Sat, 2 July 2022

Newsletter sign-up

Subscribe now
The House Live All
By Dods Impact
Environment
National recognition for Sellafield's apprentice scheme Partner content
Economy
Why the Catapult Network is a trailblazer for a new energy future Partner content
Economy
Communities
Economy
Press releases

We must cut taxes to tackle the cost of living crisis and protect Britain’s future

We must cut taxes to tackle the cost of living crisis and protect Britain’s future
4 min read

While “Czar Putin” considers the deployment of the alarming and all too real weapons of mass destruction, in Global Britain the media and the Westminster bubble can do little more than chat about our own weapons of mass distraction – namely, cake and legs.

Boris Johnson must contend with all these elements, he ignores our greatest existential threat at his – and our – peril. Ultimately, the UK’s future success rests upon our economic performance, the political dimension of which appears to have been delegated entirely to a dirigiste and lacklustre Treasury.

The Prime Minister’s only bridgehead into this arena lies in his controversial insistence on an expensive and vulnerable route to net-zero at a time of a cost of living crisis.

Now is the time for Johnson to exercise his historic genius in being the lightening rod for what is really relevant. Far from being warned off interference in Treasury matters, our Prime Minister must get a grip of the central and most important matter for Britain’s future. 

If global growth is likely to average 3 per cent per annum, we must aim to match this or face long term, relative decline

While we are predicted to be growing faster than the EU and outperforming most of the G7 over the coming few years, the longer-term outlook is dangerous. If global growth is likely to average 3 per cent per annum, we must aim to match this or face long term, relative decline. Relative decline means we will become increasingly vulnerable to the very military threats that presently impede our sleep, not to mention economic risks resulting in relatively poorer healthcare, a poorer population, a potentially enduring reduction in our standard of living.

It need not be so - but our ultimate success depends on a government prepared to stand up to the declinist doctrine of the Whitehall mandarins, including the desire of the left liberal elites to stay close to the declining EU. The full force of the animal instincts of entrepreneurs, of enterprise, must be released, reflecting our newfound, post Brexit economic freedoms. 

Family businesses, who represent over 80 per cent of the enterprises in the UK, are demanding that the government create an environment in which the winners can pick themselves for the good of all. This can only be achieved by seeking the reverse of current Treasury policy.

The Treasury missed the opportunity to convert UK debt into long-term, or perpetual, low-interest rate bonds. Even so, debt will take care of itself provided we attain significant growth, which requires a major boost to the private sector. To obtain this, the government must first cut business taxes, including corporation tax: a tax predominantly paid by UK family businesses and avoided by so many multinationals. Personal taxes should also be cut as soon as possible: a boost to supply and consumption is possible and desirable. 

There is also now the opportunity to diverge from the oppressive and bureaucratic regulatory regime of the EU. Serious deregulation would deliver as much as 2 per cent of GDP. It is particularly important in stimulating the 70 per cent of GDP which is domestic and should not be derailed by multinationals who see regulation as sunk costs, a competitive advantage and barrier to entry – nor, for that matter, by Whitehall, who relish it as a source of power and relevance. 

While the post Covid economy faces an equivalent of post war challenges and opportunities, it does so without an eviscerating burden of external debt, with no loss of assets and at a time where our competitors are similarly hamstrung. Rightly fond of channelling Churchill, the Prime Minister should embrace this welcome absence of downsides and revel in seizing the kind of opportunities squandered by Britain post WWII. Nor indeed are we yet faced with the hyperinflation of the pre-Thatcher era or the stultifying intransigence of the Trade Unions, the arguable tendency of GPs and Whitehall to work-to-rule aside. 

The Prime Minister who once let slip “f*** business” now needs to give it some love. He must grip this vital part of the nation’s destiny, for only by creating an environment for growth can Britain’s potential be achieved, and the Prime Minister’s own destiny be fulfilled.

Famous as the “have your cake and eat it” politician, now is the time for Boris to leave cakegate behind and focus on growing the economic cake, otherwise we may shortly find not enough to go round.

 

John Longworth is chairman of the Independent Business Network.

PoliticsHome Newsletters

Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.

Categories

Economy
Podcast
Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now