The Centre for Policy Studies has published a pre-Budget briefing outlining the priority areas that Rishi Sunak, the new Chancellor, should address in order to boost growth and allow hard-working people to keep more of their earnings.
The leading centre-right think tank recognises that the Chancellor faces a tough balancing act, with manifesto promises for more spending to be kept on the one hand, and the Conservatives’ reputation for fiscal responsibility to be maintained on the other.
On top of this, the ongoing coronavirus epidemic poses significant challenges for businesses, as well as the wider public. The Chancellor should use this Budget to set out measures the Government is taking to support those most at risk financially.
Among the CPS’s proposals are incentives to provide short-term credit and more generous overdraft facilities and repayment relief to support businesses while the country tries to manage the effects of the coronavirus epidemic, in order to ensure that good firms do not go under through no fault of their own. (It is also working on further stimulus proposals, should they be needed.)
The think tank is pushing for the Government to confirm that the National Insurance threshold will be raised to boost take home pay, allowing families to keep more of what they earn, and for the Government to prioritise the creation of free ports and opportunity zones, which were first proposed by the Chancellor, Rishi Sunak, in a paper for the CPS in 2016.
Driven by its firmly held view that stamp duty is exacerbating the housing crisis, the CPS is also proposing a radical reform to take all properties below £500,000 out of Stamp Duty Land Tax altogether, which would exempt around 90 per cent of properties in England.
The Budget proposals being put forward by the Centre for Policy Studies are:
- Urgently prepare potential stimulus packages to address the consequences of the coronavirus, including the provision of short-term credit to businesses and potentially a 25 per cent cut in business rates and employer’s NICs bills for one year, with other measures introduced if necessary
- Take the lowest paid out of tax by raising the National Insurance threshold for employees
- Level-up left-behind regions with a new generation of free ports and opportunity zones
- Take 90 per cent of properties out of stamp duty to boost the housing market
- Start an infrastructure revolution by setting up a new National Infrastructure Fund
- Help first-time buyers by confirming that the Government is committed to the proposed new market in long-term, fixed rate mortgages
- Encourage businesses to invest by raising the Annual Investment Allowance
- Help renters into home ownership via reforms to Capital Gains Tax
- Massively simplify tax for small businesses through a Simple Consolidated Tax
The CPS believes these proposals would demonstrate clear intent for levelling up all parts of the UK, increase productivity and boosting homeownership:
James Heywood, Senior Researcher at the Centre for Policy Studies, said:
“The Chancellor’s first priority must be to reassure businesses and consumers that he understands and recognises the challenge posed by the current coronavirus outbreak. Beyond this, the Budget needs to take bold action to level up the UK, increase productivity and boost homeownership. We urge the Chancellor to consider seriously our proposals to keep the economy on track, reward hard-working people and deliver sustainable economic growth in the long-term.”