Why the Tory right's "growth plans" won't work

Scrapping workers' rights and deregulating planning laws won't stimulate growth.

Labour may be most associated with calls for a "plan for growth" but recently they’ve been joined by another force: the Conservative right. Liam Fox was in the Times yesterday arguing for one, and the Free Enterprise Group group of backbenchers also have a book out entitled Britannia Unchained. Some of their ideas, however, might be not be helpful.

Cutting taxes for business

Cutting corporation tax has been proposed as a stimulus for business. There are two arguments behind this: firstly, a lower rate might attract foreign direct investment to the UK, and secondly, reducing the tax rate leaves overburdened businesses with more money, which could help them expand and create jobs.

Let’s first remember that any benefits from foreign corporations setting up shop in the UK would take years to filter through, and so not be suitable as a stimulus. In addition, it's not clear that cutting the rate further would attract much new business anyway. At 22%, the UK already has the fourth-lowest headline rate in the G20 after Saudi Arabia, Russia and Turkey. Comparable countries (Germany 31%, USA 41%, Japan 40%, France 35%), who all do far better in terms of domestic industry, all have higher rates. Any gains in competitiveness would be marginal at best.

As a boost to our existing businesses, a corporation tax cut is also largely pointless. This is because businesses have plenty of cash: UK firms are currently net savers and are sitting on a combined total of £754bn. This is not normal for a healthy market economy, where firms should be borrowing to invest. But there are no available investment opportunities, either because of a lack of demand or because of a more fundamental slowdown in the rate of innovation, and firms are just doing what is rational. Pumping them with more cash would be unlikely to have any effect. Since corporation tax is on a percentage of profits, there is also no reason why cutting it would make previously unprofitable investments viable. A cut in the rate would be unlikely to help.

Making it easier to fire people

The main recommendations to come out of the government’s Beecroft Report were ideas like no-fault dismissal and other restrictions on workers' rights. The stated justification is that firms are too scared to take on employees because it is difficult to get rid of them if they are underperforming.

One of the economic trends that ministers have sought to draw attention to is the contrast between growth and employment. Unemployment has been slowly but consistently falling, despite the economy shrinking. The most common explanation for this is because firms are hoarding labour, so they don’t have to reconstruct a skilled workgroup when demand returns in the future. The Bank of England looked at five indicators of labour hoarding and found that there was good evidence to suggest this is what was happening.

If this is the case, then firms are, in aggregate, feeling quite the opposite way that Beecroft suggests they are: hoarding labour beyond the point you need to is not really consistent with being terrified of taking on workers.

Conversely, if you’re suspicious of the Bank’s findings (and why not?) it could be possible that firms desperately want to get rid of these workers but can’t. This is unlikely because overall the UK labour market is pretty flexible (the third least regulated in the OECD according to the CIPD), but if this were true, then a lot of people would lose their jobs as newly liberated firms sacked with abandon. This would make the Beecroft proposals a recipe for unemployment.

Scrapping planning regulations

The Labour left has led calls for a housing stimulus, mainly composed of council housing. But an alternative take on this comes from Tory elements, within and without government. Get rid of planning laws, they say, and market-led housebuilding will commence.

The evidence suggests this policy has been plucked out of thin air. The Local Government Association reports that there are 400,000 homes with planning permission that haven’t been started by developers or have stalled their construction. Last year in London, where demand is highest, London Councils counted around 170,000 homes that had gained planning permission but were not been built.

This is not a picture of a planning bottleneck. It’s also why claimed successes of previous planning reforms that count permissions granted as delivery should be ignored, and why getting rid of more regulations will likely have higher costs than benefits.

Tory MP and former defence secretary Liam Fox is leading calls for deregulation. Photograph: Getty Images.

Jon Stone is a political journalist. He tweets as @joncstone.

Photo: Getty
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The science and technology committee debacle shows how we're failing women in tech

It would be funny if it wasn’t so depressing.

Five days after Theresa May announced, in her first Prime Minister’s Questions after the summer recess, that she was "particularly keen to address the stereotype about women in engineering", an all-male parliamentary science and technology committee was announced. You would laugh if it wasn’t all so depressing.

It was only later, after a fierce backlash against the selection, that Conservative MP Vicky Ford was also appointed to the committee. I don’t need to say that having only one female voice represents more than an oversight: it’s simply unacceptable. And as if to rub salt into the wound, at the time of writing, Ford has still not been added to the committee list on parliament's website.

To the credit of Norman Lamb, the Liberal Democrat MP who was elected chair of the committee in July, he said that he didn't "see how we can proceed without women". "It sends out a dreadful message at a time when we need to convince far more girls to pursue Stem [Science, Technology, Engineering and Mathematics] subjects," he added. But as many people have pointed out already, it’s the parties who nominate members, and that’s partly why this scenario is worrying. The nominations are a representation of those who represent us.

Government policy has so far completely failed to tap into the huge pool of talented women we have in this country – and there are still not enough women in parliament overall.

Women cannot be considered an afterthought, and in the case of the science and technology committee they have quite clearly been treated as such. While Ford will be a loud and clear voice on the committee, one person alone can’t address the major failings of government policy in improving conditions for women in science and technology.

Study after study has shown why it is essential for the UK economy that women participate in the labour force. And in Stem, where there is undeniably a strong anti-female bias and yet a high demand for people with specialist skills, it is even more pressing.

According to data from the Women’s Engineering Society, 16 per cent of UK Stem undergraduates are female. That statistic illustrates two things. First, that there is clearly a huge problem that begins early in the lives of British women, and that this leads to woefully low female representation on Stem university courses. Secondly, unless our society dramatically changes the way it thinks about women and Stem, and thereby encourages girls to pursue these subjects and careers, we have no hope of addressing the massive shortage in graduates with technical skills.

It’s quite ironic that the Commons science and technology committee recently published a report stating that the digital skills gap was costing the UK economy £63bn a year in lost GDP.

Read more: Why does the science and technology committee have no women – and a climate sceptic?

Female representation in Stem industries wasn’t addressed at all in the government’s Brexit position paper on science, nor was it dealt with in any real depth in the digital strategy paper released in April. In fact, in the 16-page Brexit position paper, the words "women", "female" and "diversity" did not appear once. And now, with the appointment of the nearly all-male committee, it isn't hard to see why.

Many social issues still affect women, not only in Stem industries but in the workplace more broadly. From the difficulties facing mothers returning to work after having children, to the systemic pay inequality that women face across most sectors, it is clear that there is still a vast amount of work to be done by this government.

The committee does not represent the scientific community in the UK, and is fundamentally lacking in the diversity of thought and experience necessary to effectively scrutinise government policy. It leads you to wonder which century we’re living in. Quite simply, this represents a total failure of democracy.

Pip Wilson is a tech entrepreneur, angel investor and CEO of amicable