One of the big disappointments with the Coalition from an economic perspective is its evident inability to articulate and enact a meaningful agenda for “supply-side reform”. Supply-side economics is just a poshed up term for a fairly simple idea – that governments can help the economy grow by removing the disincentives to business expansion, or, in other words, by staying out of the way and ensuring adequate, affordable infrastructure.
Yet as the Government wrestles, often ineffectually, with the deficit, the banking system, the schools programme and welfare reform, Britain’s numerous other supply-side deficiencies have gone largely unaddressed.
The Government promised to reduce the regulatory burden on business; in fact it has gone up. It also promised to make the tax system simpler, but it has become more complex.
We should, by now, have been well on the way to at least the promise of overall reductions in the tax burden on the economy; in the event, further tax rises the other side of the election now seem a certainty. Barriers to housing and other forms of development were supposed to have been removed, yet confronted by vested interest, ministers have backed off.
Nowhere is this lack of progress in establishing the building blocks for a more productive and prosperous economy more apparent than in energy policy, which for decades has never been anything other than a hopeless mess but is now in danger of transmogrifying into an unmitigated disaster.