Let’s get cracking: invest, innovate and rein in the idle
First published in the Sunday Times on 3rd July 2016.
Change always brings opportunity. From radical surprises can come inspiration. I can’t pretend I wasn’t shocked when “leave” won the referendum last week, even though I supported the cause. But once the initial surprise wore off, the potential started to emerge.
Britain should come together to manage the challenges. We want solutions, not pessimism; answers, not anger. And we need no gloating or smugness from “leave” voters either. Each side of the debate had its merits; I still believe the EU is undemocratic, bureaucratic and wasteful. But leaving it will not be without short-term disruption. We will gain from our departure only if we reform in a constructive way.
I believe there are several ingredients to a revival. In the first place, we require the national will to reform. A powerful desire to improve our lot, and actually take the necessary actions, is a vital precursor.
It involves abandoning the ingrained sense of entitlement and dependence all too frequent in many of our communities. We cannot afford to subsidise so many able-bodied citizens to remain idle. A way should be found for them to contribute. We must embrace a work ethic that involves scrapping restrictions and regulations that render our companies unable to compete.
As Simon Wolfson, a brilliant retailer and a “leave” supporter, has said, Britain can embrace comfortable decline, or dynamism — which can be uncomfortable. We need radical budgets and legislation to help business, and the Nimbys must compromise. The alternative is stagnation.
Planning, employment law, health and safety legislation, environmental and energy legislation — all should be rigorously simplified. Brussels red tape and Whitehall gold-plating must be cut. The common agricultural policy should be scrapped. Burdens on entrepreneurs must be lifted. Startups must be unleashed; innovators and inventors incentivised with tax breaks.
Perhaps the single most important task is to boost technical education massively. We must teach the craft knowledge — from construction to IT — that employers demand. Meanwhile, our output must possess sufficient added value that it cannot be easily substituted by low-cost producers.
Whole cities and regions desperately need to undergo industrial reinvention, just as countries such as South Korea and Taiwan have over the past 50 years. Innovation, diligence and discipline are vital for us to arrest the decline.
Other independent nations can provide case studies for the right policies to pursue: from Singapore to Israel to Switzerland, these are vigorous democracies that punch way above their weight economically. They have excellent education, are economically liberal and foster innovation and trade. They have never needed an equivalent of the EU to do well.
The pound was probably overvalued, and a weaker currency was inevitable sooner or later. Some sectors should benefit from lower sterling. Exporters will be able to offer better prices, and there should be some import substitution from domestic producers.
Tourism represents 7.5% of the UK economy and should boom. VAT should be cut on such services, as they do elsewhere. London is now the world’s most popular city to visit. In the next decade or so, inbound hospitality could easily double with visitors from Asia. We must play to our strengths in sectors such as the media, entertainment, education, health sciences, financial services, professional services and hi-tech engineering.
Investment has temporarily stalled, but it will resume. Britain enjoys rule of law and strong property rights, and better infrastructure than most. There may well be bargains available in the coming months. The rapid recovery of the stock market demonstrates that professional fund managers see value. I will continue to deploy essentially all my capital here because I know Britain is a good place to do business and can offer outstanding returns to risk-takers.
The country seeks leadership: a directionless vacuum cannot be allowed to develop. It is vital that we send a reassuring signal to the many foreign nationals working here that Britain needs the best talent from all over the world. I want them to stay because they are invaluable contributors. There is no room for small-minded prejudice — Britain is a tolerant and friendly place for anyone who wants to get ahead. We need to be more open, more engaged, more global — but we cannot have our trade and immigration policies dictated by Brussels.
Many are predicting that property prices will fall. This has silver linings. I suspect that expensive houses and commercial property values have already slumped because of the sharply increased levels of stamp duty, which is nothing to do with Brexit. If houses become more affordable then first-time buyers will benefit. It will also help redistribute wealth between the generations. And too much capital has flowed into high-end residential property speculation in London. More investment needs to be diverted towards more productive uses in the real economy, which helps create permanent jobs.
This referendum must act as a powerful reminder that British society is too focused on London. I run many dozens of operations outside the capital. Talent, investment and confidence must be better dispersed towards the regions. But addiction to boondoggle EU grants is not the answer. Most of those taxpayer handouts are dispensed to big businesses anyhow. Somehow prosperity must spread outside the southeast as part of a rebalancing.
The eurozone faces profound financial, welfare and demographic challenges. One result of our referendum may be that the EU also reforms. Meanwhile we have a flexible, pro-enterprise economy, a nation full of resourceful, ingenious people. I believe there will be long-term gains from controlling our own destiny but we must seize the day to secure them.