David Blackburn

Free Enterprise Group tells George Osborne: ‘Don’t play safe’

The Chancellor’s Autumn Statement is looming on the horizon, and the Free Enterprise Group, the loose alliance of backbench Tory MPs, laid out its proposed economic reforms at the Institute for Economic Affairs earlier today. The group sees the economic recovery as an opportunity to address some of the underlying challenges in the British economy before the general election. The group urged the Chancellor not to play safe, and proposed seven stimulatory tax cuts to benefit those on low and middle incomes: the so-called ‘squeezed middle’.

1). Create a single VAT rate of 15% – revenue neutral (Kwasi Kwarteng)

2). Move the majority of the cost of green levies onto general taxation with the aim of abolishing those taxes in the long run – £2.8bn cost (David Ruffley)

3). Abolish Air Passenger Duty – £1.5bn cost (Kwasi Kwarteng)

4). Abolish Stamp Duty on land for properties under £500,000 to boost home ownership among the aspiring classes – £2.4bn cost (Dominic Raab)

5). Abolish employers’ National Insurance contributions for unemployed under 25s, a ‘fair and equitable’ solution to youth unemployment  – £0.29bn cost (Brooks Newmark)

6). Freeze business rates for three years – £3.8bn cost (Dominic Raab)

7). Take ordinary workers out of higher rate income tax by raising the basic rate limit from £32,010 to £40,000 (plus the personal allowance of £9,440) – £5bn cost (Kwasi Kwarteng)*

The measures would cost £15.79bn. Funding options include: removing the ring-fencing of the health and education budgets (£7bn). Cutting the number of government departments from 20 to 11 (£8bn)**, introducing a three-year cash free of benefits (excluding pensions) (£3.4bn), means testing of ‘grey benefits’ such as the winter fuel allowance (£2bn), integrating Child Benefit with Universal Credit (£4.5bn) and abolishing housing benefit for under 25s (£1.8bn).

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