Government and Institutions

Delivering Brexit isn’t enough: Where’s the pro-growth vision for Britain?

The 8 June General Election is being viewed through the prism of Brexit.

In one fell swoop, it is said that Theresa May can quash holdout Remainers, manage her party’s competing visions of Brexit, and improve her Brussels negotiating strength. Add to that giving herself until 2022 to implement a deal before fresh elections, and going to the polls now makes sense.

But in the absence of meaningful opposition, far too little thought or attention is being given to the needs of the economy and a post-Brexit vision.

Politically, this is understandable. In fact, a Faustian pact will develop between the Conservatives and the Liberal Democrats for this General Election to be EU Referendum 2.0. But the arithmetic truth is that the Brexit die is cast. What we need now is a discussion for Britain post-Brexit.

Thus far the Conservatives have been largely silent on this. May appears all but guaranteed to win a large mandate, but to what end? As well as enjoying the dominance of commanding a large majority, an understated effect of Britain leaving the EU is that the new government will be more powerful through virtue of having more powers. Repatriated levers in trade, regulation, tax, migration, agriculture and fishing will lead to a host of decisions to make. We have little insight into how the Prime Minister would seek to utilise them, and what principles will guide her in doing so.

The same is true on domestic economic policy. May has claimed the Brexit vote shows the public wants fundamental change. Yet so far her words and deeds are out of sync. An uninspiring first week of campaigning has seen the renewal of the arbitrary 0.7 per cent of GDP aid spending target, and a promise to cap energy prices – an economically illiterate policy for which her party rightly castigated Ed Miliband in 2015. In fact, the “boldest” move so far has been her willingness to flirt with abandoning a pledge not to raise income tax, national insurance or VAT.

I doubt many Brexit voters expected the referendum result to be interpreted as a call for Miliband’s price controls, foreign aid or tax hikes, particularly given the Conservatives are already projected to take the tax-to-GDP ratio to its highest level in 30 years. The only thing saving any of this from being an electoral albatross is that Labour would be certain to do more of each.

Yet the wider problem is that this kind of agenda is not how Britain is going to make a success of Brexit. The Prime Minister may not believe she needs to think much about economic reform. But so did David Cameron once. As the new Tory leader, he thought he could concentrate on other issues, right up until the point the financial crisis and ballooning budget deficit slapped him into shape. Now is the time to seek to turbo-charge the economy into any Brexit-related headwinds.

So significant is the Prime Minister’s room for manoeuvre that Britain has a unique opportunity to adopt an expansive free trade vision, to overhaul corporate taxation to attract inward investment, to liberalise energy markets, reclaim fishing grounds and replace the hated Common Agricultural Policy. With buckets of political capital to spare, the Tories could push for pro-growth property and land tax reform, planning liberalisation and school choice too – leaving Britain structurally much better placed for strong growth in a post-Brexit environment.

It remains to be seen whether May will seize the initiative. But her backbench Tory colleagues should be making the case that the space for this kind of agenda exists in the manifesto. Many of them will be content with cementing Brexit and worrying about the details of what to do with it and in preparation for it later. But this would be a huge missed opportunity. With such weak opposition, the time for a bold, free market policy platform is now.

Further IEA reading: Breaking Up is Hard to Do; From Nationalism to State Control; A Post-Brexit Framework for Electricity Markets

This article was first published in City AM.

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