Latest round of Tory sleaze is tip of the iceberg in Broken Britain

For it is obvious that neither major UK party has any clue how to address Britain’s dire poor productivity or lack of economic competitiveness. And without a major improvement in both, growth will remain sluggish, incomes will remain flat and the Treasury will lack the wherewithal to fund the NHS or anything else.

Last week, just as the Zahawi row was cranking up, Chancellor Jeremy Hunt assembled an obliging group of business executives from Meta, Amazon, Microsoft, Apple and Google to announce his latest blueprint to boost growth and productivity.

Hunt used the occasion to berate those critics who do Britain down.

Talk of “declinism about Britain is just wrong,” he told his audience.

He seemed oblivious to the irony that if the British economy was not in dire straits then he would not need a plan to boost growth, in the first place.

Never mind the fact this peculiar, hand-picked audience knows only too well that the UK is nowhere when it comes to participation in the global high-tech elite.

Hunt finished his bizarre peroration with a plea: “I want to ask you to help turn the UK into the world’s next Silicon Valley.”

Aside from Hunt’s wobbly grasp of geography (can an island be a valley?), he offered no incentives to back up this request, merely reminding the audience that the government is broke and wouldn’t be cutting taxes any time soon.

The reaction of the business community to Hunt’s much trumpeted initiative was underwhelming to say the least. The head of the British Chamber of Commerce dismissed the speech as having “very little meat”.

The Federation of Small Businesses was even more sardonic about Hunt’s offering: “We hope he follows today’s bark with a bite.” In other words, there is no concrete growth plan, just more empty slogans. The same goes for Labour.

It is worth reminding ourselves just how dire the UK economic actually is. According to the latest data from the Office of National Statistics, comparing productivity across the G7 big industrial nations, output per worker is higher in every country compared to the UK (bar Japan where we lack comparative figures). In the US, output per worker is a staggering 50% higher while the UK lags the G7 average by 16%.

Worse still, the productivity gap is widening. UK productivity growth has practically flatlined since the banking crisis of 2008. The latest stats, published last week, show productivity in the third quarter of 2022 was barely higher than in the year before the start of the Covid pandemic.

This is significant because it was thought that the big changes in work practices that were forced by the lockdown would have boosted productivity somewhat.

They haven’t.

So what is the root cause of Britain’s desperately poor productivity and what can be done about it?

The usual suspects include notoriously low UK spending on capital investment – productivity is directly tied to the quality of your machinery. And the British obsession with owning property over actually making things.

Yet there is a deeper malaise and this brings us to the Zahawi affair. Quite simply, British commercial life is deeply corrupt. Our business and financial elite prefer fiddling to hard, entrepreneurial graft. On the usual global indices of business corruption, for instance, which are published by the Transparency International NGO, the UK seems to rank quite high.

It comes in at number 11 in the world in 2021. But such rankings refer only to cases of simple personal bribery. The corruption of British economic and business life takes place at a deeper institutional and cultural level.

Since the days of Thatcher, business and banking life has become characterised by a cult of getting rich quick through financial wheeling and dealing rather than patient investment in manufacturing.

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In fact, much of what is left of British industry has been flogged off to foreigners, while our business class makes money trading bits of paper or parcels of land.

Consider the latest British economic debacle, the collapse of Britishvolt – the flagship £3.8 billion project to establish a UK facility to manufacture batteries for electric vehicles, located on a 93-hectare site in Northumberland.

State-supported Britishvolt has gone belly-up without ever producing a single battery. Yet its management happily spent the shareholders cash on private jets and expensive sponsorship of motor racing events.

It turns out Britishvolt had failed to secure a single advance customer order, has no working technology and is in an already crowded market.

So why build a humongous factory when you have nothing to sell and no-one to sell to?

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Because the bozos in charge were in love with show and pretence, with making deals rather than making things. And it suited the Tory government to promote this fiction as part of its bogus “levelling up” agenda.

The contemporary British economy is based on financial gambling. The rot set in with Thatcher, who sold off state enterprises for a song to fund tax cuts – hardly a sustainable strategy.

The spivs and gamblers who bought these assets were not interested in the long term. They were more concerned with turning a fast buck on a trade. Welcome to the Del Boy economy we now live in. Productivity is the last thing they care about.

At the centre of this network of incompetence and irresponsibility are the banks and investment funds (aka financial gambling houses). Nobody went to jail when the British banks nearly brought down the global financial system and economy in 2008.

Instead, the banks set about putting tens of thousands of viable small companies into receivership and sold off the assets cheaply to restore bank profits. This act of economic vandalism goes a long way to explain the failure of productivity to grow since then. The latest round of Tory sleaze is merely the tip of the iceberg.

Britain is the world’s biggest offshore tax haven and centre for money laundering.

Since 2008, City banks have paid some £25bn in fines for misconduct yet no banker has served time. Instead, the banks recoup the fines by charging customers more And now Rishi Sunak – a former banker – plans to remove many of the controls imposed on the banks in the wake of the financial crisis.

The fox is definitely inside the hen house. We won’t improve productivity unless we eradicate Britain’s Del Boy business culture.

Unfortunately, that can’t be done without dismantling the political state that created and protects that culture. Sacrificing the odd culprit politician now and again merely serves to protect the others.

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We need root-and-branch reform. And that requires destroying the corrupt British state as it exists today. We can start that process here in Scotland by withdrawing our allegiance to the doomed, decaying, corrupt entity that is the so-called United Kingdom.

The outcome of the next General Election will change nothing fundamental about Britain’s economic mess. But it could be the start of Scotland’s escape road.