government’s initial ideas – around relaxing Sunday trading laws and easing rules for pubs and cafes – have seeped into the public domain. But they are going to have to think bolder.

First, a vast swathe of workers are going to have to look for different jobs. We need them to be able to find gainful employment fast. So, the Government must positively encourage entrepreneurs to take on new staff without incurring huge costs and open-ended liabilities.

One of the greatest barriers to business growth in Britain is taking the step from sole trader to hiring your first employee, because it incurs such high costs and risks.

To remedy this, we should allow businesses to take on a certain number of workers – perhaps 10 or so – on an agency worker basis.

The requirement to auto-enrol new workers into a company pension scheme should be suspended indefinitely – it is particularly expensive and time consuming for small businesses.

Similarly, we will need a brake on the growth of the minimum wage. If by this time next year it is illegal for businesses to create jobs which pay less than £8.73 an hour, then we should expect fewer jobs and longer dole queues.

Additionally, we should regionalise the scheme – having the same wage rate across the board probably doesn’t have much impact on employment growth in affluent Surrey, but will be limiting job opportunities in, say Jaywick.

Second, the new emerging businesses we will need to fill the vacuum left by the impending collapse of so many legacy companies don’t just need staff, they also need premises to operate from. This will require an overhaul of Britain’s absurd planning restrictions. We should make it easy to convert a building being used for one purpose and allow it to be used for another, whether this is a change of business designation or a switch between retail and residential. The current process takes months to navigate and often ends in failure.

Third, the Department for Business, Energy, Innovation and Skills should be rebadged and repurposed as the Department for Deregulation. Its mission would be to incinerate the mountains of petty red tape which are impeding economic growth and to act as the first line of defence in preventing the creation of any new ones. All of the regulations suspended during the crisis – from allowing restaurants to offer takeaways without needing a permit, to letting truckers drive for more hours – should be permanently rescinded.

If the Tories want to see a swift recovery from the greatest economic downturn since the Second World War, they must act on their pledge to “Unleash Britain’s Potential”.

Mark Littlewood is the director general of the Institute for Economic Affairs