Tariff response: slash red tape and lure the non-doms back
Shadow Business Secretary Andrew Griffith on the five steps the government should now take
A few years before he died, Henry Kissinger described Trump as “one of those figures in history who appears from time to time to mark the end of an era and to force it to give up its old pretences”. It is time for us to give up the pretence that the world owes us a living and time for the Prime Minister to set out a new plan this week based on the aggressive pursuit of growth and competitiveness through unleashing Britain’s private sector.
Free trade has benefited us greatly, it was this country which pioneered it and then used it to sell our inventions around the world — lifting billions out of poverty in the process. But we should be under no delusion: trade benefits those who have something to export, and like other businesses our exporters have been hurting from the day this government took office. Britain now has a unique opportunity. She has regained control of her trade policy and is benefitting directly from Brexit in the form of a lower US tariff band and a wide set of trading alliances including zero tariff goods exports to the EU and membership of the CPTPP.
So here are the five actions the government should immediately take:
Don’t retaliate. Keep calm and keep negotiating for a deal.
If Tariffs imposed by the US on our exports hit British jobs, all that imposing tariffs on imports from the US would do is raise prices for UK consumers and businesses. It would be an act of self-harm and simply makes things worse. It is a good maxim in Westminster that the wisest course of action is often to do the opposite of what Lib Dem leader, Ed Davey advocates – this is no exception.
I speak all the time to business leaders, and they are clear that retaliation would not help. The things we manufacture in this country are complex and often rely on components from abroad, including the US. Retaliating could mean a company faces a tariff when importing components, and then faces another one when exporting the finished product. Disaster. And let’s be clear: a tariff is a tariff, whatever its name or justification. So, this restraint must include not imposing so-called “green tariffs” like carbon border adjustments.
Fix Energy costs — for real.
A manufacturer in Birmingham, West Midlands faces four times the energy costs of a manufacturer in Birmingham, Alabama. This is economic suicide and unsustainable. Build nuclear at pace for sure but the crisis is much nearer term. The government immediately end the ban on new oil and gas exploration and amend the Energy Producer Levy to incentivise production in the North Sea. We must use all that god gave this great country, not ignore it as we import higher-carbon energy and force businesses and families to pay ruinously high prices.
Make the UK a haven for the internationally mobile, not a pariah
We have a highly progressive tax system. The top 1% in this country alone pay the fair share not just of themselves but the shares of 28 others too. When these golden geese leave, the treasury is left with a catastrophic hole which will need to be plugged with more taxes from everyone else and more cuts to front-line services. The prejudiced attack mounted by this Government has already seen 11,000 millionaires leave – one every 45 minutes. This should never have happened, but the US Tariffs offers the government the perfect cover to reverse it.
Ditch the red tape – don’t just talk about it
One stroke of one pen is all it will take. But the government must act not just talk about cutting red tape. The Employment Rights Bill is 300 pages of closely typed bureaucracy which will hold back businesses and drag us straight back to the 1970s world of strikes and stagnation. Its worst crime is that it makes it harder and riskier to give young people their start in life.
The snooze-fest inducingly named Extended Producer Responsibility is not much better. It’s a massive recycling tax which will see businesses across the country hit with enormous charges and compliance costs, supposedly to fund recycling schemes which many of them are already paying for anyway.
Rule out any tax rises for the remainder of this Parliament
We are already in a world of uncertainty. The Chancellor must not be allowed to pile her own on top. It is likely the sliver of headroom she gave herself in her most recent emergency budget has already gone and the markets sense it. It was a huge mistake of this government to take a whole summer before their first budget – filling the void with trash talking the economy to boot. This week she should name the date for her next budget attempt but also rule out any more taxes on business or measures that will hit domestic demand.
None of the impact of last week’s announcement will be fixed overnight. The path to rebuilding Britain as a high growth economy of successful exporters is a long one. But it won’t happen at all if the government does not change course. We are in a new era, and we need to confront that. As Mohamed Ali said: “everyone has a plan until they get punched in the face.” We may be on the ropes, but the bell has yet to ring.