The Tories’ Laffer-style radicalism
David Blackburn 2:18pm
In contrast to David Brooks’ optimism about Conservative economic policy, is Oliver Marc Harwich, former Chief Economist at Policy Exchange, who described George Osborne’s plans as “timid and unimaginative”. In a speech to the Centre for Independent studies, Dr Harwich remarked:
“To be fair to the Tories, at their last party conference in Manchester George Osborne finally spelt out that a future Conservative government will be cutting public spending. But even the £23 billion over the next five years that Osborne announced amounts to little more than a rounding error in Britain’s public finances. Even in the face of the greatest economic crisis that Britain has experienced in decades, Tory policy remains timid and unimaginative. If the Tories can’t offer anything better than managing Britain’s decline, then what’s the point of a change in government?”
£23 billion of savings will hardly be noticed and the Tories will have to go further. But, as James noted in this politics column, the Tories have a radical plan to foster growth through tax and spending cuts over the next parliament. The plan is inspired by Laffer-style supply-side thinking: low taxes will improve Britain’s competitiveness in the global market, encourage job creation and yield substantially higher receipts. The proof of this radical alteration to Britain’s tax system will be in future receipts and future growth, not public announcements 8 months before the election.
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DavidDP
October 16th, 2009 2:32pm Report this commentTo be fair to Mr Harwich, he doesn't have to worry about silly things like gettign elected.
Tiberius
October 16th, 2009 2:47pm Report this commentYou've nailed it with your conclusion, David.
Peter From Maidstone
October 16th, 2009 2:51pm Report this commentThe former Chief Economist at Policy Exchange is obviously not very sensible when it comes to politics if he thinks he is reasonable to criticise a shadow spokesman on any issue this far ahead of an election against such a poisonous government.
strapworld
October 16th, 2009 2:53pm Report this commentPlease correct me if I am wrong. But where was Oliver Marc Harwich, former Chief Economist at Policy Exchange, prior to the Banking crisis?
Where were his speeches warning us of the impending disaster?
Where are his thoughts on the way ahead?
It is easy to be a spectator, on the side shouting inane comments. But all these so called experts were nowhere to be found prior to the event. None had the vision or foresight to warn any of us. No. They prefer to stand and shout AFTER the event.
Great! Experts? not worth the paper they write on. They should all be sent to Lundy Island.
TrevorsDen
October 16th, 2009 3:22pm Report this commentCongratulations - the penny seems to have dropped - at least as far as the first 4 contributions are concerned.
Sally Forth
October 16th, 2009 3:35pm Report this commentThis is the 'let the non-bank private sector rip' solution. The tories have got to dust down all the old mechanisms to raise trend growth. That isn't just about rewards for wealth creators but it means cutting through the web of regulations that bind businesses and we all know where many of these come from. We desperately need this growth to replace the structural holes left in the tax base by a depressed housing market and lower taxes from financial services. We also need it to soak up the rise in unemployment as the public sector sheds labour.
Olaf Rye
October 16th, 2009 4:12pm Report this commentThe Conservatives have been far too timid, but the British public also seems to be afraid of endorsing deep cuts as there is still a belief in the desirability and need for big government. We need an honest debate and an honest appraisal of the fiscal disaster that we have found ourselves in and the only solutions are deep cuts to government spending and the repealing the mountains of legislation that Labour has enacted to restrict our freedoms. I expect that a worry of a civil service of immense scale voting against the necessary measures is keeping the Conservatives particularly quiet.
Dirty Euro
October 16th, 2009 4:42pm Report this commentIf low taxes work so well why is France wealthier than us and the USA now. The low taxes for the rich model has failed. The economy will start to grow as we are exiting recession and the right will say oh look we exited because we cut taxes. Not fair!
John Moss
October 16th, 2009 4:49pm Report this commentI believe we should set a "base case" spending total of £702bn for 2010-11 - Labour's planned figure - and stick to that cash figure for the next four years.
That "saves" £102bn off Labour's previous figures, but involves no "cuts". It also gives the Civil Servants 15-18 months to plan for the squeeze.
Changes made by an incoming Conservative goverment can then adjust that figure, downward of ocurse.
In addition to that, Corporation Tax should be cut to 10% and VAT reduced to 5% for all construction and energy-efficient installations. You could make that a general presumption with the HMRC only challenging those things which they felt were clearly outside the spirit of the policy.
10% C-Tax brings in investment and creates jobs, thus cutting the benefit bill. 5% VAT generates domestic construction work and jobs, but lowers the price of this for households. With the increased activity levels, tax take will be increased sharply.
Nick
October 16th, 2009 5:26pm Report this commentDirty Euro, France isn't anywhere close to being richer than the USA. GDP per capita for France is $34,000 and for the USA $47,000. These are 2008 figures. Even factoring in the fact the Euro has strengthened against the dollar in the last year the USA is still comfortably richer than France.
Unfortunately the same can't be said for the UK. Which might have something to do with Gordon Brown's economic mismanagement over the last 12 years.
Olaf Rye
October 16th, 2009 5:26pm Report this commentDirty Euro: not low taxes for the rich, but low taxes for everyone ! Instead of letting the government decide how we spend our money, and lavishing it on people that feel an entitlement to a certain standard of living despite not having worked for it, we should decide for ourselves and live with the consequences of our decisions rather than have the state bail out every irresponsible and lazy fool out there.
Draughtsman
October 16th, 2009 6:01pm Report this commentDirty Euro - you seem to have an obsession with those whom you term 'the rich'. Olaf has got it right in one go so far as individual taxation is concerned. Anyone on less than 10 or 12K shouldn't be paying tax at all.
So far as business is concerned, the Tories are talking about significant decreases in the corporation tax rate. In the end we have got to trade our way out of the Brown debt mountain and the only way we can do that is to encourage private business by tax reductions, cutting red tape and the many petty regulations that are currently hampering it.
Victor Southern
October 16th, 2009 6:44pm Report this commentDirty Euro
Just last week Tracy Emin announced she was going to live in France because of their lower taxes. If she had you as her adviser she would have stayed here.
High tax governments have the concept that they can spend our money better than we can. I have heard it said that if income tax was abolished altogether the increased VAT intake would more than compensate.
Dirty Euro
October 16th, 2009 9:58pm Report this commentNo you are looking at purchasing parity GDP per capita. The dollar has declined massively since then. Plus their depression has been bigger France is now wealthier.
Amadeus Plonquer
October 17th, 2009 2:26am Report this commentThe UK has a once-in-a-generation opportunity in this crisis. An unfettered City of London could propel the UK to teh top of the financial centre list. WHile the USA is being bogged down with the Blairite centralising, left-of-centre, punish success mentality, already failed policies of Obama, London has an open goal.
Now is the time to flatten the tax structure, to pass a balanced budget bill (ala Gramm-Rudman) and to position the UK to take on the world. Anything short of this is pissing in the wind.
Beer Moth
October 17th, 2009 8:22am Report this commentI'm sure I've seen that 'Ready for Change' line before somewhere?
Dirty Euro
October 17th, 2009 1:36pm Report this commentAmadeus Plonquer London is not the UK. We are not here to be servants of London. We do not need policy to be just run of London, London, London all the time. Why can civil servants and finance people not realise London is not the only thing in the UK that matters.
The solution
October 18th, 2009 12:07pm Report this commentLand tax!
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