Day one: getting us back in business

Dear Treasury Permanent Secretary,

Good news: the nightmare is over. We both know that Gordon Brown is one of the greatest economic vandals ever to have resided in Downing Street. And to make Britain competitive again will require hard work. We can start immediately, and without the need for legislation. I’d like the following to be in place by the end of our first 100 days.

1) Please draw up plans for a two-year public sector pay freeze, and for a few billion pounds worth of immediate cuts. Rather than trimming spending across all departments, I’d like to axe entire programmes. These will include Sure Start, which would save £1.4 billion a year, and the NHS national programme for IT, saving £1.2 billion. The markets are watching us anxiously. We need to demonstrate intent. This will all be met by rage from the unions — but we may as well get on with these tense relations.

2) The Treasury has long used a strange way of calculating tax. Your ‘ready reckoners’ assume that if you raise, say, income tax by 1p in the pound then everyone will pay exactly that. In the real world, increases in tax decrease the incentive to work. Your failure to account for this gives the Treasury an unrealistic approach to taxation, making it hungrier for more. I’d like you to move to this real-world system of assessing tax: so-called dynamic tax scoring. It should reflect the way that taxation can alter incentives to work, save and invest; and show that high national debt and public spending crowds out private sector growth. Publish all of this new dynamic model’s assumptions online. From the emergency budget onwards, assess all of your decisions according to two benchmarks: the old, static Brownite model and our new, dynamic one.