The idea of an ‘empty budget’ later this month is disappointing those who backed George Osborne in the hope of his fixing the problems he so eloquently outlined in opposition. If Brown proposed cutting the deficit by 33 per cent over two years, newspapers who criticised him at the time for lacking ambition — as Osborne did — can hardly be expected to applaud the Chancellor for cutting it by just 25 per cent over three years.
Faster progress is needed: on the deficit, and on economic growth. There are many tools that can be used and the Sunday Telegraph describes a few of them today in its leading article. It’s an important contribution to the debate. Here are its main points, and my take:
1. Cut taxes, especially corporation tax. Consider abolishing, or at least suspending, capital gains tax. Companies need persuading to part with their large bank balances.
It’s now clear that the UK recovery is being crushed by the sheer size and cost of the government machine. Taxes have proven too great a burden, given the economy has proven far weaker than Osborne was told even in June 2010. Lighten the tax load, and growth follows.
2. Rethink spending priorities. Although George Osborne has sensibly committed the Government to austerity, bolder reductions in public spending can still be made. Mr Osborne has cut total state spending by just 3 per cent in three years – after it increased by a staggering 58 per cent under Labour. The national debt is ratcheting up by £3,000 per second.
The Sunday Telegraph does something that few other newspapers do (not even the FT) which is to actually whip out a calculator and quantify the total cuts. They are 3 per cent so far, and this is put in the perspective of the 58 per cent rise of state spending in the Labour years.