12 May 2010
Written by Dr Madsen Pirie
Tony Blair spoke of "education, education, education", but David Cameron's focus must remain economic, says Madsen Pirie, an advisor to the last Conservative administration.
Tony Blair left no doubt as to his top three priorities: “Education, education, education.” Given the current state of education in Britain, it could be argued that he failed to succeed with any of them.
The top five priorities of the new government are more clear and more urgent. They are the economy, five times over. Unless the economy is put right, everything else will fail. Unless Britain earns its keep, pays its way, and generates new wealth, there will be no funds to support any of the ambitious projects that the new partners want to achieve.
Despite Britain’s overhang of debt and the parlous state of public finances, there are promising signs that things can be done, not least because both coalition partners recognize the problems.
One of those economic priorities is taxation. Gordon Brown has left a shambles, with low earners paying so much tax that they have to be helped by credits and welfare payments. The good news is that one coalition policy already agreed is to lift the starting tax threshold to £10,000.
This would lift 3.6m low earners out of income tax altogether - making work more attractive than welfare for the low paid, and will considerably reduce welfare spending.
Another priority is the deficit. Both partners want spending cuts, and must now urgently identify their targets. Scrapping identity cards will be a good start, but then comes the painstaking process of identifying the needless spending and unproductive jobs and practices that permeate the public sector. The Lib Dem proposal for a value-for-money commission is one the Tories can embrace heartily. A trawl through the spending of local authorities will expose wasteful and unproductive spending.
Spending cuts alone will not do it, however. There must be a boost for business. Scrapping the National Insurance "jobs tax" increase will only be the start, and the Lib Dems must quietly bury the idea of raising capital gains tax from 18 per cent to 50 per cent - it must be kept low to boost new business and the jobs it creates.
The coalition should protect small and new businesses from many taxes and regulations until they grow large enough to cope with them. They should be protected and nurtured like greenhouse plants, because they represent Britain’s economic future.
Not least among the economic priorities must be the complete modernization of the way the Treasury manages our economy. It must be updated and streamlined, with clear principles replacing antiquated practices. The Treasury must be made to count the likely benefit of new policies, as well as their costs. It will be revolutionary, but this is a time for revolutions.
The final economic priority is pensions, which must be restored to their healthy pre-Brown state. It has to be worthwhile for people to save, without fear of those savings being taxed. And gold-plated public pensions far in excess of those available elsewhere have to be brought into line. Their unfunded liability simply cannot be afforded.
The other priorities include crime, immigration, educational standards, and welfare dependency, among others. But economic priorities are the top five. If the new Government gets those right, it will have the time and resources to tackle the others.
Published in the Telegraph here.