Share<\/p>\n
<\/p>\n <\/a><\/p>\n <\/p>\n <\/a><\/p>\n When business leaders say planning is broken, ministers should listen <\/li>\n <\/p>\n <\/a><\/p>\n <\/p>\n <\/a><\/p>\n Britain needs more rivalry and less red tape <\/li>\n <\/p>\n <\/a><\/p>\n <\/p>\n <\/a><\/p>\n The state is strangling innovation <\/li>\n<\/ul>\n After nearly two decades of weak growth, stagnant wages and stubbornly high inequality \u2013 alongside one of the worst productivity records in the developed world since the financial crisis \u2013 Britain\u2019s central problem is how to get the economy growing again.<\/p>\n We don\u2019t build enough homes. We don\u2019t generate enough cheap energy. We don\u2019t invest enough capital. And we make it far too difficult for new firms to challenge the comfortable incumbents.<\/p>\n Take planning. Britain has developed a system that makes construction slow, uncertain and political. England added 208,600 net additional dwellings in 2024\u201325, down from 221,070 the previous year, and well short of the 300,000 target. Infrastructure is constantly delayed and over budget. Energy networks cannot expand quickly enough. The result is not only higher costs. It is lower productivity.<\/p>\n That frustration was on show at the Guildhall this week, during the Margaret Thatcher Conference<\/a> organised by the Centre for Policy Studies (CapX\u2019s parent organisation), which focused on prosperity and featured the insights of a succession of business high-flyers.<\/p>\n Simon Wolfson<\/a>, chief executive of Next, told the conference that the UK planning system is the \u2018single biggest drag on prosperity\u2019. He argued that something far more radical is required, and that the current model is fundamentally incapable of delivering the housing and infrastructure Britain needs. When one of Britain\u2019s most successful business leaders is calling for the existing system to be torn up, ministers should accept that incremental reform is no longer credible.<\/p>\n Our energy policy makes this worse. Britain has pursued decarbonisation without a coherent strategy for keeping supply cheap and reliable. Since 2024, the UK has had some of the highest industrial electricity prices in Europe, well above those faced by firms in countries such as France. Energy is a necessary input into almost all production. When energy is expensive, everything else becomes expensive too.<\/p>\n And it\u2019s not just the cost of energy. It is the structure of the market that needs fundamental change. Greg Jackson<\/a>, founder and chief executive of Octopus Energy, criticised a dysfunctional policy framework in which excessive regulation and poor market design restrict competition and prevent suppliers passing cheaper energy to consumers.<\/p>\n Then there is competition more broadly \u2013 or rather, the lack of it. Britain has become less dynamic. Too many sectors are dominated by incumbents facing insufficient competitive pressure.<\/p>\n A more competitive economy is a more productive one. Real rivalry forces firms to sharpen up \u2013 to innovate, cut costs and improve productivity. Remove that pressure and complacency sets in. Britain has allowed a dense thicket of regulation, often well-meaning in isolation, to harden into a barrier to entry and expansion. It is the smaller, younger firms \u2013 the very ones most likely to drive future growth \u2013 that feel it most acutely.<\/p>\n Entrepreneurs see this plainly. Speaking at the conference, Luke Johnson, entrepreneur and chairman of Gail\u2019s, argued that in Britain success too often runs into a system that is slow, adversarial and resistant \u2013 where building and scaling a business is a constant struggle against red tape and high costs.<\/p>\n This sentiment was echoed by speaker after speaker. The biggest barrier to growth is not a lack of ideas or effort, but the friction imposed by an increasingly interventionist state. More regulation, higher taxation and an increasingly onerous Net Zero framework were condemned for strangling innovation, employment and prosperity.<\/p>\n Ben Francis<\/a>, co-founder and chief executive of Gymshark, drew resounding applause when he told Emma Jones \u2013 UK Small Business Commissioner and founder of Enterprise Nation \u2013 that government should \u2018get out of the way\u2019 of SMEs and, more pointedly, to \u2018leave us alone\u2019. It captured the mood of many in the room.<\/p>\n Our tax system reinforces the problem. Britain now combines a high overall tax burden with a structure that weakens incentives at the margin. Fiscal drag has pulled more workers into higher tax bands, with 5.7 million higher-rate tax payers and 893,000 additional-rate taxpayers, according to the latest HMRC figures. For business, constant changes to the tax regime and investment incentives undermine confidence. Stability matters as much as the level of tax.<\/p>\n The labour market tells the same sorry story. UK unemployment fell to 4.9% in December 2025 to February 2026, but that headline masks a rise in economic inactivity, with 21% of 16 to 64-year-olds neither in work nor looking for work.<\/p>\n There are now around 2.8m working-age people economically inactive because of long-term sickness \u2013 around 800,000 more than at the start of 2019. A serious system supports those who cannot work while helping those who can return. Desperately needed welfare reform<\/a> should not be portrayed as cruelty.<\/p>\n All this points to a deeper failure. The British state has become more ambitious in its interventionist policies but less effective in delivery. It promises more and delivers less. It regulates more and then builds less. It says it wants growth while making growth harder.<\/p>\n The solution is a sustained programme of supply-side reform: liberalise planning, pursue abundant and reliable energy, restore competition, simplify tax, reduce marginal disincentives, tackle inactivity and deliver infrastructure faster and on budget.<\/p>\n For politicians operating on a five-year electoral cycle, this is a hard sell. Supply-side reform brings pain upfront and challenges vested interests, while the gains take years \u2013 sometimes decades \u2013 to materialise. But the alternative is worse: weaker growth, higher taxes, poorer services, and a disillusioned public increasingly convinced that nothing ever changes.<\/p>\n The Guildhall discussion was right to focus on prosperity. And the common thread across the day was that prosperity is not delivered by government tinkering. Britain needs more builders, more entrepreneurs, more competition \u2013 and a government prepared, at last, to step back and let them get on with it.<\/p>\n CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.<\/p>\n Columns are the author’s own opinion and do not necessarily reflect the views of CapX.<\/p>\n \t\t