City of London Matters #TwoCities

Polly Tearooms in Marlborough closes after 114 years. For the same reasons that all businesses are struggling: NI rise, minimum wage, taxes, regulations. Our rulers can’t begin to imagine what it’s like to run a small enterprise within tight profit margins.

The hard truth is that government must do fewer things, and do them better. It is not there to solve all of life's problems. Labour and Reform are squabbling over who can be the most interventionist in the Poundland dispute. Getting involved in Poundland is the opposite of doing fewer things better. In a dynamic economy, thousands of businesses will be created every year, whilst others sadly fail. Although not a frequent shopper, I’ve always been a fan of Poundland. Mrs Griffith has been known to have to fish me out from wandering the aisles, marvelling at how some of the products are so much cheaper than elsewhere. Brands of my youth such as Our Price records, Woolworths and Oddbins are no more. Consumption patterns change, new technologies emerge but so long as there are entrepreneurs willing to take and back risks, new growth fills the places vacated by others. Poundland was founded in the 1990s. It will have taken a place left by other businesses, had that not been allowed it would never have existed in the first place. The government has a huge role to play in sustaining profitable businesses in the UK, but the bar should be set very high on piling into disputes once a business is already in trouble. Instead, the government should make it less expensive and risky to employ staff, lower business rates, tackle planning red tape, deliver cheaper energy and lock up prolific shop lifters. All of these would help our retailers. If there is ever a Poundland ‘post-mortem’, just like the rest of the High Street, I am sure these factors will feature prominently. If I were Chancellor, reducing those burdens, rather than grandstanding on social media, would be my focus. In this case, some are asking that the government ‘step in’. In reality, that means government deciding what rules apply to whom and telling businesses that politicians know better than them. This never goes well and that judgement is often clouded by political factors. If we enter a world in which politicians decide the future of businesses, we will find that businesses must put a ‘price’ on the risk of government sticking their fingers in everywhere. The cost of doing business goes up, and fewer people bother at all. We end up in a world where it’s who you know that matters, not what you know. Investors, who have a choice where to take their money, will demand a higher price to do business here - or stay away entirely. Every well-intentioned regulation or intervention has its unintended consequence. It sounds harsh, but not every problem has a government-shaped solution. And sometimes the most mature and courageous political position is to stick to those things which government can do to make. That decision won’t always be popular, but it will be based on the truth.