Letters | 10 October 2009

Invest in the state

Sir: David Cameron will never be a revolutionary if he follows your advice and concentrates only on government spending (‘Is Cameron a revolutionary?’, 3 October). He needs to completely rethink taxation, too.

You say that taxes must rise. But putting up taxes now, as conventional wisdom suggests, will increase the government deficit, not reduce it. Cameron should make massive cuts in taxes on personal incomes, savings and capital. Suppose he reduces taxes and at the same time allows individuals wishing to set up new schools to issue ‘education convertible bonds’ underwritten for the first ten years by the government? As long as these are made attractive to savers, individuals will have a reason to buy them. So the government will be able to replace a huge percentage of its expenditure on state education with private funding.

If Cameron did the same for health and other services, a large percentage of the government deficit would be replaced by private individuals’ investment in public services. This will create confidence by changing the whole nature of how we view the role of government. Replacing taxation by private investment in this way gives individuals a very clear say in the nation’s education and health. It also allows people to put their savings to productive use rather than have them lie idle in bank accounts earning minimal interest, thereby increasing the velocity of money and escaping the dangerously deflationary Keynesian liquidity trap. This is Cameron’s chance to change the game and be truly revolutionary.

Matthew Quirk
Chiddingstone, Kent 

Bad police

Sir: I was much amused (but not surprised) by Jeremy Clarke’s account of his failure to charm his way out of a very minor infringement of the law — failing to wear a safety belt (Low life, 26 September).