My growth agenda: Get out of the way


shopsI had one of those depressing meetings with government folk the other day, this one on growth. It started well enough, talking about the need for deregulation, competition policy, and the burden of employment law. The trouble is, though, that deregulation has been found too difficult. Nick Clegg's intended repeal of outdated laws has been put in a drawer because there's too much outdated law for him to get his head round, while Francis Maude's proposed bonfire of the quango is a damp squib. And as for employment law, well, much of it comes from the EU, and the rest is stuff that is easy to create but not easy to repeal, since all such laws build up dependency groups.

So our meeting started going onto other fronts. Regional growth policy; more local banks to provide better access to funds for local businesses; whether government can buy more from smaller companies and help them to grow. Luckily I had dosed myself up with Stugeron, or I would have been retching under the table.

Regional growth first. The national GVA statistics (PDF) – which measure the contribution of each region to the UK economy – shows huge variation. London has GVA of £34,000 per head. At the other end of the spectrum is Wales, at £14,842, the North East of England, at £15,621, then Northern Ireland at t £15,795, Humberside at £16,569 and the West Midlands at £16,788. In other words, the contribution of every one of these entire regions is less than half that of London. And why? Could it be because these regions are exceptionally dependent on government spending? Has the state simply crowded out enterprise in them? If so, no amount of fiddling around with new programmes is going to help them.

Local banks? I'd love to see them, but again, is it not an excess of government regulation that has driven them out? Banks today have to be huge in order to bear the volume of regulation that is forced upon them. That's why you – almost – never see new banks being created. If we had a proper competitive market – and if banks had to tell customers exactly what risks they were taking with depositors' money – the whole sector would be revolutionised. The banks would separate their investment and deposit businesses, and local banks no doubt would spring up again, without Sir John Vickers or any other government czar having to raise a finger to create yet more regulation to solve the problem that regulation created in the first place.

As for government procurement... if you think that government spending is the key to growth, there's really no hope. Rather than taking advice from eggheads round the Westminster Village, ministers would be far more profitably employed by going round the small businesses in their constituencies and asking what stops them employing more people. That is my growth agenda.