The Reform-linked Centre for Better Britain think tank has released a bumper set of policy proposals today after being commissioned by Richard Tice to examine how to turn Britain’s economy around. It’s meaty…
Here are the key radical policies:
Tax (18 policies)
- Rule: no tax cut goes ahead until equal spending cuts are found.
- Personal allowance: stop withdrawing it above £100,000 (ends the 60% rate).
- Child Benefit: make universal again, scrap the High Income Child Benefit Charge.
- Pension annual allowance: abolish, along with related limits.
- Making Tax Digital for income tax: scrap.
- National Insurance: merge employer and employee NI into one payslip charge, then phase it out over a generation as pension contributions rise.
- IR35: replace with a clear legal test of self-employment.
- Stamp Duty Land Tax: abolish.
- Stamp Duty on shares: abolish.
- Inheritance Tax: abolish.
- Capital Gains Tax: abolish (first for assets held over three years then fully). Fallback: restore inflation indexation and cut rates.
- Corporation Tax: cut from 25% to 15% over eight years, then only tax profits when paid out (Estonia model).
- Dividends: refundable tax credits for dividends from British firms, first for pension funds, later for all UK shareholders.
- Air Passenger Duty: abolish.
- Digital Services Tax: abolish, or raise its threshold.
- Environmental levies: abolish Landfill Tax, Aggregates Levy, packaging EPR and Plastic Packaging Tax.
- Insurance Premium Tax: cut from 12% to about 3%; exempt private medical insurance.
- Tax code: a Tax Code Commission to rewrite it from scratch into a few short Acts.
Pensions (11 policies)
- Lifetime Investment Account: one portable account per worker for life, based on Australian superannuation.
- Contributions: rise by 0.5 points a year to at least 15% of earnings (target up to 20%), no opt-out, self-employed included.
- Child accounts: every child gets an account at birth with about £1,000 from the state.
- Access: locked until retirement except in narrow hardship cases.
- State Pension: gradually becomes a means-tested safety net with existing entitlements kept.
- Triple lock: capped at growth in the working-age tax take.
- Public sector pensions: close to new entrants, new staff join the Lifetime Investment Account, cap pensionable pay at £50,000 to £75,000 for existing staff.
- No mandation: pension money should not be forced into UK assets.
- ESG: non-financial ESG screening only if savers opt in.
- Pensions regulator: focus on long-term returns, not short-term volatility.
- ISAs: merge into one Investment ISA, end new Cash ISA contributions, full allowance requires at least 50% in UK assets.
Bank of England (8 policies)
- Accountability: new parliamentary committee judges the Bank’s performance.
- Inflation: judged over one, three and five years, separating home-grown inflation from imported shocks.
- MPC: external members picked independently, more real-economy experience.
- Pay: leadership pay linked to hitting the mandate. Would focus minds…
- No growth mandate for the Bank.
- Reserves: pay full Bank Rate on only part of banks’ reserves, put lower or zero on the rest.
- QE losses: end the open-ended Treasury indemnity and losses stay on the Bank’s books.
- Debt management: execution moves to the Bank but strategy stays with the Treasury.
Other investment-inducing policies (16 policies)
- Department for Economic Growth: split from the Treasury – Treasury loses its veto via short-term fiscal scoring.
- Risk appetite: ministers set explicit risk levels for regulators via mandate letters.
- FCA: about 50% fewer rules, harsher penalties for serious misconduct.
- Challenger banks: lighter capital rules, MREL threshold raised to £500 billion and no ring-fencing.
- Bank surcharge: replace flat 3% with 0% to 10% rate linked to SME lending.
- National Investment Bank: permanent capital, commercial board, fills scale-up equity and small-loan gaps; absorbs British Business Bank and Innovate UK functions.
- Strategic Investment Vehicle: up to £50 billion covering the NIB, early-stage technology and hard-to-finance infrastructure.
- AIM: lighter reporting and governance rules, trading changes to improve liquidity.
- Pre-IPO market: turn the Private Securities Market into a standard route for £20 million to £200 million raises.
- EIS/SEIS: merge into one Enterprise Scheme; raise early-stage limit to £500,000.
- Start-up finance: replace Start Up Loans with German-style lending and coaching.
- Sprint permissions: fast-track planning, visas, sandboxes and tax breaks for AI, quantum, life sciences, defence, nuclear.
- Investment reliefs: broader, faster reliefs for factories, labs, data centres and energy assets.
- Listings: float commercial state-owned assets.
- Arm’s-length bodies: mandate letters and sunset reviews; abolition presumed unless justified.
- Financial education: core, assessed part of school maths from primary age.
The swathe of taxes to be eliminated looks radical but they account for only some 5% of total managed expenditure. The most damaging taxes raise almost no money…
The authors have targeted increasing investment as the top priority for getting productivity up and turning the economy around. Tice and Robert Jenrick responded:
“The four key areas in the report requiring reform are: regulatory and governance, SME growth capital, pensions and savings as well as tax simplification. The analysis is deep and we will be carefully reviewing their recommendations. Reform UK has already embraced variants of some of the recommendations.
Regulatory gold plating and a mindset of precautionary rather than proactionary has meant too many barriers, too many costs that reduce activity and prevent real growth. We must be bold in order to create higher levels of real growth.”
They’re taking it seriously…
