Andrew Tyrie wants George Osborne to do a raindance:
Mr Tyrie called for the tax system to be simplified and business taxation to be reduced, and said he wanted to see fewer regulations and changes to labour laws…
"A much more coherent and credible plan for supply-side reform to improve the long-term economic growth rate of the UK economy is now needed."
This runs into an embarrassing fact - that history shows that Tory “supply side reform” has not raised growth. In the 23 years since Nigella’s dad cut the top rate of income tax to 40%, GDP growth has averaged 1.92% a year. In the previous 23, it averaged 2.47% a year. Even if we ignore the recent recession (and there‘s no reason we should) growth in the 20 years after Lawson‘s Budget averaged 2.4% a year - less than in the 1965-88 period.
This matters. Since the 80s, Tory supply-siders have had pretty much the policies they hoped for - deregulation, lower corporate taxes, lower top taxes, privatization and much weaker trades unions. And yet growth during this period has been no higher than it was when, according to legend, Red Robbo and Paddy Fleming were shouting “everybody out” every day.
This is not necessarily proof that “supply side” policies alone fail. It could be that no government policies can reliably raise long-term growth, because this is determined by factors which governments cannot control, such as entrepreneurial spirit or the rate of monetizable innovation.
This is why I say Tyrie wants the Tories to do a raindance. He wants them to give the impression of doing something, so that they can claim credit if growth picks up later. This is policy-making not as rational, empirically-guided activity, but as ritual.