Tories must think ahead
HOW wrong it would be to think all of the fissures in economic thinking ahead of the election are in the Labour Party. the tories also are having battles.
the big difference is that as the party of government, likely to be elected with a bigger majority and required to negotiate Brexit, the Conservative manifesto will have greater impact.
What we have seen so far is not greatly encouraging. No one can be happy with the arrogance and ‘feather-and-rocket’ approach to pricing by the big six energy companies.
they have been slow to lower tariffs when wholesale prices fall but super- quick to raise them when they rise.
But the price cap unsheathed by theresa May’s government is clumsy intervention in free markets which is backfiring, as the best-priced deals vanish and investment plans are pared back.
More competition and/or a windfall tax, which could be recycled to needy consumers, would be far more effective.
Among the problems to surface are tory differences over tax policy. the Prime Minister may be inclined to leave in place the tax pledge to leave income tax, national insurance and VAt ring- fenced from changes. Philip Hammond wants to see the constraints removed. Not because he, as a tory, wants to see higher taxation, but because the Chancellor recognises sweeping tax reforms, such as those that might be recommended by former Downing Street advisor Matthew taylor for the selfemployed, would be prevented by overelaborate tax promises. Also divisive is the tendency to rubbish George Osborne’s legacy. theresa May favours a West Midlands powerhouse focused around the election of former John Lewis boss Andy Street as a tory super-mayor.
But that should not come at the expense of Osborne’s Northern Powerhouse and Manchester’s success as a media and techhub. Among Osborne’s initiatives was the promise of £250m seed money to Rolls- Royce and partners to develop a generation of ‘Small Modular Reactors’ to keep Britain’s lights on.
Rolls promised to bring to the production chain the same robotic and digital precision technologies used to build the cuttingedge trent XUB engine.
Appallingly this proposal, just the kind of thing the UK needs post-Brexit, is stuck in Whitehall treacle.
Negotiating a favourable Brexit clearly is essential to the UK’s future prosperity. But in Britain’s new life outside the EU, we need to play to strengths. On the revenue front that should mean lower and simpler taxes, or even some revolutionary thinking such as a turnover tax on companies that captures the sales, not just of Marks & Spencer and Sky, but of Amazon and Apple.
What we need most urgently is investment in those parts of the economy where we have competitive advantage. Fintech and artificial intelligence are two areas where the UK is doing well. to maintain that edge we need both the infrastructure and the research. It is no use waiting for 2025 for Bt/Openreach to put down the fibre which will deliver ultra-fast broadband to 10m consumers and businesses that should be done now. the ducts, tunnels and exchanges are there – let’s get it done as a priority. Similarly, our great research universities cannot afford Brexit uncertainty. We must begin replacing research funding from Europe now, rather than allow any doubts.
the visa system must be fit for purpose so that the best PhD researchers, scientists and technicians from the rest of the world do not decamp. In particular, with the likely loss of the European Drug Agency from Britain, the Government should lose no time in setting up its British counterpart.
AstraZeneca and others argue that Britain could gain competitive advantage if such an agency was clued into the latest pharmacological and device breakthroughs, and could link in some better way to the NHS so that compounds could be brought to market both safely and more quickly. Immunotherapy drugs to combat cancer is an area where the UK already has a lead.
there are countless possibilities for building on the UK’s competitive advantage. Our politicians and industrialists just need to grasp the nettle. Fallen angels tHE value of Cambridge and Imperial to Britain’s post-Brexit future is illustrated by Softbank’s £390m investment in British tech simulation start-up Improbable.
Great that ARM owner Softbank is backing Britain again. Pity that the City appears more interested in short-term trading than committing funds to national genius.