by Peter Franklin
Monday, 10
January 2022

Lord Frost’s way forward is back to the 1980s

The former Brexit chief chooses to ignore Britain's productivity crisis
by Peter Franklin

Lord Frost — the ex-Brexit minister who staged his own exit before Christmas — is now telling the  Tories what to do in an interview with the Mail on Sunday. 

The way forward that he advocates is in fact back to the 1980s and the Thatcherite golden age: “We need to get the country going economically again and that means free markets, free debate and low taxes.”

He’s certainly right that we need to get the economy going again, but as part of the “free debate” about that, I wonder if he has any explanation for this:  

It’s a chart tweeted out by Professor Richard Jones — a scientist and expert on innovation policy, whose work has influenced Dominic Cummings among others. What it shows is that the UK has suffered a productivity crisis. From 2010 to 2019 only two OECD nations have done less than Britain to boost labour productivity — Italy and the special case of Greece (which had an economic meltdown during the Eurozone crisis). 

It’s an abysmal record, and if we’re serious about turbo-charging our economy then this is where we need to start. Furthermore, if free market Right-wingers want to us to follow their prescriptions, then they need to explain why less economically-liberal economies like France and Germany have managed to out-perform us. 

Frost also criticises the UK government’s net zero policies — an attack amplified in an op-ed from Andrew Neil, also in the Mail on Sunday. But investment in clean technology doesn’t seem to have done super-green Denmark — close to the top of the productivity league table — much harm. 

In fact, the Danes are only beaten by two countries: Ireland and South Korea. The Irish model can be dismissed because the Republic’s GDP figures have been distorted by tax avoidance schemes. The Koreans, meanwhile, have benefited from an ambitious, hi-tech industrial policy. 

As Ben Houchen — the Conservative mayor of Teesside — argues in a piece for The Times today, the new Tory voters of the North and Midlands want to see that sort of ambition from the British government. Therefore, Boris Johnson and Rishi Sunak have a big decision to make: whether to prioritise tax cuts or the strategic investments of the levelling-up agenda.  

Of course, what Lord Frost and his allies would argue is that lower taxes and reduced regulation is how we create the conditions for wage-boosting investment. But if that’s true, then why hasn’t the UK’s liberal economic model solved our productivity crisis?

Join the discussion

  • Maybe the best way to approach this issue is indirectly via training, ambitious infrastructure goals, business friendly tax and regulation policies. Also, the UK has a comparative advantage in energy resources: the governmùent should be out and about opromoting the development of these resources.

  • I can never understand the productivity issue in the UK. Anecdotally I see we’re doing ok relative to everyone else overall, but the productivity data always shows us to be massively underperforming. Is this data reliable?

  • Thanks Norman, I didn’t know this debate was going on (I am a supporter of Toby Young’s Free Speech Union and shall check out the Daily Sceptic more often).
    It sounds right to me though – it was only six months ago when we discovered that despite the upper limit of EU citizens in the UK being officially 3m, 6m applied for and got indefinite leave to remain. If you assume that not every EU citizen living in the UK applied, that would make the number what? 9m? 12m?
    And that is just EU citizens. I remember during the referendum seeing figures that the number of new NI numbers being issued every year was treble the number of immigrants captured in the official stats.
    In 2011 someone in the business told me that even though the official population was 64m, the supermarkets budgeted for 70m people living here in their planning. I wonder what it is now that the official pop is 68.5m. 75m?

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