Brexit taught us two things. Firstly, many pro-EU Britons fear for their red-tape careers and get a submissive thrill out of taking the side of foreigners. Secondly, we learned real Britons buy and invest more just on the strength of added freedom to come, even if they know working round the euro-quislings will take time.
So rather than just trying to get laws past entrenched EU collaborators, Britain’s government should be signalling new suggestions to the public. A few proposals will unshackle business sentiment while the Brussels knotweed is still being hacked away.
Here are 5 things Theresa May or her ministers could talk about right now to stimulate growth.
1) Without proposing a law, HMG can say it wants to see large firms return to paying invoices the next day. It used to work like this before the 1950s. Some allege it was GEC that started the abusive habit of giant companies paying invoices from smaller firms when they felt like it – at the end of the month or even later. This has clogged trade for half a century and is a way big firms can bully small firms. Be too eager in asking for your money and you might never sell to Mr Big again. Companies before the war used to, out of habitual honour, pay invoices at once. None of this “end-of-the-month” nonsense, but the next day or “within three working days”. Remember that phrase?
This is no laughing matter for small businesses. New firms routinely go bust because a big client pays them too late for them to pay their bills. This is unfair, absurd, and slows trade down to the pace of a stalled chain of house buyers. It’s a massive hidden tax that large firms levy on small firms. A couple of government officials saying changes to the rules are even being considered will have a major effect.
This will raise the velocity of money. Instead of sitting in large companies’ bank accounts earning interest half of each month, cash moves round between several firms several times each week, boosting trade and adding growth. It helps small firms stay in business long enough to learn how to become medium-sized firms. It injects cash into the economy at no unfair cost. It only penalises large entities sitting on money by deliberately paying their suppliers late, which they shouldn’t be doing in the first place.
2) The quickest and politically safest way to slow house-price growth, help homebuyers, and relieve homelessness: make noises about letting individual local councils bring back rates and dump council tax. Note the wording there – not a national overhaul, just whichever local authorities like the idea. Allow any council to trigger this switch over. This means that councils suddenly get something big to decide that’s in their power, and local politics suddenly matters. It also means HMG is not to blame if it doesn’t go well – just let councils choose between keeping council tax and reintroducing rates. The poll tax / council tax idea was, let’s admit it, one of Margaret Thatcher’s few mistakes. Rates were beautifully simple to levy and also acted a tax on house prices. Removing the rates put a massive twist into 1990s house-price inflation. Of course a council that changes over should lock in for a period – say 12 years – to stop constant changing back and forth.
Like all great ideas, the very possibility of rates returning to a council near you would magically do two things. It would revive local politics, substantially raising turnouts in council elections. Added to that it would needle the housing bubble with the eerie thought that our council too might one day go back to rates and bang goes your automatic bricks-and-mortar appreciation. What else? Instead of Gordon Brown’s ridiculous “bedroom tax”, homeowners nationwide would start letting out spare rooms again to cover their rates. The mythical “housing shortage” would evaporate as property-owners once again take in a lodger.
Arab and Russian oligarchs might even let a few deserving almost-rich people live in the West End again.
Council tax reduces the letting out of rooms for several reasons. First, landlords can be involved in the bureaucracy of whether their tenants are paying council tax or not: as the cynical old saying goes, a trouble shared is a trouble doubled. Secondly, since council tax separately charges tenants, it increases the effective price to tenants of paying for a room – and this really means that landlords get less rent, so have less incentive to let out. In some cases council tax has even cost landlords more who let out rooms. Thirdly, by splitting tax with tenants over property-owners, it increases returns to property-owners, which is how it is that it hugely added to house-price inflation. These repeated house-price bubbles since the 1980s, added to reduced letting out of rooms, explains the rise in homelessness since then. It also explains the myth of a “housing shortage” in a country that quadrupled to quintupled the size of its housing stock over a century – in a period when population didn’t even double but grew by only 50% from 40 million to 60 million.
Just talking about this idea will snip a percentage point off house-price bubbliness and homelessness. Even if only one local authority in the entire country took the plunge and did it, the reverbs would be felt right into central Chelsea.
Of course some will attack having two local-tax collection methods as “total chaos” but since Brexit we’ve learned. We learned that people who moan about “total chaos” are cowardly desk weasels denying others the elbow room Uncle Strasbourg gives them.
3) Ministers should talk about encouraging British businesses to accept Swiss francs, euros, Norwegian kroner, USD, Australian or Canadian dollars if they wish. Right now, some larger British shops take other currencies as a courtesy, but still the price is in pounds and gets converted (with charges) as a forex transaction. Allowing firms and shops to pay British taxes in other currencies – or even exempt foreign-currency balances from VAT and corporate tax if they are less than a certain percentage, such as 10% of turnover – would signal openness to foreign visitors, and give businesses some indirect tax relief. Furthermore, precisely those businesses doing most to correct Britain’s current-account deficit would benefit.
Encouraging the acceptance of euros without joining the currency straitjacket should annoy all the right apparatchiks, as well as show proper disdain for Guess Who insisting we gum up our economy with “value-added” tax in the 1970s. Again, just talking about it will show British voters this is about freedom and common sense.
4) Then someone asks what about Wales, Northern Ireland, Scotland? Can they too let their traders accept other currencies and quote in them for tax purposes? Correct answer – yes, of course. What’s more, why not digital crypto-currencies as well? BitCoin, DarkCoin, DogeCoin? Several countries will do this soon, so why not Britain now? Hang on – what about a currency for Scotland? A currency for Ulster or Cymru? Even better. Another yes. This would be the single best way to stimulate all those economies. The Irish Republic is a healthier economy today because for a few years in the 1970s it floated the punt away from sterling, and became a low-wage exporter to Britain. Then it joined the euro and that second big currency bloc slowly choked the Celtic Tiger.
The one-currency-one-territory habit is narrow-minded and recent. Before the 1690s all economies were effectively multi-currency, and they grew faster. The US grew quicker before the 1850s when there were many diverging dollar rates and central-bank regulation hadn’t been centralised. Even The Economist once bravely suggested Northern Ireland might benefit from a currency of its own.
Won’t prices in several currencies be confusing? In Ulster pound + the euro + normal sterling? No, because it’s only by choice. Businesses that don’t want to don’t have to. 95% of shops and firms will use vanilla sterling only. No compulsion. Simple to follow, simple to ignore. Another contrast to the red-tape bondage fetish of the S-&-M euro-dungeon.
Just mentioning the idea (“We are looking into possible ways to…..”) raises growth as firms invest ahead in the place that likes trade instead of hating it.
5) Then there are the ball-and-chain rulebooks themselves. The Health & Safety legislation that no small firm can afford to pay a lawyer to read and no small firm can spare the time to read themselves.
Just make it advisory.
Instead of the Roman/Napoleonic civil-code tradition on the Continent specifying how everything must be done in detail we have (through historical accident – we’re not infallible) a superior tradition. A court with a jury can look at how Businessman X behaved and come to their own conclusions. Businessman X could have consulted the health and safety legislation as best-practice guidelines. But it seems he did something reckless, which is why an injured customer or employee has landed him in court now. The Continental idea that all crimes and accidents must somehow be banned in advance is not only impractical – it shows childish denial of the richness of life. Juries and capable judges (at least judges more capable than some who oozed upwards during Blair’s legal “reforms”) can easily sort out law case by case.
Which is another reason why it’s good to leave the EU, another reason to revive our own lucky tradition. Britain always used to be open for business until we let the euro-Lilliputians tie us down like Gulliver.
All that’s needed is to just float each idea and say this is the direction we’d like to go.
A few ministers saying these things out loud has enormous power. President Trumpster understands this superbly. He also has to outmanoeuvre his own desk weasels in the bloated federal apparatus and media.
So the Donald is talking past them and communicating with the real public. Theresa May can learn from him.
Mark Griffith is a financial trader who keeps a weblog at http://www.otherlanguages.org
Thanks for a very interesting and quietly inspiring read. I particularly like the phrase “dark weasels” and will be using it at every opportunity from now on, if that’s ok.
There seem to be two problems with this:
1. The increase in housing stock may have outstripped population growth but this is offset by how atomised families have become, with everyone nowadays wanting ‘their own space’ – ie their own home.
2. Similarly, it seems unlikely that many people(unless desperate) will want to give up spare rooms for lodgers. Nowadays people like having spare rooms – where else would they store all the possessions that modern affluence has enabled them to buy?