Things government should not do – Part 1 by John Redwood MP

George Osborne has called for a debate on the limits to what the state should do. I hope he will be inundated with people’s views on all the needless interventions, meddlesome actions and over the top spending which has characterised national and some local government in recent years. It is difficult to know where to begin.

Today I propose a new approach to business. Government should stop the cash and cut the interference.

The last government in its final years went back to the 1970s, intervening , subsidising and trying to pick winners or stop losers on a grand scale. On its own underestimates it spent £120 billion on clumsy support for banks. It subsidised car manufacture. It spawned a whole host of small schemes to offer consultancy, advice and guidance and to reward certain types of technology or “new” undertakings. The result of all this was the worst recession we have lived through since the 1930s, and no evidence of a robust recovery led by the winners of the future that Labour so craved to create. Its regional policy was no more successful either. The more it spent in the poorer regions, the more they fell behind.

The new government has to sort out the dreadful banking inheritance. I argued at the time against nationalisation of the banks in difficulty. Labour stupidly replied that I wanted them to go under, refusing to see the true alternative – offering short term loans and guarantees for collateral and forcing major restructuring of banks at risk to reduce their liabilities and bring in new private sector capital. We now have to undertake that review of the nationalised banking estate, and get it into a shape which can lead to early sale of the assets and a better structure of banking in the UK.

The business consultancy, guidance and related schemes should be offered to the private market. If the work the quangos and civil servants do in these areas is valued, then let it be done in the private sector by them using private money to finance it. If it is not valued, then let’s close it down.

Let’s shut the RDAs, as we have often argued together on this site. In return for cutting cash to business, let’s cut costs for business at the same time. That means a substantial programme of deregulation using Nick Clegg’s Bill as the early legislative vehicle. I put in my letter to Mr Clegg some of the measures I would repeal which would cut business costs. Whitehall should set itself the target of cutting business costs of responding to regulation by say, £5 billion a year, which is as good as a tax cut. It would make a direct contribution to improving UK competitiveness and therefore creating more jobs. Start by scrapping the ludicrous Money laundering procedures which seem to be based on the belief that money launderers do not have utility bills and passports. Move on to the working time or anti overtime regulations.

Over to you for more ideas.


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