Freeing Britain to Compete

Today the Economic Competitiveness Policy Group, chaired by John Redwood and Simon Wolfson, Chief Executive of the Next fashion group, has published its final report. The report recommends proposals to reverse the decline in Britain's competitiveness. The proposals in the report are recommendations to the Shadow Cabinet at this stage – they are not Party policy.

Five Things Everyone Should Know

• Gordon Brown’s £5 billion a year pensions tax has done great damage, wiping around £100 billion off the value of people’s pensions.

• This Government has added a massive £50 billion of extra regulatory cost to British business.

• Gordon Brown sold 395 tonnes of our gold reserves at the bottom of the market. If he had held onto the gold it would now be worth £2 billion more.

• Much investment in health and other public services was clearly needed. But the very large increase in spending has largely gone to waste - there has been only a 2 per cent increase in NHS activity.

• Under Gordon Brown there has been a rapid build-up in Government debt, which now stands at £500 billion.

Key Message

This report is the most impressive and comprehensive analysis of the state of the British economy produced by any political party in recent times. It offers us a set of imaginative policy proposals directed at improving the competitiveness of our economy, rescuing our pension system and ensuring that more Britons, and more parts of Britain, share in global prosperity.

Government should have one simple economic objective: to make Britain the best place in the world to do business. This report shows that Conservatives have the long-term ideas to prepare Britain for the future.

The Report

• The report, entitled ‘Freeing Britain to Compete’, is the result of 18 months of public hearings, research and expert advice. It makes a large number of detailed recommendations to the Conservative Party.

• The report will form the fourth part of our national debate on policy, Stand Up Speak Up – a chance for everyone to get involved in shaping our election manifesto.

The full is report available at http://www.conservatives.com/pdf/ECPGcomplete.pdf

The Competitiveness Challenge

Competitiveness matters. The UK has been falling behind in recent years. As a result five million people of working age are without jobs, one million manufacturing jobs have been lost in ten years, and many people are suffering from low take-home pay. We have had higher interest rates, higher inflation, more public borrowing and less growth than the other leading economies of the world.

Whilst the City of London has performed strongly, led by business and financial services, the gap between London and the rest of the country has grown much larger over the last ten years.

The Recommendations

The report argues that to deal with challenge government must regulate less and tax less. Government must take a lead in sorting out the chronic lack of capacity in transport, energy and skills, and in delivering better public services at a realistic price.

Conservatives will consider carefully the recommendations the Policy Group makes, which include:

• Strengthening the monetary policy framework to create stability, to protect us from further changes in the inflation target, which was loosened before the last election, and to make an honest statement on the full amount of public borrowing and the state of the economic cycle.

• Cutting the cost of regulation and bureaucracy by £14,000 million a year by the end of the first Parliament. This would leave business with more money to invest in new jobs and new products and encourage small businesses to hire extra staff.

• Sharing the proceeds of growth between higher public spending on services and lower tax rates. Tax reductions should be targeted to encourage a more enterprising UK when the conditions allow, including lower corporation tax, the removal of inheritance tax, the reduction of capital gains tax, the abolition of stamp duty on shares and raising the threshold for 40 per cent income tax. The reform of inheritance tax and capital gains tax would have the effect of removing the family home from inheritance tax.

• Expanding rail capacity by 50 per cent through new technology and adopting the types of modern lighter train used elsewhere. Track and train should be reunited and more private capital raised for modernisation.

• Raising money from foreign lorries using our roads, to provide cash to remove bottlenecks and improve traffic flows on main roads, especially at junctions. Busting congestion is a green policy.

• Using private money to build relief trunk routes or widen existing main routes, building on the success of the M6 tollway.

• Organising, as a matter of urgency, a competition to see which technologies offer the cheapest and best way of generating carbon free or low carbon electricity, to be followed by early decisions allowing the expansion of such modern power generating capacity.

• Abolishing the bureaucratic Learning and Skills Council, and to develop a system of paying for training based on student choice and employer need.

• Encouraging savings through a Lifetime Savings Scheme with tax relief to help people with retirement, first property purchase and training. The regulatory framework should be changed to make it easier for companies to keep final salary pension schemes open or in business and allow people to chose whether to buy an annuity or not with their pension money.

• Offering a better tax deal for people and companies to give to Universities to strengthen their endowments and increasing the numbers studying science and technology.

• Strengthening the UK science base, and encouraging more positive links between business and Universities.

• Improving the way we motivate and reward public officials, to raise the quality and efficiency of government itself and to reduce the cost. Unnecessary functions and parts of government should be identified.

• Finding land for building more homes and employment space, without damaging the many precious built and green environments in our crowded island. Identifying places suitable for new settlements, beginning with an enlarged Thames Gateway development using reclaimed estuarial land as well as brownfield sites in the Thames corridor.

• Increasing home ownership, share ownership, and business ownership – people should participate in the growing wealth of the nation and not feel excluded.