This government’s dither and short-termism will hurt us all in the long-term – My Tribune column

Dither, delay, short-termism and uncertainty. These are the words increasingly used by industry and business leaders to characterise this government’s policies, whether it comes to housing, infrastructure, Europe or jobs and the economy as a whole.

Here are a few examples. In 2006 Labour introduced a policy for all new homes to be zero carbon from 2016. It won wide support from business groups, environmental organisations and the construction industry. The cornerstone of the policy was an agreed trajectory to 2016 that included changes to building regulations to improve energy efficiency standards in 2010 and 2013.

But the details of the regulations due to be introduced this April have now been delayed by Ministers until the autumn, causing huge uncertainty in the construction industry. With the government desperate to prove it can ‘deregulate’, the construction industry now fears the 2016 target could be abandoned, even though companies have been investing in order to meet it. Ministers driven by political posturing and short-termism have failed to grasp the much longer timetables businesses need to work on.

Similar dither and delay is also holding back many of the long-term infrastructure investment and decisions we need to make now. It’s not simply that the government has cut capital investment further and faster and that many of those projects which have not been cancelled are beset by delays. Big decisions, such as how we expand airport capacity in London and the south east, have been put off until after the next election.

That’s why I have asked Sir John Armitt, the chair of the Olympic Delivery Authority, to conduct an independent review into how we radically improve the decision-making, planning, delivery and finance of long-term infrastructure projects.

And then, of course, there is Europe. We do need reform and change in the EU. But David Cameron’s announcement of a referendum in five years time on Britain’s EU membership bought just a week of unity on his backbenches at the expense of five years of uncertainty – the most recent example of a government driven by political short-termism.

Being able to sell from Britain into the EU single market is a vital driver of future investment decisions for businesses. So at a time when the economy is flatlining it cannot be in our national interest for the Prime Minister to hang what many will see as a ‘closed for business’ sign around Britain for five years.

Rather than spending months agonising over this speech, David Cameron and George Osborne should have been focussed on why the British economy has ground to a halt. It’s now clear that the government’s economic policies are failing and have led to a wider uncertainty and lack of confidence which, alongside the impact of tax rises and spending cuts, has led many households and businesses to rein in spending and delay investment decisions.

Next month’s Budget is this Chancellor’s last chance to set out a new approach. Because after nearly three years of stagnation under this government the country faces the prospect that living standards will be lower at the time of the next election than the last.

To catch up all the ground lost over the last few years Britain needs a strong and sustained recovery. Action is needed now to kick-start our economy – bringing forward infrastructure investment, building more affordable homes and giving tax breaks to small firms taking on extra workers – to prevent three years of stagnation under Cameron and Osborne leading to further years of slow growth, lost investment and falling living standards.

As Ed Miliband said in his One Nation economy speech last week we need a government which recognises that outdated trickle-down economics won’t work and that the recovery must be made by the many, not just a few at the top. That must mean cancelling a top rate tax cut that will give an average £100,000 a year to 13,000 millionaires on the same day millions of working families have their tax credits cut. And it means bringing back a new lower 10p starting rate of tax, helping 25 million people on middle and low incomes, paid for by a mansion tax on houses worth over £2 million.

Will the Chancellor act? He has four weeks to end the dither, swallow his political pride, recognise his policies aren’t working and show he can put the long-term economic interest above political short-termism. Sadly, on his record so far, I wouldn’t hold your breath.

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Posted February 22nd, 2013 by Ed