Dyson: Stupid, short-sighted policies holding back economy
Growth is now a dirty word in No10, says businessman as he tells Britain to cut red tape to escape Covid inertia
THE “short-sighted” and “stupid” economic approach of Rishi Sunak’s Government is keeping Britain in a state of “Covid inertia”, Sir James Dyson warns today.
Writing in The Daily Telegraph, the entrepreneur and founder of the Dyson technology empire warns that “growth has become a dirty word” during Mr Sunak’s time in Downing Street.
The 75-year-old criticises the burden of regulations and increased business taxes, arguing that the Conservatives seem to think “penalising the private sector is a free win at the ballot box”.
He also suggests the Government’s failure to get workers back to the office after Covid has “badly damaged the country’s self-belief and work ethic”.
The broadside from one of the most prominent Brexiteer businessmen comes as the first signs of a battle on tax cuts emerges ahead of the Budget on March 15.
Treasury insiders say that no major tax cuts are expected, arguing that the focus must be on halving inflation this year – one of Mr Sunak’s five promises.
But Tory MP supporters of Liz Truss, whose premiership collapsed after her tax-cutting economic plan imploded, this week formed a new group to lead a push for growth.
Mr Sunak is facing pressure to cut the tax burden on households and businesses amid signs the UK will avoid the recession predicted by the Bank of England. The economy grew faster than expected in November, while official figures showed price rises slowed for the second month in a row, falling to 10.5 per cent in the year to December from 10.7 per cent in November.
Meanwhile, at the World Economic Forum in the Swiss resort of Davos, senior business figures yesterday said the world economy may be faring better than expected.
François Villeroy de Galhau, governor of the Bank of France, said there was “a feeling of optimism” that Europe would avoid recession this year, despite high inflation and economic uncertainty. “Activity is more resilient, we should avoid recession. I would not have said this three months ago,” he said.
In his article, Sir James writes: “I believe it is not too late for Britain to shake off its Covid inertia and its dependence on politicians for all the answers. There are sensible policies, such as research and development tax credits, that encourage investment in the UK and the creation of high-value jobs and careers.
“But the Government seems intent on moving in the opposite direction with the introduction of increasingly suffocating regulation, greater interference with business, and thinking it can impose tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box.
“This is as short-sighted as it is stupid. In the global economy, companies will simply choose to transfer jobs and invest elsewhere. Our country has an illustrious history of enterprise and innovation, born of a culture which we are in the process of extinguishing.”
Treasury insiders have rejected such criticisms in the past, arguing that the best way to trigger economic growth in the immediate term is to bring down inflation.
Jeremy Hunt, the Chancellor, is focused on halving inflation this year rather than lowering the tax burden, which is at a 70-year high.
But pressure from some Tory backbenchers for tax cuts is already starting to emerge ahead of the Budget. In Parliament yesterday, two dozen supporters of Ms Truss gathered in the office of Simon Clarke, the former communities secretary, to form what has been dubbed the “Conservative Growth Group”.
Ms Truss was in attendance but did not make a speech.
One former minister insisted it was “not a formal event” but a casual drinks party that doubled as “a conversation about the importance of growth”.
There were other warnings in Davos about the Government’s approach. Tony Danker, director-general of the Confederation of British Industry, said global investors are shunning the UK because the Government has no coherent economic plan.
He said: “Money is leaving the UK. Investors are freezing up and the heart of the problem is that we don’t have a strategy.”
Sir James Dyson is chief engineer and founder of Dyson
It is a measure of our political malaise that the Prime Minister recently declared it was a “big risk” for a politician to say that “change requires sacrifice and hard work”. That he deemed it dangerous to state something so obvious is deeply telling. Hard work and sacrifice should be a vote winner, not an electoral liability. But growth has become a dirty word and an idea too risky to contemplate.
This helps explain why our economy is in the doldrums and why, on current trends, the average British family will be poorer than their Polish counterpart by 2030. We can turn things around but only if fast-growing companies are allowed to thrive here. And we will have to act fast: it’s a global race and our competitors are hungry.
The Government has a role to play. Starting with the spring Budget in March, it must incentivise private innovation and demonstrate its ambition for growth. There are about 33million jobs in the UK, of which 27million are in the private sector. Yet too often it is the private sector that is being handicapped, and targeted to pay ever-higher tax bills, ranging from a whopping 32 per cent increase in corporation tax, a 13.8 per cent employer National Insurance rate, to embracing the new OECD global minimum tax rate, which targets foreign earnings, many of which fuel domestic investment and growth – no wonder the US is getting cold feet.
The Government took control of employees from companies during the Covid-19 pandemic by ordering them to stay at home. They have yet to direct them to return. This has badly damaged the country’s work ethic. It has left too many with the impression that only the state can solve our woes – which is simply a charter for ever greater centralisation and regulation. Now the pandemic has passed, private sector enterprise and innovation must be freed to generate the growth and create the wealth which are essential to get the country back on its feet.
Dyson’s growth happened largely despite government rather than because of it. It required the hard work and innovation of our engineers, as well as financial risk-taking. Yet the Government continues to interfere blindly with job-creating businesses, something it knows nothing about. A typical example is the move further to enshrine working away from the workplace – from day one of a new job. No thought has been given to the impact on engineering and other research-based companies, who require their employees to have access to laboratories and physical equipment to carry out their roles.
No weight, moreover, has been afforded to the importance of face-toface collaboration, shared culture, mental health, productivity and output, or the training of new and young employees, all matters which are fundamental to the success of businesses and employees alike.
In the process, ministers are creating invidious divisions in the workforce with unforeseen social and labour relations consequences. They are doing so in the knowledge that in the public sector, working from home, with flexi hours, has led to unacceptable delays for driving licences, passports, tax enquiries and worse. With this record, how can the Government insist it knows best?
In Malmesbury, we have set up the Dyson Institute of Engineering and Technology, our solution to the UK’S shortage of engineers. We were the first organisation of our kind to be given new degree-awarding powers. You might think the Government would support our Institute, which provides its 160 undergraduates with a globally focused job and salary, a rigorous, hands-on degree, access to state-of-the art commercial laboratories and which charges no tuition fees. Instead, we are now regulated by two different bodies which have completely different approaches. We have to employ two people full-time just to deal with them.
I believe it is not too late for Britain to shake off its Covid inertia. There are sensible policies, such as R&D tax credits, that encourage investment in the UK and the creation of high-value jobs and careers. But the Government seems intent on moving in the opposite direction with the introduction of suffocating regulation, greater interference with business, and thinking it can impose tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box.
This is as shortsighted as it is stupid. In the global economy, companies will simply choose to transfer jobs and invest elsewhere. Our country has an illustrious history of enterprise and innovation, born of a culture which we are in the process of extinguishing. We have got through the worst of Covid, but risk wasting the recovery.