BLOG: All aboard the Burnham Express

I listened intently to the Prime Minister’s inaugural speech to the Commons and his first PMQs last week, and it seems the Burnham Express is going absolutely nowhere… with a departure time of never.

What became obvious was that his answer to the lack of growth in Britain – currently looking rather anaemic – is essentially more State, more control, more infrastructure, with the private sector apparently expected to pick up the bill.

Really?

Someone should sit him down, preferably over a ‘curry and beer’, and gently explain that he is no longer Mayor of Manchester. There is a much bigger, wider, and considerably more complex world out there. Britain does not need another municipal transport enthusiast, it needs someone who understands the dynamics of commerce.

Andy, listen up my boy, and please allow us to educate you since we think you need it badly.

The Private sector is roughly four times the size of the Public sector and is the engine that generates the wealth.”

Maybe they didn’t brief you properly at your crisis meetings at No. 10? For your edification, the private sector is roughly four times the size of the public sector and is the engine that generates the wealth upon which the State so dependably feeds.

Government does not create wealth on its own. It taxes it, regulates it, redistributes it, and occasionally provides the infrastructure and conditions in which other people create it.

Private sector

Therein lies the delicious contradiction. The legacy of the Starmer Government is more regulation of employers through Workers’ Rights, higher employment costs through the minimum wage, and increased Employer National Insurance. The Office for Budget Responsibility (OBR) estimates these additional costs will ultimately reduce employment by at least 50,000.

Youth unemployment is already around 16% going North, while graduates emerge from university clutching enormous student loans and discover that the jobs market has apparently misplaced the ‘welcome’ mat.

It makes employing people more expensive, running businesses more difficult and investing in Britain less attractive. Then we hold a seminar to investigate the mysterious disappearance of Britain’s growth.

Thousands of wealthy, mobile people have taken their capital, businesses, and tax contributions elsewhere.”

The abolition of the non-Dom regime was another triumph of economic self-harm.

Thousands of wealthy, mobile people have taken their capital, businesses, and tax contributions elsewhere, leaving Britain nursing the warm, morally correct satisfaction of having driven them away at the expense of the country – and now there are rather more empty boardroom chairs.

Our experiment has been to truss up entrepreneurs with taxes, regulations, and bureaucratic hurdles until they quietly relocate somewhere less hostile. After all, there’s nothing more mobile than an entrepreneur running from an asphyxiating tax regime.

More trains won’t create growth

And what is the great Burnham solution to this morass? More devolution.

Of course, Britain needs decent transport. Infrastructure matters after all. But infrastructure is an input to growth, not growth itself. A shiny new railway does not spontaneously manufacture entrepreneurs, productivity, investment, or profitable companies. You cannot make an economy prosperous simply by giving the State more levers to pull.

Burnham’s philosophy seems blissfully naive and endearingly parochial.

The Old Labour mantra dictates that if something isn’t working, give the Government control of it. Take your pick… which industry would you prefer? Water, Electricity, Banking, Gas or Transport? And when that fails, presumably set up a quango to pontificate about it… that should do the trick.

My observation is that Burnham is a career politician who has a basic understanding of the machinery of government.”

My observation is that Burnham is a career politician who has a basic understanding of the machinery of government, but hopelessly has no instinct for the rather ‘cut and thrust’ machinery and dynamics of Commerce.

Life Lesson No. 1: A private company has an unforgiving discipline, called a profit-and-loss account. Waste money and the company’s bankers squeal. Run out of cash and people lose their jobs.

On the other hand, the ‘dead hand of Government’ has a rather more forgiving and accommodating protocol to nationalise industries. Run out of money? No worries then just raise taxes to fill the void. Lose money on a project and call it an ‘investment’. And, whatever you do, bury the losses somewhere deep in the State accounts, where almost nobody will find it.

That is why the private sector matters. It takes risks, invests capital, invents things, employs people, and then hands a sizeable portion of its profits to the Government in taxes.

Look across Europe, where larger State ownership and heavier regulation have hardly produced an economic renaissance. Then admire our peers across the Atlantic with their deeper capital markets, entrepreneurial culture, and fiercely competitive private sector.

Businesses compete, innovate, and take risks rather than waiting patiently for the ‘Government Albatross’ to swoop down and bail them out.

More enterprise

Britain needs more of that spirit. Instead, we have created an increasingly bloated State and a burgeoning welfare sector, consuming humungous resources that might otherwise be invested in productivity, enterprise – and, rather importantly, defending the nation against our foes.  There’s an idea…

Ideological purity will not rescue Britain. Nor will the familiar political incantation about “believing in ourselves” and fixing Broken Britain through hope, aspiration, and the occasional sermon from the pulpit. This is puerile hyperbole.

Putting ‘the train carriage in front of the engine and then wondering why you are not going anywhere’ is not an economic strategy.

So, my advice to our Prime Minister is simple: You have a hard-nosed, experienced economist, Lord Neil, whom you trust and is trying to tell you how to revive Britain’s fortunes and a good start is to resist taxing the Rich for economic salvation.

For heaven’s sake, listen to him.

Or as President Ronald Reagan once, so eloquently put it: “The nine most terrifying words in the English language are: ‘I’m from the Government, and I’m here to help.”