Rachel Reeves is digging a hole for herself and the country (Image: PA)

The Independent Business Network of family businesses (85 percent of UK businesses) has produced a report on the practical business and economic aspects of creating growth in order to help our hapless Chancellor, Rachel Reeves, navigate her way to a successful budget at the end of this month.

Creating wealth and generating the economic growth on which everything else depends is not rocket science, however it does seem to be beyond most politicians, not least those in the new, near-communist Government with which we are “blessed”.

Before the election both Keir Starmer and Ms Reeves were at pains to point out that wealth creation and growth were their joint number one priorities, particularly as these were considered pre requisites for spending on public services and for the prosperity of the people of the UK. Since coming to power however, this seems to have been forgotten as almost all policies being pursued are, by their nature, anti-growth.

It could be of course, that there is a fundamental misunderstanding on the part of Ministers and the Chancellor as to what growth means, that some how putting more money into public services or increasing activity is itself growth. The famous, latterly left leaning economist, Maynard Keynes said that economic activity can be created by digging holes and filling them in again. However, such a philosophy, while technically correct, does nothing for real wealth creation and growth which requires innovation, investment and productivity improvement.

It appears the Chancellor is certainly following Keynes in one respect however, she is digging an ever deeper hole for herself, chasing ever more elaborate tax ploys to pay for a spendthrift administration hell bent on rewarding the vested interests of their Trade Union masters.

In order to create growth in the economy there needs to be innovation and investment. It is the private sector that creates wealth and to encourage the necessary investment and innovation there needs to be adequate profit. Innovation and investment is a risky business and profits need to be sufficiently large to reward and engender this. To this extent, it is capitalism that has generated human progress as a consequence of the pursuit of profit. After all greed is good!

The dead hand of Socialism, of Marxist philosophy, is bad. A statist government that thinks it can pick winners better than the market is deluded. Similarly, the levying of ever higher tax rates on business and individuals reduces returns on investment and innovation, profit, depressing growth and wealth creation and ultimately also tax returns. It is not rocket science and yet politicians who have no experience of business and who do not really understand how the economy works, repeatedly fail our country by creating a policy suite which is anti growth, all about spending, or indeed saving through austerity, but failing to recognise that neither of these create growth.

An administration governing for the benefit of the nation, rather than a narrow group of vested interests, of whatever stripe, would follow an innovation and investment programme, putting in place all of the necessary elements to support growth, that often only government can do: education policy; infrastructure development; profitable immigration to fill skills and labour gaps; and a tax, trade and regulatory approach which enables business development and above all else, promotes profit.

The most stark anti-growth agenda today is our energy policy and the massive cost of Net Zero madness. By creating the correct economic environment, the winners will pick themselves.

To be fair to the current administration, the dramatic failure of our political class to create a growth environment has been going on for a very long time. The UK financial sector has consistently underinvested in UK business by comparison with rivals for the best part of a hundred years and more, finding more profitable returns elsewhere.

Once the world leader, innovation stalled under the dead hand of government, only during World War Two and later under the leadership of Margaret Thatcher, did we see these negative trends reversed. The financial crisis saw the nadir of the growth rate in recent times and has persisted. As a consequence of all this and of the dilution of growth through mass migration into the UK of high proportion of, economically speaking, non value adding individuals, the wealth of the British people has been in relative decline for over a decade, to the extent that the GDP per person measured by Purchasing Power Parity (PPP) now ranks no 29th in the world. We are not rich.

It is against this background that Ms Reeves will deliver her budget. Too prepared to follow Whitehall declinism and satisfy vested interests, the future at least for the next five years, looks grim. Meanwhile, as if the 1970’s were truly repeating themselves, the PM and the hapless David Lammy appear to be looking for a solution in the failed and ever declining EU project.

It is never too late. Economies across the globe have transformed in just decades. The invisible hand of the market and the proven power of compound growth is something to behold, it is only the failure favour political class that holds us back.