The Centre for Policy Studies is delighted to welcome the Chancellor’s decision to make full expensing permanent.
The CPS has been leading the calls for full expensing for many years. It is a vital step in counteracting Britain’s chronically low rate of capital investment, which was 20% lower than the OECD average in the decade before the pandemic. What the Chancellor called the largest business tax cut in modern British history could, according to our modelling with the US-based Tax Foundation, boost the long-run capital stock by 1.5%, and deliver a 0.8% boost to wages and a 0.9% boost to GDP.
There were other welcome measures to promote growth and investment. The announcement of a concierge service for large international investors is long overdue, and chimes with recommendations made in our report ‘Why Choose Britain?’, which set out a 10-point plan to better facilitate international investing.
Pushing forward with the full privatisation of NatWest, as called for in Nick King’s ‘Retail Therapy’ and Sir John Redwood MP’s ‘The Power of Ownership’, will be an opportunity to boost investing, if done in a way which ensures the general public have the maximum possible opportunity to participate as retail investors.
The CPS also welcomed the commitment to speeding up infrastructure planning decisions and improving community consent, which we and many others have identified as a key constraint on growth, and to tackling the increase in economic inactivity via judicious and fair-minded welfare reforms.
The cut in National Insurance is also extremely welcome at a time of rising taxes, although it would have been preferable – and better for many taxpayers – for the Government to have halted the relentless ratchet of fiscal drag via frozen thresholds.
Meanwhile, the decision to maintain the triple lock and increase pensions by 8.5%, while welcome news for the country’s pensioners, is yet another example of a country which prioritises older people at the expense of younger workers. If Britain’s economy is to grow at anything near the required rate over the coming years, and younger people are to enjoy anything close to the financial stability enjoyed by their parents and grandparents, the Government must balance the need to protect pensioners with policies which enable home ownership and increase housebuilding, as well as easing burdens on working families.
Robert Colvile, CPS Director, said:
‘The CPS of course welcomes the Chancellor’s announcement on permanent full expensing. As he mentioned in his speech, we have been calling for this for many years and the boost to investment and productivity will be much needed.
‘Overall, Jeremy Hunt set out measures which do reflect the government’s commitment to making long-term decisions for a brighter future. But the economy, and our long-term growth prospects, are still far from where they need to be.’
NOTES TO EDITORS
- The Centre for Policy Studies is one of the oldest and most influential think tanks in Westminster. With a focus on taxation, economic growth, business, welfare, education, housing and green growth, its goal is to develop policies that widen enterprise, ownership and opportunity.
- For further information and media requests, please contact Emma Revell on 07931 698246 and [email protected] or Josh Coupland on 07912 485655 and [email protected]
Date Added: Wednesday 22nd November 2023