Autumn Statement: 10 things George Osborne ought to announce today - but never will

An economist explains what the Chancellor should be doing in an ideal world

Sean Ogrady
Wednesday 03 December 2014 01:00

More than most, George Osborne is a deeply political Chancellor of the Exchequer. After all, he is in charge of the Tory Party’s election planning, and the man charged with keeping his party, his leader and himself in a job after the general election next May.

So I have no doubt that he will ignore these suggestions, some of which are politically bonkers – even though we all know they are the right thing to do, will benefit the country, and, maybe one day, will have to happen. Vote winners, though, they ain’t.

Put VAT on everything, and lower the new single rate

At the moment we have many different rates for different things – arbitrary and economically distorting. Children’s clothes carry none, electricity and gas bills carry five per cent, newspapers carry nothing, most other stuff carries the usual 20 per cent. Our buying decisions are, to that extent, irrational and skewed.

Obviously hiking VAT, even to a more general level of, say, 12 per cent, would on the whole hit the poor rather than the rich, but we can devise better ways to help those in need, through taking more out of taxation and national insurance, and improving targeted benefits for those out of work, and building an economy that creates better-paid and more secure jobs. The tax base would be extended at a stroke. We wouldn’t have to worry about whether Jaffa Cakes are zero rated (for biscuits) or 20 per cent rated (for confectionery) or what temperature a Cornish pasty gets taxed at. Of course I know no politician is going to raise food bills by a fifth; I’m just saying.

Combining National Insurance and Income Tax

They are much the same thing. If we want to make sure people are entitled to unemployment benefits because they’ve been in work – the only real function NI still has – they could pay a nominal “stamp” of perhaps £1 a week when they are in work. Childish opposition politicians will always cry that the government that did this had “doubled income tax” or something stupid like that. Like I say, this is a rationalist argument.


Spend whatever it takes to repair the roads, rail and bus services

The state can borrow at unprecedentedly low rates and the markets understand the idea of borrowing to invest. When we do this we boost the economy immediately, and raise the long-term growth rate. Everyone is a winner.

Spend whatever to takes to get the entire nation on broadband

As with roads and other infrastructure spending: in the long run it will make sense to get rural areas connected, boosting productivity and quality of life – especially if we…


...get people working from home

Modest tax breaks or subsidies - admittedly against the principle of fiscal neutrality - could be justified for the wider good of improving productivity and spreading growth outside London. Having people do more from home means fewer congested commuter lanes and rail carriages, deflated London house prices, raising them elsewhere in the country if it makes no difference where people live, and reinvigorated villages, towns and cities. All those run-down homes need new, more prosperous tenants and owners and no-one should have to live in London.


Reintroduce the dog licence

Yes indeed. Like Victorian times, when it was first brought in, we have a terrible problem of bad dog owners and out of control mutts. A fee of, say, £20 would cover the admin and ensure fewer children get mauled and scarred for life, pay for a special fund for their treatment, and more dog wardens.

Abolish almost all parking restrictions in depressed town centres

Not really a Treasury matter as such, but with a spending implication. Anyway, forget Mary Portas, brilliant as she is. We need to revitalise dying town centres. Like it or not, we all like to drive to the shops and walk to where we want to. Hence the popularity of out of town malls and unpopularity of park’n’ride schemes. Councils should be given grants to de-pedestrianise high streets and undo one-way systems. We’ve tried everything else; this may be our last chance to get some life back into city centres.

Reduce beer duty by 10p a pint

Like the high Street, the British pub plays a vital role in society, and helps civilise our often wayward drinking habits. Too many fine pubs have been lost to the nation, and all that happens is people preload on cheap supermarket booze. Unless we want to see the end of the traditional public house, we need decisive action now. This could be paid for by an extra levy on off-licence and supermarket sales.


Levy Capital Gains Tax on main residential homes

This is the rational way to tax property wealth, the biggest single drive of inequality in the country – especially between the generations. Every other type of capital gain is taxed when it is realised, including second homes. First homes should also be taxed, at a modest rate, and only when they are sold, so the tax can easily be paid for from the proceeds/profits. Much smoother than a mansion tax of new council tax bands.


Of course this is political madness, but once upon a time we had MIRAS, which actually subsidised mortgage holders with tax relief (Mortgage Interest Relief At Source). That too was a sacred cow. Few recall it now. We could use the proceeds to cap tuition fees or expand our universities. It was raising huge sums and hurt no-one. An allowance of say £10,000 a year could be introduced and the levy phased in, to ease the pain.

End charitable status for public schools

They aren’t Oxfam or Unicef, and their attempts to partner up with state schools are usually tokenistic. It would mean they would be restricted to even richer elite than now, but the money saved, plus the other measures here, would pay for better facilities and teaching in state schools including a new generation of grammar schools in the poorest districts. Start with the most deprived set of postcodes and then work backwards.


That’s me done. What’re your top 10 fantasy Chancellor ideas?

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