Hail the gloriousness of state investment

There’s an idea floating around out there that the State invests better than private industry does. That bureaucrats - or, if we prefer, elected politicians, those encapsulations of the will of the demos - will do better than capitalists at planning for and creating the vision of the future through such investments. You know the spiel, diverting societal resources from the chasing of fripperies to that of creating real and lasting societal value.

It’s also true that governments can borrow at lower interest rates than anyone other than Warren Buffett (one secret of his success really is that he’s been able to finance his holdings at lower rates than the US Treasury) therefore profits should be higher.

Well, OK, it’s a theory, like all such theories it should be tested against reality. Which has been done by Croydon council:

How scandal-hit Croydon council went bust with £1.6bn debt

Failure after failure is highlighted by a review that suggests police investigate possible misconduct in public office

Oh.

The thing that most struck us was this:

One of the biggest disasters of her tenure was the establishment of a council-funded developer called Brick by Brick, which was supposed to make profits for the authority by building homes on council-owned sites.

Negrini’s regime ploughed £200 million into the company, and Colm Lacey, her director of development, was appointed chief executive, despite having no experience running a commercial developer, let alone one with a £200 million budget.

In London’s suburbia by far the two largest costs in housebuilding are the land itself and the planning permissions. The land they already owned, the planning permission was something they themselves granted. They were also able to borrow at lower than commercial rates given access to Treasury funding. Yet in a rising property market they still managed to lose money on the deal.

How excellent. We’ve tested a theory and found it wanting. Despite the logic of the initial suppositions it doesn’t work. In fact we’ve tested the model to destruction. Reality differs from the prediction therefore this is a line of thought to be abandoned. To misquote Richard Feynman, in battles between theory and reality it is reality that wins.

So, no, using people good at that kissing of babies in order to get elected to perform that necessary and useful task of investing society’s resources doesn’t work. So, let’s not do that then.

This will, of course, be a disappointment to Professor Mazzucato but it’ll make the rest of us richer.

The TUC's gross error about the gender pay gap

It’s possible to wonder why we even bother to have government experts if no one is going to pay the blindest bit of attention to what government experts tell us. At which point the TUC tells us that:

Women work two months for free, reveals TUC analysis

New research reveals a 15% pay gap that widens dramatically after women have children

The more ancient among us might remember that episode between that proof of nominative determinism, Sir Michael Scholar, and Harriet Harman:

The note explains that the figure of 23 per cent quoted in the GEO press release relates to

the median hourly earnings of all employees (full-time and part-time combined)

…

Indeed, it is the Statistics Authority’s view that use of the 23% on its own, without qualification, risks giving a misleading quantification of the gender pay gap.

To translate out of bureaucratic politesse, don’t do that, it’s misleading at best and more accurately could be described as lying with numbers.

So, how has the TUC, this 14 years later, calculated the numbers?

The overall gender pay gap is calculated using all median hourly pay, excluding overtime, for all male and female employees

Therefore they’re wrong - either being misleading or possibly lying with numbers, use whichever according to taste and or opinion. As we’ve noted several times before, everyone’s been told not to do it this way yet still they persist. Why do they wish to mislead in such a manner?

Using the same data source as the TUC it’s possible to correct the numbers as we’re supposed to. The gender pay gap for full timers is more like 6%. Among part timers only it is in favour of women. By age shows a similar difference from the numbers the TUC uses. When compared properly across countries this puts the UK gender pay gap among the lower. The importance of this being that all the usual policies advanced to reduce it further don’t seem to do so. The Scandinavians with generous maternity and paternity leaves have gaps little different and sometimes higher than we do. Those places with substantially lower tend to remove women with children from the workforce altogether for cultural reasons. Sure, we could follow those policies but we think it’s not quite what people mean by either equity or the economic freedom and liberty of women.

There is one qualified ray of light in this.

Joeli Brearley, founder of the campaign group Pregnant Then Screwed, said: “This is a motherhood penalty. Women face maternity discrimination because they are seen as distracted and uncommitted to their jobs when they have children, whereas men actually get paid more after they have children.”

Qualified, of course, but the nub of the truth is there. It’s not that women are seen as, it’s that on average and across all women behaviour changes upon the arrival of children. Men do not “get paid more” when or because they are fathers, male behaviour - on average and across the population - changes upon the arrival of children so that men earn more.

That is, we do not have a gender pay gap in any meaningful sense. We have a parental pay gap. It’s possible to repeat the observed numbers from two simple facts. Mothers earn less than non-mothers, all else equal, fathers earn more than non-fathers equally ceteris paribus. Nothing else is required to explain all of the observed differences in pay across gender (or perhaps these days we should say sex if we’re allowed to assume a binary any more), age and everything else. Parental status.

We’re not sure why anyone thinks this is a surprise in a mammalian, viviparous, species. We see gendered differences to the arrival of offspring all around us. And given that this simplicity is all that is required to explain the observed differences then Occam’s Shaving Kit suggests that this is the explanation we should accept.

We might also observe that the standard human economic unit is the household - because of those decades long child raising processes - and so any economic analysis which tries to evaluate individual incomes without incorporating household formation and the reasons for it is going to be more than a little misleading.

But there’s more than just statistical manipulation to consider here in that policy sense. Assume we are right, as we are. Differences in individual pay across gender are explained, wholly, by different reactions to the arrival of descendants. Given that the Good Society is the one which is the result of the millions of individual choices we are at liberty to take then why would we actually want to change this outcome?

Explanations on a postcard to the TUC.

The Glorious State Planning Of Medical Training

How glorious it is to have the State in charge of a sector of the economy. For only the State can take a long-term view of matters. The private sector would just muddle along without taking those necessary decisions to ensure the achievement of the better society through proper planning:

Medical school places will double and thousands of apprentice doctors will be trained on the job under NHS plans to deal with chronic staff shortages.

An NHS workforce plan due to be published next month warns the health service will be short of more than half a million staff without the biggest boost in training for a generation and radical changes to how it recruits frontline professionals.

As we’ve been pointing out for near a generation now the increased feminisation of the profession has implications. The feminisation is a joy, of course, it’s part of the economic liberation of women, that wondrous event of the past century. But it does have implications, years off to have children, years of part-time working when the ickles are young and so on. Any planning system worth its salt would have increased the number of training places to match that - for any rational planner would have noted that more heads need to be trained when fewer lifetime hours of labour are gained from each head trained.

Medical training in Britain is a state-planned area of the economy. That rise in training did not take place and that’s all we need to know about the efficiency of State planning - it isn’t.

So, let’s not use State planning given the evidence of how well it doesn’t work then.

There is also a more minor point to relish here:

One in eight new doctors will qualify through apprenticeships by the 2030s as the NHS creates a new path into the medical profession for people who do not come through the traditional A level route.

Sensible enough.

A pilot is due to begin soon of training courses that allow nurses, paramedics or others working in the health service to train on the job for five years before taking the same exam as other medical students to become a doctor.

Why not?

The plan envisions thousands of such apprentices qualifying every year in the mid-2030s.

Apprentice nurses will see an even bigger expansion with a quarter of new students qualifying this by under plans to offer a better career path to healthcare assistants and other staff.

Ah, yes, that was the bit we were looking for. For it is only a decade and a bit more back that the decision to insist all nursing training should include a degree was taken. That’s now being walked back upon in favour of the older system of learning by doing.

Why not just go the whole hog and rescind that error of making nursing a graduate entry profession and go back to training nurses as we’re going to be training them anyway, by getting out there and doing nursing?

For we have already proven that State planning isn’t efficient, is capable of error, the most important thing about errors being willing to admit to them as that first step to reversing them.

Fixing UK school education

Not very many people think that the school system in the UK is adequate. Too many leave without the qualifications needed to see them into higher education or good quality jobs. Universities seeking more state school students are having to lower their standards to admit them.

We have Academies, state-funded schools that operate independently of the local authority. They have more freedom over their curriculum, budget, and staffing than traditional state schools. They are often sponsored by businesses, charities, or other organizations, and are required to meet certain performance targets in exchange for their autonomy.

We also have Free Schools that are similar to Academies in that they are publicly funded but operate independently. They are usually set up by parents, teachers, or community groups who want to provide a different type of education to what is currently available in their area.

Then there are Grammar Schools which are state-funded secondary schools that select their students based on academic ability. They are often seen as providing a higher-quality education than other state schools, but there are very few of them left and they account for only 5% of state school pupils.

The majority in secondary schools are in comprehensive schools, some of which are of high quality, but many are in the category described by Alastair Campbell as “bog-standard comprehensive.”

Competition and choice could improve schooling in the UK if we followed the Swedish system for schools, one which is very popular indeed with parents.

In Sweden, parents have the right to choose which school their child attends, including both public and private schools. This is made possible through the Swedish government's school choice system, under which each pupil is allocated a certain amount of funding from the government, which can be used to pay for education at any public or private school of the parents' choosing. This means that schools receive funding based on the number of pupils they have enrolled, rather than the location or district in which they are situated.

Parents can choose any school that is eligible to receive government funding, and are not limited by geographic location or residential address. The only requirement is that the chosen school must be able to provide education in accordance with the Swedish curriculum. The Swedish government also allows private schools to receive government funding, provided that they meet the same curriculum requirement.

Overall, the school choice system in Sweden gives parents a high degree of flexibility and control over their children's education, and has led to a diverse range of educational options being available across the country.

They include for-profit schools, also known as "independent schools," which are privately owned and operated educational institutions that receive government funding. The for-profit schools in Sweden operate as independent institutions that receive government funding, but they must meet the same standards and follow the same regulations as public schools.

The great value in the for-profit schools is that many are owned and run by companies that take their expertise acquired in running a school and transfer it to others in the chain. A Free School in the UK has to go through the procedures and teething troubles one by one, but the Swedish for-profit schools have already experienced them and learned how to deal with them.

The standard of school education in Sweden is very high, and parents whose children attend the private (state-funded) schools report a higher level of satisfaction than do those whose children attend state-run schools. Because free schooling is open to all, with free choice of school, no child is held back from access to high quality education.

There is a good case for the UK to put the ideological divide that has stymied school excellence behind it, and follow the Swedish model of giving parents a wide choice of different types of institution provided that they meet the quality standards required.

We're predisposed to not believing this 4 day week trial

This is no doubt terribly naughty of us but the initial set of thoughts is that we don’t believe much of it:

Quantitative research team

Prof. Juliet Schor, Boston College

Professor Schor has been announcing, for decades, that mediaeval peasants had 70 days holiday a year because there were 70 Holy Days a year. We are therefore predisposed to be very cynical about any report which contains her thoughts on working hours. As with Greg Clark’s early monograph on feudal working hours which is also oft used - the problem being that he measured the work done on the demesne in lieu of cash rent, leaving out all of the work done on the peasants’ own land. The simplest observation to counter Professor Schor’s claim is that animal-owning peasants who take 70 days off a year rapidly become non-animal-owning peasants and are therefore dead.

We’re also less than taken by the claims of revenue maintenance. The claim is that revenue rose by 1.4% over the time of the trial. Inflation was also around 5% over that 6 month period. We take that to be a real decline in revenue, not a rise at all. Certainly, there is no mention in the report of an inflation adjustment to their figures.

Our real complaint though is not about such details. Rather, to draw evidence from a different experiment carried out over the same period, Elon Musk’s actions at Twitter. Reducing the workforce from 7,500 to 1,750 (or so) and still having Twitter ambling along as before. Clearly it is possible reduce labour input and maintain output. But how? At which point we’d inaccurately quote the Twitter programmer who said that the major change is that he now doesn’t go to four-hour meetings about which shade of blue the site should use but amuses himself by actually working on some programming.

Or, from the report:

Staff also told us about the significant preparation period before the pilot. As part of the lead-in, the brewers studied their brewing process closely, breaking down the tasks involved, running their phone timers in their pockets, searching for new efficiencies, and developing a new set of production targets. One brewer describes an atmosphere of excitement, solidarity and challenge around finding ways to reduce working time.

A phrase we heard a lot in our conversations with staff was ‘mucking in’. On days where not everyone is present, staff could be required to jump in on tasks that may have previously been outside their remit, helping with brewing, packaging, or picking up the phone. The staff we interviewed celebrated the sharing of skills and sense of collective effort this involved. The manager said ‘the whole team now does what the manager does’, by forecasting busy periods and identifying what needs attention. When we asked him whether he was worried about work becoming more intense, he said they were busier, but less stressed.

The interesting point being that there’s no requirement for a four-day week here. That sort of more efficient use of labour - a rise in labour productivity - is possible with a five-day week too. Which would lead to, instead of a 20% reduction in labour input, a 20% rise in output. Or, at least, could do so. Or even, a 20% reduction in the number of people employed over a five-day week and the availability of that now surplus to this task labour to go and solve some other human need or desire.

More efficient working is, after all, more efficient working. There’s nothing here at all which suggests that the extra day off is the driver of this greater efficiency. Attention to removing inefficiencies, yes, but that can be done without the reduction in labour hours.

We’re entirely fine with people organising their working hours as they wish. We are, after all, the liberals around here. But this report is being touted as proof that the shorter working week works. Which it isn’t, not at all. It is proof that not having four-hour meetings about the colour blue can increase labour productivity. So, let’s not have four-hour meetings about the colour blue - or their equivalents, endless mutterings about whatever corporate nonsense is fashionable this week. Go to work to actually work that is.

The report claims that the four-day week brings these efficiency benefits. Which it doesn’t - or at least the evidence presented doesn’t show that. What it does show is that a concentration upon labour productivity increases labour productivity which is a somewhat less earth-shattering finding.

It’s entirely true that such an increase in labour productivity could be taken as more leisure, just as it could be taken as greater output and so more material wealth to be shared across the society. From which we can derive the actual liberal solution. Leave people be to decide upon such things for themselves and that split between more leisure and more stuff will be taken by the individuals concerned, the societal outcome being emergent from those individual actions.

That is, whatever we do, don’t have new laws about it.

Book Review - The Long View

Richard Fisher’s ‘The Long View’ discusses the role that short-termism plays in society. The book lays out a compelling argument for why people should embrace the long view and ways to do it. Short termism is what the author uses to refer to a bias people have to prioritise short term gains at the expense of the long term. 

Fisher discusses the root causes of short-termism, with a focus on capitalism and politics. In the case of capitalism, Fisher refers to quarterly reporting and misaligned personal targets as two contributing factors to the increased reliance of firms on short-term goals. Firms are guided by this three month timeframe to appease investors, sacrificing opportunities to pursue long term objectives such as R&D spending, advertising and patents. 

On politics, Fisher addresses one of its biggest flaws: that politicians are reluctant to pursue goals where the benefits are recognised long after the next election. If voters see no short-term benefits in the time politicians have been in office they are often eager to replace them. 

Fisher also draws on the role the media has in exacerbating the short-term mindset present among politicians. With the media hell-bent on creating the most shocking stories to attract the highest number of readers, they are more likely to focus on events that have just happened than on future events which are less tangible to imagine.

Further into the book, Fisher explores the mind's perspective of time. As humans, he explains, we are drawn to the present because we are psychologically distant from future events which seem less concrete and harder to picture. It is easy to understand then why politicians feel more ethically motivated to act on present day problems, such as rising unemployment, but less connected to long term challenges such as climate change. The suffering of those now is much more vivid and tangible than the suffering of those in the future. 

As well as diagnosing our temporal bias for short-term thinking, Fisher provides ways we can bring our ‘present’ and ‘future’ selves closer together, so we are less psychologically distant from the long view. This includes incorporating ‘perspective thinking’, which in short refers to viewing life in the mindset of a future being. 

What is most beneficial about this read is how timely it is. I recently wrote about how the lack of lab space in the Oxford-Cambridge arc is stifling innovation opportunities in the life science sector. By suffocating potential innovation, we are sacrificing benefits that future generations could feel. I suggested opening up areas of the green belt for construction or relaxing restrictions on Grade II buildings to allow existing spaces to be repurposed. While these solutions would allow long term innovation to flourish, politicians looking to please voters are not inclined to pursue policies that could lose them votes. This is a clear example where short term political gains are prioritised over long term benefits. 

At the Adam Smith Institute, we commit to establishing policy that brings benefits that will be felt years in the future as well as the present. So I would strongly recommend this book to anyone similarly frustrated by the current state of society and a culture we have established that seeks immediate gratification. It effectively tackles and provides thorough and thought-provoking solutions to a complex and urgent problem.

Pre-order here.

The important thing about that exploitation of Chinese labour

We do tend to think that this isn’t one of the terrors of the modern world:

China is mounting an economic assault on Gen Z – and it will end in disaster

Apparently Shein intends to grow its business. Providing more and lower cost clothes to the youth of today.

Yet perhaps the biggest losers stand to be its legion of unquestioning young customers, and the fashion industry’s attempts to convince the world that it really has changed for the better.

The youth of today getting more of what they want - clothes - and cheaper just doesn’t sound like making losers of the youth of today to us.

The truly important number in here though we insist is this:

Then, last autumn, a Channel 4 documentary reported that factory workers earned an average of £19 for a typical 18-hour shift,

Those are not high wages even by Chinese standards. The hours are well over the legal maximum and the pay seems to be half the minimum wage of even the poorest Chinese province. No, we’d not like to work for such sums. No, we do not support such law-breaking if indeed that is what is happening.

And yet. Using Angus Maddison’s numbers as updated (in 2011 $ at PPP and GDP per capita, so not the same number at all but a very useful comparison) we can see that Chinese living standards, on average, were about $1,000 a year in the year 1000AD. In 1500, about $1,200. In 1911 (a year of revolution) around $900. In 1978, after those glorious years of Maoism, $1,700 (not far off England in 1400 AD, ). By this measure they’re now $13,000 and change.

So, what are these wages at these factories? Perhaps $25 a day for a 300 day work year - $7,500. Adjust a bit to take us back to 2011 international dollars (maybe 30% inflation in the USD over that time) and call that $5,000 a year.

Wages and GDP per capita are not directly comparable, not at all. Wages will, on average, be lower than GDP per capita for obvious reasons. But, still, we can see the direction of travel here.

The claim is that $5,000 a year in wages (in 2011 $) is the most vile durance. This is what the oppressed at the bottom of the Chinese pile of vast inequality (and China is grossly more unequal than any single country in Europe) are getting. Yet that’s at least twice and given the difference between wages and GDP somewhere between 2.5 times and 5 times the average for the entire economy back when China was more equal under Mao.

So, what matters? Inequality? Or that economic growth which lifts all boats?

Well, that this 5 times the real living standard is now considered so low that it’s illegal in China does give us a very good demonstration of the growth being the most important part of what makes life better, doesn’t it? And that is why we think that’s the important number here. Yes, £19 a day is a low wage. It’s also vastly higher than the average even within living memory - isn’t economic growth a lovely thing?

Perhaps, to improve the human experience, that’s the thing we should concentrate upon then? Growth?

Financing higher education

The UK education system is in dire need of reform, and one area that requires urgent attention is the issue of student loans. In recent years, Australia has emerged as a world leader in this area, and it is time for the UK to take a leaf out of their book.

The Australian approach to student loans is simple and effective. Students are not required to pay any tuition fees upfront, and they only begin repaying their loans once they start earning a certain amount. The repayments are taken out of their salaries automatically, making the process easy and hassle-free.

Although it is a loan system, the fees are paid by the state with the student acquiring a legal obligation to pay them back when they earn enough to begin doing so. For 2021-2022 the threshold was A$46,620, or about £25,000. It is set annually. Repayment is between 1% and 10% of salary, dependent on earnings, and ceases when the cost has been repaid in full.

A crucial difference is that the interest rate is corrected for inflation only, so is zero in real terms, meaning that the debt is not mounting up as it does in the UK. This helps explain why the default (non-repayment) rate in Australia is under 17%, whereas in the UK it is close to 50%. If the UK were to put loans on zero interest in real terms, it would undoubtedly lower the default rate dramatically, and might reclaim the costs of zero interest by having a higher proportion of students paying off their loans.

The Australian system has numerous benefits. It ensures that higher education is accessible to all, regardless of their financial circumstances, and it reduces the burden of student debt that many graduates face. It also encourages people to pursue higher education, as they can do so without worrying about the financial cost.

In the UK, the current system of student loans is complicated and confusing. Many students are put off by the prospect of taking on large amounts of debt, and this is deterring them from pursuing higher education. This is having a negative impact on the economy, as we are failing to develop the skilled workforce that we need to compete on a global level.

The UK should adopt the Australian approach to student loans without delay. This would simplify the system, make higher education accessible to all, and encourage more people to pursue further education. It is a win-win situation for everyone, and it is time for the UK to take action. Why not follow Australia's lead and create a brighter future for our students and our economy?

So, who should pay for childcare?

This is not, in fact, quite true:

With the chancellor, Jeremy Hunt, looking at measures that could reduce childcare costs, which are some of the most expensive in the world,

The Chancellor is not looking at reducing childcare costs. He is looking at altering who has to pay them.

…demanding action on increasing state help

Quite.

Of the parents surveyed, 70% said they would work more if childcare were available for free. Treasury insiders accept that childcare costs are one factor keeping some people out of the labour market.

But this opens up that question which all too few are willing to discuss. OK, taking care of children is something that must be done and is expensive when it is done. So, who should be carrying those costs?

There are three - and only three - possible alternatives.

The first is that parents, in some mixture, take care of their own children.

The second is that parents work in order to earn the money to pay someone else to take care of their children.

The third is that taxpayers pay to take care of their children. Or, as that can also be put, everyone else in the country has to go to work in order to care for the children of those original parents.

An illustration of this happens to also be in the papers:

Which is to say, I birthed two babies in relatively quick succession, looked at the cost of childcare (£42.5k a year for a baby and a two-year-old in my part of London, towards which the government will contribute up to £2k a child under the tax-free childcare scheme), and decided that staying home made more sense than putting them in nursery and desperately trying to earn enough to break even.

So, the cost of caring for those two children is £42.5k a year. That’s just the cost. It doesn’t change whether it’s the parents doing it themselves, the parents working to pay it or everyone else being taxed £42.5k a year to pay for it.

That is, no one at all is talking about making childcare free, the only conversation happening is over who should carry the cost of childcare?

The argument in favour of the taxpayer picking up the tab is that there is some benefit to society - it makes us richer in some economic or possibly even moral manner - in the taxpayer doing so. Children are better looked after by paid labour perhaps. Or the value of the work done by the now freed-up mother (for it will likely be the mother who is the stay-at-home parent) is more than the value of the work lost by pulling some other young woman (for it will likely be a young woman doing the childcare) out of some other job to care for children. The problem with that second argument is that if this were so then the wages gained by the mother working would be enough to cover the cost of employing the other.

But this is the question that does need answering. Not, at all, whether childcare should be made free simply because childcare never will be free. There’s a cost and expense to it. The only thing that can be discussed is who is it that should be carrying that cost? Either in their own labour opportunities foregone, in the spending of the fruits of their own labour or in a slice off the top of everyone else’s labour?

Well, which should it be?

One answer we’re convinced is wrong is the Edwardian one, which is that finally the government should take action to solve the servant problem. So, other than that, what is the correct answer over the distribution of these costs?

Promoting growth and innovation

In recent years, many economists have proposed that a growth agenda with lower taxes is essential for the UK's long-term economic success. They argue that by reducing taxes, the UK can stimulate economic growth and create more jobs, which will ultimately benefit the entire country.

One of the most prominent economists who supports this view is Arthur Laffer, of Laffer Curve fame. It represents the relationship between tax rates and government revenue. Laffer argues that reducing tax rates can increase government revenue by stimulating economic growth and increasing tax compliance. This idea has been demonstrated in practice by countries such as Ireland, which reduced its corporate tax rate in the 1990s and saw a surge in economic growth and foreign investment. The UK saw this work with the Lawson tax cuts of the 1980s

Another US economist who backed a growth agenda with lower taxes was Milton Friedman, one of the most influential economists of the 20th century. Friedman argued that high taxes can lead to a "deadweight loss" in the economy by discouraging work, investment, and entrepreneurship. By lowering taxes, the government can encourage more economic activity and ultimately generate more revenue in the long run.

By reducing taxes, the government can stimulate economic growth, create more jobs, and increase government revenue in the long run. This, in turn, can lead to higher wages, better living standards, and increased prosperity. Of course, there will always be those who argue that lower taxes will lead to a reduction in public services, but this need not be the case if the government is able to reduce waste and improve efficiency.

One very important way to promote growth is to encourage innovation. UK companies need to invest in research and development. Increasing private sector investment in innovation can create a culture of innovation in the UK. Giving tax breaks to those who invest in innovation can set minds looking for ways to innovate. Encouraging collaboration between businesses and universities can also help in this regard.

The regulatory environment for innovators could be more supportive than it is. Regulation should be designed to encourage innovation, not hinder it. This includes ensuring intellectual property laws are clear and well-defined, as well as having regulations that promote competition and entrepreneurship, and make life easier for new market entrants with innovative products and processes.

A culture of encouraging entrepreneurship can lead to the development of innovative ideas and businesses. Providing training and resources to entrepreneurs can also help to promote innovation. There could be annual awards for innovative achievers to highlight their activities and to encourage emulation.

This mixture of low taxes, more investment in innovation and creating a climate of entrepreneurship is not some kind of witches brew dreamed up by theoreticians. It is a combination that has been shown to work in practice, and offers an attractive alternative to the decade of stagnation that might ensue if it is not applied in the UK.