PracticeConsultingOnly the Tories cut red tape

Only the Tories cut red tape

Governments do not have any money beyond what they extract from businesses and their employees in taxation. So unless the government looks after the wealth-producing sector of the economy it will eventually fail in its public expenditure plans.

My worry is that the government is now committed to increasing public expenditure by 3.4% a year over the next three years, but the economy is set to grow at only around 2.25%. This probably means more stealth taxes to come, but this hits the competitiveness and profitability of businesses, so the government is slowly strangling the goose that lays its golden eggs.

The CBI estimates that the extra tax and regulatory burden on British business now exceeds Pounds 32bn over this parliament. So the pro-business rhetoric of the government has not been matched in practice.

Extra red tape and government regulation are squeezing the entrepreneurial life out of this country. It is particularly damaging to small businesses which are often run by people with little time or inclination to engage in lengthy consultation exercises with central government.

The government says it is aware of the problem and has even announced plans for a deregulation bill, though it will not be enacted before the general election.

Meanwhile, the regulatory juggernaut rolls on, fuelled particularly by the EU. Last year, parliament passed a staggering 3,600 new regulations, up on 1999 which itself was a record year.

We must stop this regulatory tide. I propose that new regulations are accompanied by a ‘sunset clause’ which ensures that they lapse after a certain period unless parliament positively decides to renew them. Combined with independent assessment of costs and benefits, this should concentrate the minds of MPs and civil servants.

On tax, we can start by abandoning a new energy tax, the so-called climate change levy, which is due to come into effect in April. It will be paid by all businesses and is an unwelcome burden when energy prices are rising anyway.

It is a clumsy and damaging way of responding to the threat of climate change, which is far better tackled in other ways. We will abolish this tax.

  • Rt Hon David Heathcoat-Amory MP shadow secretary of state for trade and industry.

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