There is (was?) a way through
Updated: Feb 24
The lesson I take from the reaction to the “mini-Budget”, including from some sector leaders, is we are all socialists now. In the decades since Mrs Thatcher’s radical reforming government came to an end in the early 1990s, the economic belief-system of the nation has moved gradually but inexorably to the left. Where we once had a firm belief a balanced budget and free enterprise were the best route to deliver wealth and happiness to an aspirational nation, government and voter now look to solve any perceived unfairness with yet more rules and regulation funded by an ever-greater deficit. This has led to 51% of households being on some form of state support and the tax burden rising to levels not seen since the Second World War.
During lockdown, there was a calamitous acceleration in this trend and the nation moved from social democracy to full-on Soviet-style dictatorship with every aspect of life subject to control by Big Boris in an effort to suppress the virus. Even questioning this shift was deemed criminal.
At the same time, since 2009 the huge amount of free quantitative easing-cash swilling around the system has caused an asset pricing bubble on a scale not seen before in the UK. For our sector, this has led to huge increases in freehold and rent pricing. And for the same reason, many of our so-called zombie businesses with failed brands and business models have continued to find funding as they lurch from company voluntary arrangement to company voluntary arrangement. While this may have protected jobs and temporarily kicked the lender-can down the road, a high street full of struggling brands has clogged up the market and dampened the animal spirits we need to drive growth, innovation and sustainable employment. For every Loungers there may be as many as two or three such zombie businesses. And well-run businesses suffer at the hands of this government and financier-led life-support. What level would property costs be at without it, for example? (We might be about to find out).
On to the great moment of reckoning. A new Tory chancellor stands up and launches a radical new economic strategy, unfunded and untrailed in any manifesto that the wider country could vote on. Lower taxes, deregulation, freedom! The economic promise of Brexit – long delayed by covid and Boris – finally at hand.
Yes, the presentation was woeful. Blimey, wasn’t Liz just awful that day? But as an entrepreneur I’ll take a free-market approach any day of the week against raiding companies’ profits and an expensive and unreliable green revolution teeing up the rebirth of nationalisation. I know of at least one hospitality leader who has been approached by Jacob Rees-Mogg asking for a list of unhelpful regulations that stifle business so he can slash them – let’s do this!
But the colossal misjudgement of Truss and company is to assume the population at large, or even businesses, would be interested in such a gift. After 30 years of demonising free enterprise, during covid the message final stuck. So much so, that even us private sector types are suffering from Stockholm Syndrome and think the answer to our future prosperity is not for government to get out of the way, but for yet more so-called “support” from our captors.
Labour can’t believe its luck – Kwasi had hardly sat down before the tanks of the left were parking on the newly vacated centre ground. The 33% point lead in the polls slammed the point home. And the great risk is that free-market, business-friendly economics are now in danger of joining free speech and other once-hallowed cancelled concepts in the dustbin of history.
The chief flaw in that Truss argument is even a well presented, well thought through version of the mini-Budget would have resulted in increased uncertainty and instability given the 18-month window available to see results. Most businesses are dialling back growth plans as no one really knows the mid-term impact of all of this will be. So the cure looks worse than the disease right now. And though it pains me to say it, right now the socialists do look the more stable option.
But don’t get too relaxed. A Labour government would inevitably lead to higher taxes and greater regulation. We have become so used to the drip-drip of new rules in hospitality every year that we don’t believe that it can be any other way. The idea that workers and consumers could form their own opinion on a company’s ethics and behaviour – particularly given the transparency of the internet age – and vote with their feet (as in reality they already do) seems like a dangerous idea now.
Look, I didn’t vote for Brexit, but it does present an opportunity – with the right government – to roll some of this stuff back – and in time also to reduce the tax burden. I hope the terrible prat-falls of the current Tory clown-car don’t deprive us of this opportunity for another generation. I still think there is a way through – it requires Ukraine to resolve and several other big bits of luck – but the security shutter on the emergency exit is rumbling shut.