This piece is written by Liam Halligan of The Daily Telegraph
Last Sunday, this newspaper revealed the Government was launching a review of UK competition law, ahead of an autumn Budget. “Competition drives down prices, creates wider choice for consumers and leads to better-quality products and services,” said Alok Sharma, the Business Secretary, making the formal announcement the next day.
Our political and media class remains fixated on the Covid crisis and the Brexit endgame – for obvious reasons. As the weather cools, the debates over lockdown measures and the London-Brussels stand-off are certainly heating up.
Competition policy, though, encompasses a battle of ideas that, in the long run, means more than how we manage Covid or Brexit. While it sounds arcane, it’s about what kind of capitalism we want.
Across the world, others will be watching, wondering what moves the UK – so often a policy trend-setter – will make. This competition review, while lasting just a few months, could set the path towards regulatory changes which impact enormously the lives and livelihoods of countless millions across the UK and beyond.
The study will be led by John Penrose – a Conservative MP since 2005. He’ll consider how, as the UK hopefully emerges from lockdown and starts life outside the European Union, our competition laws can be improved.
Penrose – who previously worked for JP Morgan and McKinsey – is an innovative thinker. If the Government allows him really to express himself, this quick-turnaround review could be a highly influential piece of work.
But it’s a big “if” – because Penrose’s views on competition policy are, in the eyes of some, too radical. I admire his ideas but various powerful players – particularly those running large companies benefiting from the status quo – do not. The quotations that follow are from A Shining City Upon A Hill – a pamphlet Penrose wrote in 2018 – and a speech I heard him give as it was published. “Every so often, capitalism goes wrong,” says Penrose.
Delving back into history, he explains how “waves of bank failures in the early days of the industrial revolution resulted in the UK’s pivotal  Bank Charter Act”. He reminds us that “exploitatively poor working conditions then led to progressively more effective Factories Acts, beginning a long process of improving safety and equity for employees, which continues to this day”.
John Penrose MP will lead a competition review that could shape new laws as Britain prepares for life outside the EU.
Penrose recalls also that “the Great Depression which followed the  Wall Street crash gave birth to modern competition laws, to protect customers from being exploited by over-mighty companies”.
These changes happened not because the governments involved wanted to replace capitalism with a more dirigiste system of socialism or even communism. They were, in contrast, attempts to modify capitalism, in a bid to regain the broad public consent on which it was built, so ensuring its survival.
“Each of these moments happened because capitalism had started to behave in ways which seemed immoral,” Penrose argues. “Creating wealth is wonderful, but not at any cost, and the tariff in human health or dignity had become too high – so each time, the system had to change.”
There are moments in history when, as Penrose says, “society demands new laws to shape and frame free markets so, while driving growth and prosperity, they do so humanely, without exploiting the weak and vulnerable”. Modern capitalism must, periodically, be updated, modernised and rebooted.
Penrose believes, and I agree, that a new rebooting is long overdue. While the current system benefits a lot of us, for many more – perhaps even the majority – it isn’t working as it should.
Far too many consumers feel capitalism is “stacked against them”, says Penrose, “by a complacent, comfortable, out-of-touch global elite” that rewards itself but exploits some lower-skilled workers. “Energy firms rip off loyal customers with sky-high prices as soon as they forget to switch,” he says. “Broadband works slower than it’s supposed to … water firms don’t fix leaky pipes but still impose hosepipe bans.”
The richest 10pc of UK adults now own around half of Britain’s wealth, with the top 1pc controlling 15pc of all assets. While wealth inequality fell from 1995 to 2005, since the 2008 financial crisis, it has risen sharply, driven by falling home ownership, narrower pension provision and endless quantitative easing – which has pumped up the price of property and other assets; good if you own them, bad if you don’t.
More accurate tax data has revealed a widened income gap between rich and poor
The gap between rich and poor is measured by the so-called Gini co-efficient, where 0pc represents total income equality and 100pc would mean one person owning all the wealth in an economy
Many young adults now struggle to attain living standards enjoyed by their parents. After years of real-terms pay cuts, faith in market economics is slipping. Much of the population views the UK not as capitalist, but “cronyist” – with good reason. And the lockdown has refocused the advantages of wealth and home ownership.
That’s why Penrose’s earlier call for a new Competition Act – “to help shift the balance of power back to customers and citizens” – is so timely.
But that’s where the problems begin. Because, for a large section of the Conservative Party, the big businesses that would oppose more consumer-friendly regulation and pro-competition anti-trust measures simply must not be gainsaid.
Vital consumer markets – including telecoms, house building, banking and energy supply – are dominated by a small number of large companies. It results in poor service, “super-normal” profits and high prices.
For years, our competition policy has been far too influenced by supplier interests. Large developers gave the Tory party £11m over the past year – and a new raft of planning proposals do almost nothing to challenge what is now a highly exploitative oligopoly.
The huge tech firms – adept at recruiting government policy wonks on sky-high salaries – seem immune to scrutiny. And when powerful firms are challenged for ripping off consumers, regulatory changes are typically “voluntary codes” – non-binding stipulations, often circumvented.
Our last Competition Act was in 1998, before Facebook and Google existed. Yet Penrose’s remit may be limited to moving around the deck chairs – merging regulators like Ofcom and Ofwat – rather than setting a new course for the ship of state.
“John Penrose’s work will help ensure we can drive innovation, produce better outcomes for consumers and allow new entrants to the market to grow,” says Rishi Sunak.
I hope so, Chancellor, I hope so. Because if those of us who like capitalism fail to fix it, those who don’t will take over – with disastrous results.