How much free enterprise is good for us?

There is an undercurrent in some public debate that if you do not support a bigger role for the state, whatever the current size of the state might be, you are not a caring or understanding person This is disingenuous, as John Redwood MP demonstrates

Some demonstrators miss the important points
Sir John Redwood MP
On 5 January 2014 15:00

In UK politics you get used to being interviewed most of the time from the left. Those of us who believe that free enterprise can offer us more jobs, prosperity, choice, the chance of financial security through savings and pensions, are constantly made to answer questions about why we do not support higher taxes, higher public spending and more regulation of the private sector.

The questions are often dressed up as wanting us to take more from the rich, but in practice the schemes require taking more from the prudent and those in the middle of the income bands as well as those at the top. They can also cumulatively act to limit entrepreneurship and divert jobs abroad.

There is an undercurrent in some  public debate that if you do not support a bigger role for the state, whatever the current size of the state might be, you are not a caring or understanding person.

In practice most of us on the Conservative side of the argument want to live in a society where there is decent state provision for those who are unable to work to support themselves, or who are going through a bad patch in their lives and need help.

The issue between the Conservatives and the two main left of centre parties is not over whether to have a welfare state or a health service free at the point of use. It is over the extent, the best way of getting value for the money spent,  the eligibility, and the best way to help more people to support themselves.

On my personal website one of the refreshing things is that much of the criticism of me comes from the other side of the argument.  It is refreshing if it is fairly put and not labouring points that have already been answered long since.

So today let me explore what limits I think the UK wants and expects to be placed  on a free enterprise society. I do so as an MP who has a duty to represent all my constituents and to understand where a large majority wish to see  limits imposed on markets and freedom.

The first constraint on free enterprise and freedom which we all agree is the rule of law. I think all accept that individuals and businesses have to work within a framework of law, that condemns theft, violence, fraud and other malpractice. You cannot have a flourishing free society paradoxically without a system of criminal law,  and without enforcement and punishment for the minority who want to undermine a free society  by misbehaviour.

The second demand on free enterprise is to pay some tax to provide for common services which individuals and companies would not supply for themselves – like police and defence – and to pay for welfare for those in need. I accept the UK choice and tradition that health care is supplied free at the point of use and have always spoken and voted for it. I want the country to be generous to the disabled and those in real need.

The third constraint on free enterprise which some criticise me for supporting is to have border controls to limit the numbers entitled to come and live and work here.

My main reason for this view is the existence of a decent welfare and benefits system. If we have an open door policy towards countries that have much lower incomes than the UK average we run the risk of imposing too much strain on our public finances and welfare system. 

In a welfare state with reasonable benefit levels it is also important  to maximise the number of locally created jobs that go to established residents here, to keep the welfare bills under control. In summary, I do not think you can run an open borders free labour market with the rest of the world if you wish to run a welfare and income top up policy that is generous by world standards at the same time.

A difficult fourth constraint is the range of measures government does need to take to prevent private interests doing damage to the wider public interest. Like my socialist critics I of course recognise that some businesses can profit at the expense of their neighbourhood or customers.

Much of the potential damage can be taken care of by a strong competition policy, giving customers more choice to avoid companies that behave badly. But it may also require planning, environmental, health and safety and other  legislation as well to tell business what is expected and to offer some sense of security to the public.

Again the debate here between Conservatives and socialists is not an all or nothing debate. It is a debate over how many bad things do need specific regulation or law, and whether individual regulations are effective.

It is often a debate over both the total volume of these instructions, and the way some regulation can achieve the opposite of what was intended. More box ticking and form filling does not prevent financial crashes, as Labour found out to our cost.

Mr. Redwood's writing is re-posted here by his kind permission. This and other articles are available at

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