Regulators don’t create growth 

Perhaps you could gather a group of traffic wardens and ask them how to build a racetrack. Or get the leaders of the Salvation Army over to suggest some cool ideas for a cocktail bar. Think up any improbable brainstorming sessions, and it will still be hard to imagine anything more awkward than the gathering of regulators Chancellor Rachel Reeves summoned to Downing Street today to give her some ideas on growth. After all, that is her job, not theirs. 

It hardly sounds like fun. The chief executives of such august sounding bodies as the Office of Rail and Road, the Competition and Markets Authority, and that happy sounding trio Ofwat, Ofcom, and Ofgem, have all been marched into No. 11 so Reeves can ask for their ideas on how to expand the economy. Labour told us during the election that the party would make the UK the fastest growing country in the G7, but with a meagre 0.1 per cent growth in November reported today, that doesn’t seem very likely right now. We can now expect lots of embarrassed sounding coughing, plenty of ums and ahs and finally someone offering to tweak a regulation or two as part of a ‘mission-orientated green growth strategy’.

Just the concept of frog-marching regulators into the Chancellor’s office and demanding ‘growth ideas’ is ridiculous. There are two big problems. First, it is not actually their job. The role of regulators is to tame the wilder excesses of free market capitalism, to put curbs and controls in place, and to make sure consumers are protected. The only real way they could promote growth would be to abolish themselves. Everything else they do will slow the economy down.

Next, it reveals the vacuum at the heart of Labour’s plans. Despite all the overblown rhetoric during the election campaign, it turns out that neither Reeves nor any of the team around her ever had the slightest idea how to make the economy grow faster. If they did, they would not be casting around for inspiration now. They would have cracked on with implementing their plans. Instead, they are now desperately searching around for inspiration.

It will come as no surprise if they don’t come up with anything. In reality, growth comes from encouraging and liberating businesses and entrepreneurs. It comes from ditching cumbersome rules, from lowering taxes, from making it easier to build things even if some people don’t like it, and from making sure it is relatively easy to hire and fire people so that new ideas can be tried out. It seems unlikely that the suit from Ofwat or Ofgem will make that point – but until Reeves works this out we will be stuck with permanent stagnation.