Here's the glaring problem with the government's approach to economic growth

The mantra from the government is grow, baby, grow. Economic growth is being presented as the absolute priority, without which we cannot afford to improve public services and living standards. Growing the economy before net zero, before levelling up opportunities, before rescuing the NHS. 

There’s some logic to this. Of course we need to boost growth – albeit within sustainable limits. Public services need to be funded by tax revenues (unless you’re a modern monetary theorist, but that’s another story). 

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But the problem with this approach is twofold. Firstly, we live in a world of doom loops and vicious cycles. This means that it’s hard to deliver growth without first making progress in some of the areas that, according to the government, can only be tackled after we’ve started to grow the economy again. 

There are many examples. A prosperous economy requires a healthy workforce, and yet poverty, poor quality work, inadequate housing and a creaking health service are harming the physical and mental health of millions of Britons. A productive economy depends on a society that offers everyone the opportunity to maximise their potential, and yet high levels of inequality deny these chances to millions more. 

The second problem is that, for reasons that remain unclear, there has been a recent burst of rhetoric from the government about regulation being a barrier to growth. The prime minister has likened regulation to Japanese knotweed, and there has been much talk about the power of deregulation to unlock the potential of the British economy. 

There is little substance behind this argument. As a report that we have published today (14 February) in collaboration with Unchecked outlines, a strong regulatory system is essential for delivering inclusive growth that makes everyone, not just a few, better off. It is the mechanism that ensures that we minimise the risks of the free market, while unleashing its potential to deliver greater prosperity and better living standards.

A well-designed and properly enforced regulatory system is key to the delivery of all five of the government’s missions, from growing our economy and breaking down barriers to opportunity to achieving our net zero target. Regulation is the foundation of fair markets, consumer protection, and investment in key areas such as clean energy, infrastructure, and skills development. These are the very building blocks of a fair and dynamic economy.

By contrast, deregulation puts people’s lives and livelihoods at risk, as we saw in the Grenfell Tower tragedy and the 2008 financial crash; the only beneficiaries are those who are prepared to put profits ahead of people. 

Key figures in the government recognise this. Just yesterday (13 February), the deputy prime minister, Angela Rayner, said at a responsible business event that “fairness for working people does not hold back growth and innovation – it drives it”. The draft Employment Rights Bill is predicated on the notion that protecting workers’ rights is not just good for the workers in question, but also benefits employers, and supports a stronger economy for all of us. A majority of businesses agree, and so do the public. 

As many experts have pointed out in recent weeks, the government lacks both a unifying vision and a coherent theory for how it can achieve economic growth. This void is filled by those with the loudest voices – the people with an interest in maintaining the status quo. The false narrative that they push is the idea that inequality is an inevitable side-effect of economic growth, and that regulation is a barrier to it. In fact, the opposite is true. Decent regulation supports growth, and high levels of inequality undermine it.

Will Snell is the chief executive of the Fairness Foundation.

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