The Bow Group Post-Budget Reaction : 5 Marks out of 10

Economic
Wednesday, March 20, 2013

Speaking in the House of Commons today, the Chancellor announced an "a budget for an aspiration nation". The Bow Group's Head of Media Donna Edmunds, who this morning released a menu of recommendations for a supply side boosting budget, was listening with interest.

Speaking after the budget, Donna Edmunds commented "A budget for the aspirational is of course to be welcomed by all conservatively minded people, and I'm certainly happy to hear that the Chancellor is at least listening to people's concerns. The question is whether or not this budget will have a noticeable impact on household budgets. Whilst a penny off beer and the freeze in the rate of fuel duty are welcome, the money saved will easily be swallowed up by inflation if wages also fail to rise.

"The recommendations that I made this morning, such as the introduction of German style 'mini jobs' in which people can earn £400 a month tax free per job, would make a tangible difference to hard working people immediately. They would also bring down the welfare bill and help businesses of all sizes, kick starting Britain's flailing economy.

"Budget savings are welcome, but again will be subsumed into increased infrastructure building rather than bringing borrowing down. There is scant evidence that government spending has had any impact on Britain's economy so far. Whilst I admire Osborne's tenacity to stick to the original plan at all costs, if a plan is failing to deliver it may be time for new plan. His options are wider than Plan A or Labour's plans.

"Conservative governments world wide have shown that supply side measures deliver growth. Osborne has merely paid lip service to that evidence today."

"My final verdict: 5/10. Osborne was saying the right things in places, but the real test will be in people's wallets."

The Bow Group Chairman Ben Harris-Quinney said:

"We need the UK to be open for business, not business as usual, and in order to get real movement in the economy we need a change of tack. It's not necessary to depart completely from "Plan A", but it is necessary to be uncompromising in the pursuit of cutting the debt and lowering cost of living in the UK to leave the people, not the government, free to re-grow the economy.

A transition to a German system of enfranchising an army of "personal contractors" to be unconstrained by tax and red tape to offer short contract services is one measure the Bow Group has published that could serve as game-changing, rather than the business as usual approach to regrowing the economy the Chancellor has presented today."

The Bow Group Campaign Director Nic Conner said:

 

"The budget was a move in the right direction but could have been bolder. He has loosened the fingers of the State but the State’s hands are still strangling the economy. The Move to give a new tax regime to promote early investment into Shale Gas is good thing but Osborne could of gone further by the Government moving reasonably out the way and let some of the poorest people in the UK become some of the richest from the spoils that shale gas will brings to these areas'"

 

 

The Bow Group’s new Head of Media Donna Edmunds,  menu of recommendations for a supply side boosting budget


Incentivising work: 

-       An 8% tax cut for the lowest paid in society, along the Swedish tax credit model.
-       Cost of living tax cuts, including an immediate cut in VAT rates to 8%. 
-       Cuts in fuel duty so that tax is no more than 50% of the cost of fuel.
-       A flat rate of vehicle excise duty to eliminate penalisation of the poorest car owners.
-       Scrapping of green energy tariffs and the subsidies they fund.

Incentivising investment
-       Capital Gains Tax to be zero rated for three years to encourage sales of assets
-       Corporation tax to drop to a much more competitive 11%. Alternately, Corporation tax to be zero rated for all company profits reinvested in the company.
-       Introduction of German style ‘mini jobs’, with earnings of up to £400 for each job zero rated. Workers to be allowed to take on as many mini jobs as they like from different employers.
Reducing spending
-       Budget cuts to be made according to the effectiveness of the funding stream, rather than simply enacting uniform cuts across all departments.
-       A firm commitment by Osborne to reduce overall spending by 3% in 2013/14.
Fairness

-       A flat rate of taxation to be introduced. 
-       Simplification of the tax code to reduce avoidance through loopholes.
-       An immediate end to quantitative easing. 
 
Donna Edmunds commented “The recommendations emphatically call for Chancellor George Osborne to place supply side economic measures – cutting taxes and red tape – firmly at the heart of his budget, giving the British economy room to grow.