Carts, horses, and the Chancellor of the Exchequer

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One central element of the Chancellor’s economic strategy is the pursuit of growth, as measured by GDP or GVA. Growth is good, according to her. But is that necessarily true – can some types of growth be more valuable than others – and can some types even be a bad thing? One element of her pursuit of growth is the suggestion that pubs, clubs and restaurants should be able to remain open until the early hours. It doesn’t necessarily follow that she is arguing that more drunkenness is a good thing from a health perspective (health professionals have certainly expressed their concerns), but she is certainly arguing that it is a good thing from an economic perspective. More spending on alcohol boosts GDP – that’s inarguable (although a more rounded view might just query whether there might be an impact on productivity and absenteeism). It’s the sort of position which someone gets into by looking only at narrow economic considerations.

There’s another sense in which it takes only a narrow view as well. Implicit in the proposal (which has clearly been inspired and promoted by the ‘hospitality’ sector) is the assumption that people have the financial ability to spend more money on food and drink, and the only thing preventing them from doing so is restricted licensing hours. That is simply not the reality for many: more money spent on meals and drinks out means less money to spend on other things. When money is tight, people make choices, and the result – in economic terms – is that an apparent boost in GDP in one sector leads to a drop in GDP somewhere else. Households aren’t like governments – they can’t simply expand the supply of money to purchase the available resources of food and drink.

Whether extended opening hours are a good thing or not is a separate question. The idea of restricted hours is an echo of a more puritan past, and if extended hours cause no problems for local residents and if proprietors can make them financially viable, then why not allow them to do so? But believing that creating more opportunities for people to spend is the solution to growth is putting the cart before the horse. For people to spend more money they first need to have more money: consumer-led growth depends on people’s financial resources. Yet much of Reeves’ programme seems to be directed at reducing those resources rather than increasing them.