Andrew Griffith: How the Government can put enterprise at the heart of the recovery

19 Sep

The author is a former Chief Business Advisor to Boris Johnson, former Chief Operating Officer of Sky plc and founder Chairman of the Campaign for Economic Growth. Follow the Campaign @C4EG_UK.

Economic statistics each week now reveal the state of the Covid-impacted economy like charred stumps emerging from clearing smoke.

This week it was the turn of the employment data, which showed 700,000 jobs have been lost since February, and unemployment will get worse before it gets better despite the Chancellor’s excellent interventions.

The Government is rightly shifting gears from an immediate crisis response to fostering a post-pandemic recovery. There is a vibrant debate about how to do this but it is widely recognised that private sector businesses have to be at its heart.

That’s one reason why I have founded a new group – the Campaign for Economic Growth – to utilise the expertise of those who have started and run businesses to promote ideas for growth. It is the challenge of our time if we are to deliver employment and prosperity for current and future generations.

With a Budget and a Comprehensive Spending Review as well as COP26 and EXPO2021 on the horizon, the Government is presented with the perfect platform to support those growing sectors where the UK already has competitive advantage. With the right policies, we can create excellent new jobs in all parts of the country, unleash billions in private investment, and grow the export revenues that are vital to maintain our standard of living and pay for the quality public services we demand.

The good news is that Covid-19 spared or even accelerated many of the sectors in which objectively the UK already has a world-leading position: artificial intelligence, quantum computing, the life sciences, FinTech, space, sustainable aviation and clean energy. No need here to “build back better” as these were already thriving, and each represents an outsize opportunity to create multiple billions of revenue and thousands of new high quality jobs.

Hydrogen is one good example. The UK has best-in-class academic institutions and pioneering businesses producing cutting edge hydrogen technology. The world’s first hydrogen ‘giga-factory’ will open in Sheffield next year, the world’s first tests of hydrogen in the gas grid are taking place in Cumbria, and the world’s first hydrogen double-decker buses are made in Northern Ireland. The UK really does have the ability to lead the global hydrogen economy. And unlike either oil or rare-earth-rich electric batteries, hydrogen can be produced entirely domestically, without the geo-political challenges of relying on supplies from the Middle East or China.

My own constituency of Arundel and South Downs looks out over the Rampion Wind Farm off the Sussex coast. This area alone has the potential for a four-fold expansion that could be used to generate clean, green hydrogen and provide the same boost to the British economy that North Sea oil gave in the early 1980’s.

The global hydrogen economy is set to be worth $2.5 trillion by 2050, create 30 million jobs, and meet a quarter of the world’s energy demand, and the UK should aspire to a big slice of this. This is precisely the sort of opportunity the Campaign for Economic Growth wants to see the UK seize. The Government has recognised the potential, recently establishing a Hydrogen Advisory Council, but it has many more levers to pull – not least as a major player in the purchase of the next generation of buses, trains, lorries and ships.

As in many other aspects of policy delivery, we must not allow the tendency of Whitehall departments to operate in Nineteenth Century silos to result in a merely linear response to exponential opportunities for growth.

Whilst some of our public services have been found sadly wanting, by contrast businesses have demonstrated their resilience during the pandemic. After the psychological ‘wobble’ of consumers panic buying, private sector food supply chains have been remarkable for quietly and capably getting on with their important job of feeding the nation. Many other businesses have re-purposed or reinvented their operating models and got back to work – again without fuss or headlines. Whilst the state and voluntary sectors have a vital role to play in society, we forget at our peril it is only businesses that create jobs, investment and tax revenues at scale.

The Covid-19 pandemic has had a devastating effect on families and economies alike. The road to recovery will be hard, but it also presents us with the exciting opportunity to use this as an inflexion point and to shape the economy of the future. The right decisions now will ensure the UK emerges from this challenge stronger and better equipped for the next one.,

Andrew Griffith: Suspending Air Passenger Duty could give the aviation industry the lifeline it needs

10 Aug

Never has there been a more important time for Britain to show that it remains open for business.

The UK has been an open, connected economy since before Adam Smith wrote his Wealth of Nations in the eighteenth century. The prosperity to pay for the high-quality public services that we have come to expect depends fundamentally upon trade, exports and the world actively choosing to “do business” here. Among leading countries, only Switzerland, Singapore and the UAE – three nations incidentally that are all now offering airside testing for Covid – are more reliant upon international trade in order to maintain their own standard of living.

Aviation is therefore doubly important to the UK economy. It is a large sector, accounting for many high skilled and well-paid jobs. But even more vital is its role at the centre of British trade, carrying exports in the holds of the same planes that bring investors, tourists and students to the UK. Indeed, as the UK seizes the opportunities of becoming an independent trading nation again at the end of this year, this strategic importance will become even more pronounced, given the export ‘infrastructure’ that our aviation industry provides in supporting connectivity and routes with the rest of the world.

That is why a recent report from Airlines UK and York Aviation projecting a decline in the UK’s connectivity from the impact of Covid is so dispiriting. While a short-term decline is unsurprising given the reality of the impact of the pandemic on the sector – one major London airport closed and air passengers at some points down by 97 per cent – the persistence in decline is.

Forecasts show that from this December the UK is expected to see a decline in long-haul connectivity of over 40 per cent. For domestic connectivity, this is forecast at 35 per cent, and for short-haul, just under 20 per cent. Such a rapid clogging up of the arteries of Britain’s trade with the world should concern us all.

What the report also shows however, is that not all of this decline is inevitable.

The UK has a diverse and competitive aviation sector and the Government is rightly reluctant to try to pick winners or to second guess the motives of commercial businesses. Some airlines were facing challenges long before Covid.

However, one sector-wide lever available to the Government to help kickstart a recovery in aviation is to suspend the additional burden of Air Passenger Duty (APD). By waiving APD for a year, it is estimated around half the routes that would otherwise be lost could be saved, providing a very real boost to the prospects of the sector.

Under this scenario passenger demand would increase by around 12 per cent, equating to 21 million passengers against a baseline number of around 170 million. Such an increase would safeguard thousands of aviation jobs across the country including those of my constituents in Arundel & South Downs near Gatwick Airport in West Sussex.

Given the reduction in passenger volumes anyway, the cost to the Exchequer would be relatively modest and compensated for in the longer term by retaining a larger industry tax base that would otherwise be lost.

If suspending the headwind of Air Passenger Duty can do anything to help to get UK aviation – our key linkage and lifeline to the rest of the world – back on its feet sooner, then we would be remiss not to seriously consider it.