Why regulators are the wrong people to talk about growth

The headline that started it was the BBC’s “Starmer asks UK regulators for ideas to boost growth”.
As a person who has started businesses, I was completely stunned. This is like going to the brakes of a car and asking them how to make it go faster.

First and foremost, the people he is talking to have never created a business in their lives, have no business acumen, are not risk-takers and have not the slightest clue how to set a business up. They have no experience of the market, the economics of a business or how to motivate people to start businesses, let alone keep them running in a difficult business climate.

Then there is their raison d’etre which is to stop certain behaviours irrespective of logic. I remember back in the 1990s my first inspector for the organisation before SEPA (the Scottish Environment Protection Agency). He told me that he was leaving because his judgement was no longer needed. He used to visit the polluting companies more often than the cleaner ones and used to test when he worried that something was wrong.

When it got to the point that he was measuring fish pens for size as this was the only thing measurable, he started to get sick of it. Finally when he was forced by the paperwork to be more in the office than on site, he took early retirement and got out. Regulators are box tickers trying to limit business now.

Finally you have the language issue. Every day a regulator is mired in legal language and all of the research into why everything that business does is wrong. To ask them to think about growth is like a Chinese doctor asking a Kenyan mechanic how best to plant potatoes. The words are heard, the language is not understood and even if it was understood neither party has the ability or experience to do anything.

So for those poor people invested in food business in this country, or for that matter almost any rural business, the future looks as rickety as it is possible to be. When the Prime Minister of a country gets to the point of asking questions like this, it becomes starkly evident that he does not have the slightest clue what to do next.

Let me clarify why I disagree with Mr Starmer so fundamentally. I believe that he thinks he can get all of the difficult business out of the way at the beginning of his term, so he has tried to settle with the unions (impossible), he has tried to ensure that he has raised tax enough to cover his spending ambitions and he has cut in areas that he believed could give him more to spend. He and his ilk think that this will allow him to rebuild the economy over the next years and triumph at the next election. Let me explain why this is not going to work.

The increase in National Insurance is a good example. It appears not to penalise working people but of course does. However, its biggest issue lies in the fact that it tells business where he thinks he is going to get money from. Britain has a government which is looking to raise money from business, in other words penalising investors and if you do that, they don’t invest in your area.

The best analogy for why this doesn’t work is the car again. It takes a relatively small amount of energy to slow a car down and a relatively large amount of energy to speed it up again. So when you encourage people to tighten their belts through limiting their earning power, you also limit growth potential. We will face just these things in the next years allied to a slow withdrawal of investment.

For our industry, hideously over-regulated already, faced with rising costs and now an added National Insurance bill, the climate is now as frosty as my garden this morning. It is time that government begins to understand that stimulating growth is stimulating people to take risks, either by spending their hard-earned cash or by starting a business or investing in one.

These are all things that are not done by the unions or the regulators. How about a novel idea: talk to people who have started real businesses that employ people to find out what they need in order to employ more people or even to investors?