Deregulation is vital if the private sector is to create thousands of new jobs, says Kevin Hawkins


"Is this the wisdom of a great minister or the ominous vibration of a pendulum?" asked Junius, the acerbic 18th-century observer.

One might ask the same of the Comprehensive Spending Review. Listening to the cries of anguish from clients of the nanny state, one might conclude that this is nothing less than a catastrophe.

Defra, for example, is set to lose about 30% of its budget in real terms over the next five years and 14 of its quangos have been axed, with another six under review. So what? The business of producing and selling food will go on regardless.

Even if all the Spending Review targets are achieved, the public sector will still be consuming the same proportion of GDP in 2015 as it was three years ago.

So was this a lost opportunity? Not necessarily. The government has done some commendable things for example, rationalising the functions of the Food Standards Agency, the Department of Health and Defra, and initiating the first steps toward the reform of our barmy health and safety regime.

What it has not yet done is articulate a vision, let alone a blueprint, of what a public sector with half a million fewer people will do and, more particularly, will not do. Cutting local government spending by 28% suggests that most local authorities won't be in a position to take on many 'big society' responsibilities.

Maybe we will simply end up with Whitehall trying to do more or less what it does now but doing it even worse.

What will the food industry do to help replace the jobs lost in the public sector? The big supermarkets will go on opening stores where they can but, as Tesco's 14-year battle in Sheringham shows, they could do it a lot faster if the planning environment was friendlier to job creation. If the private sector is going to deliver anything like the number of jobs the government wants, the regulatory barriers will have to be lowered.

But while less regulation generally would certainly facilitate job creation, the biggest single influence on the level and timing of investment is business confidence. Do grocery retailers and their suppliers see the UK market as likely to yield an acceptable return on new investment over the next few years? For many, with the prospect of the feared double-dip recession, the jury is out.

Kevin Hawkins is an independent retail consultant.