Charlie Elphicke is the Member of Parliament for Dover and Deal. Follow Charlie on Twitter.
When construction falls 3.9% in the second quarter it doesn’t make
a lot of sense to talk about building projects that won’t happen for five or
more years – things like Heathrow, garden cities and building in the greenbelt.
It makes more sense to concentrate on the many existing planning permissions
out there for “oven ready” developments that are good to go right now. Grant
Shapps has pointed
the way on what can be done
with his success in bringing forward the development of 22,600 homes in Kent. A
development that will provide 60,000 jobs and help get things going in the next
year. Meanwhile the Government is looking
at guarantees to help fund
stalled infrastructure and housing projects. The more we focus on what can be
done now, whether through Ministerial activism or (results based) Government
guarantees, the more we are likely to accelerate recovery.
But we mustn’t forget the role
business can play in accelerating growth. Businesses have £700
billion sitting on their balance sheets. The Office for Budget
Responsibility (OBR) had expected a 7.7% increase in business investment this
year which has been revised down to 0.7%. Investment in kit like new
manufacturing machinery or more modern computers would increase GDP on the one
hand and make us more competitive over the longer term on the other. The
investment of just 2% of the cash businesses are sitting on (£15 billion) would
mean a 1% boost to GDP. The ONS believes weak business investment is due to the
continuing Eurozone debt crisis and weak domestic growth. So it’s worth
thinking about what steps could be taken to overcome the nervousness business
has about investing — like generous time limited investment tax breaks.
Not every business is rolling in a
cash pile. Bank of England numbers show how many, particularly
smaller businesses, are struggling to borrow the money they need to grow.
To the frustration of all, the big banks have pocketed all that quantitative
easing to puff up their balance sheets and failed to increase business lending.
So we should consider setting up a form of industrial bank focussed on getting
growth capital to smaller businesses. It’s worth remembering that before it
became a private equity fund, 3i was the largest provider of growth capital to
unquoted companies in the 1950s and 1960s.
We are not powerless to act. Indeed the Government has
taken effective action to rebalance the economy, restore the credibility of the
nation’s finances and kept interest rates low. Given what’s happened in Europe
that’s no mean achievement. Things may be tough right now, but they won’t be
fixed by quailing in the face of the Euro mess or adding to Labour’s toxic
legacy of debt and economic failure. They’ll be fixed by keeping our eyes
focussed on what we can do in the here and now.