Leading article: Britain needs boldness, not more of the same

 

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As MPs return to Westminster for a new parliamentary term, the Prime Minister and Chancellor will be hoping that a first major cabinet re-shuffle and a flurry of measures to boost economic growth will prove a sufficiently convincing fresh start after the Government's error-prone spring. Judging by past performance, however, the prognosis is not good.

The reshuffle, expected today, is unlikely to yield any significant changes. Between the usual internecine struggles and the extra complexities of coalition, the Cabinet's heavy-hitters are all set to remain in place; only second-tier posts, such as Culture or Transport, are up for grabs. David Cameron's decisions will be interesting for the extent to which he seeks to placate his increasingly obstreperous, right-leaning 2010 intake, but this will be no Night of the Long Knives.

The real challenge is, of course, economic growth. A profusion of confusing metrics tells of an economy bumping along the bottom and the two latest manufacturing surveys, both published yesterday, only add to the gloom. According to one, output is still shrinking despite an unexpected boost last month; the other shows British industry facing the toughest trading conditions for three years and expecting a 1.5 per cent contraction over 2012. Against such a backdrop, the pressure on the Government to act is becoming inescapable.

For more than 12 months, this newspaper has been calling for bold measures to stimulate growth. True, the deficit-reduction programme is a constraint on action, and the euro crisis is far outside the Chancellor's control. But George Osborne's hands are not entirely tied. He has, however, lacked either the focus or the courage to make real progress. Instead, he has only tinkered around the edges, introducing a series of limited, piecemeal initiatives, with very little effect.

What, then, of the latest proposals? First comes a plan to set up a state-backed bank focused on lending to small business. On paper, the idea is a good one. Business finance is an on-going issue and there is evidence that state-backed lenders work well elsewhere, notably in Germany. There is also much to be said for ensuring that the various government initiatives are brought into one place. What the scheme does not do, however, is answer the central question about demand. Access to finance is, indeed, part of the problem. But there are also any number of businesses too wary to borrow, as the many company balance sheets awash with uninvested cash attests.

Then there are the proposals for further reform of planning laws. Mr Osborne is right to note the "ludicrous" length of time it can take to navigate the planning process and to take steps to ease the strain. But with one supposedly radical "planning framework" only just approved, the question must surely be whether the Government will prove any more resistant to (typically Tory) rural protection campaigners a second time around.

Third is the proposition to use government guarantees to kickstart £10bn of house-building, expected later this week. There is real potential here, given the dire state of the construction sector and Britain's ever more dysfunctional housing market. But the scheme will need to be ambitious, both in the scale of what it offers and in the political will to tackle those same Nimbys who will fight changes to the planning system, if it is to be effective.

Signs that Mr Cameron and Mr Osborne have – finally – woken up to the need to bounce Britain out of stagnation are welcome. There is also evidence that they are looking in some of the right places. Thus far, though, the proposals, like the shuffled Cabinet, look disconcertingly like more of the same.

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