Ahead of the 2011 Autumn Statement, six leading MPs from the 2010 Conservative Party intake put forward radical proposals to stimulate economic growth in Growth, growth, growth: new ideas for growth and prosperity in the 21st century, published by the Centre for Policy Studies on Friday 18 November.
Lead author Charlie Elphicke MP comments:
“Britain has suffered a decade of economic failure with illusory growth built on debt. It’s important we have a positive and constructive debate about how we boost jobs and money over the next decade. This paper is about creating the conditions for real growth. The scale of the challenge is such that we need to be prepared to be radical.”
The main recommendations are:
- In Tax and Growth, Karen Bradley MP argues that bold cuts in business taxes will do far more to stimulate growth than cuts in indirect taxes or small tweaks to the tax system (which only add complexity and have unpredictable effects). Reducing corporation tax by an extra 2% a year, and reducing tax on capital gains can lead to the recovery that the Coalition desires.
- In Financing Growth, Charlie Elphicke MP calls for £500 billion of further non-core assets in state-owned banks to be identified and disposed of as a priority in order to cleanse their balance sheets. Private shareholders should be encouraged to take over the management of the nationalised banks in preparation for a stage return to the private sector at the rate of 20% per annum from 2014-2018. These measures will accelerate the return to “normal” banking behaviour, including lending funds to UK business, thereby accelerating economic growth. The Merlin Growth Fund should be floated, expanded and geared to provide £25 billion equity and intermediate capital to SMEs.
- In Welfare and Growth, Harriett Baldwin MP proposes that the UK should learn the lessons of benefit reform introduced by President Clinton in the US. This should include not increasing benefits in line with the number of children in benefit-dependent households and localising the level of benefits
- In Infrastructure and Growth, Claire Perry MP suggests that new pools of financing must be leveraged. For example, “New Infrastructure Bonds” could be issued to retail investors while core project management and negotiation functions should be centralised.
- In International Trade and Growth, Jo Johnson MP recognises that, while the problems of increasing exports to the BRIC countries must not be underestimated, a commitment to an ‘enhanced partnership’ between the UK and India can be a model for Britain’s engagement with other fast-growing emerging markets. In relation to UK-India trade, the Coalition could do all it can to promote its interests in the EU-India FTA; should do more to encourage SME exports to India; should develop runway capacity in the south east to be able to improve transport connections with all BRIC countries; should develop a partnership relationship for aid policy; and should do more to build closer relationships with the élite, Indian students and large Indian companies
- In The EU and Growth, Chris Heaton Harris MP argues that the Coalition should encourage the EU to find ways of scrapping obsolete, unnecessary or inappropriate EU-inspired legislation. It should also seek to remove all legislation that hinders job creation and growth; and should ensure that EU impact assessments are of the highest quality and accuracy.
Tim Knox, Director of the CPS, comments:
“As economic storm clouds loom, the Coalition must do all it can to ensure that we have the right conditions in place for long-term private sector growth and prosperity. Boldness and conviction will be crucial.”