What free enterprise needs from the government

The papers last week were dominated by the Prime Minister’s speech to the CBI, and his waxed lyrical about Peppa Pig World. While the business community and free marketeers are unlikely to be calling out for the monopolistic elements of Peppa Pig’s hometown economy (split between the single legal store owned by Miss Rabbit and the black marketeer Mr Fox), it should make us question what policies the enterprise community needs from the government.

First, with the end of furlough but continuing labour shortages, the government should resist the temptation to further intervene in the labour market. Any further lockdowns (and labour market intervention) should only be used at the very last option in response to the Omicron variant.

Regardless, the Government should also be wary of creating new employment rights or pushing minimum or public sector wages up too far. Moreover, it shouldn’t attempt to micromanage immigration as the IEA’s Professor Len Shackleton argues.

Second, it needs to stop interfering in the energy market. The collapse of Bulb, Britain’s seventh-largest retail energy company, is a result of government intervention – the energy price cap.

What’s more, policies to promote renewables and ban fracking means the UK relies on imported gas, pushing prices for businesses and consumers up. This is increasing the costs of many industries right across the country.

Third, businesses and individuals are now struggling under the highest tax burden since the 1940s. As IEA Director General Mark Littlewood states, this is likely to hamper the UK’s economic growth.

So, instead of borrowing from the European model of high spending and restrictive regulations, the UK should forge a pro-growth strategy of low taxes and less state intervention.

Reversing the planned decision to increase corporation taxes would be a start and would encourage firms to invest in the UK.

By implementing these changes, the ‘party of business’ might begin to give free enterprise the space it needs to unleash its potential and deliver greater prosperity for all.