As the parliament breaks for recess, LBC Radio presenter James Max gives the chancellor and co something to think about
Rather like the Jet Stream, the government has been in the wrong place, at the wrong time while delivering news we don’t want to hear.
As the Jet Stream shifts, let’s hope government will shift too. The coalition’s inability to reinvigorate the economy is their biggest failing to date. Confidence is being undermined. Catastrophic and devastating discoveries about the excesses and misdemeanours of some of our biggest companies during the boom could force the country into an unprecedented triple dip recession.
Immediate and drastic action is required.
Of course some of the problems relate to the continuing Euro crisis and the mess left by Labour. However, to blame-storm and point figures negates the inevitable truth that the longer the coalition is in power, the more those failures become their fault too.
The government, in particular the Chancellor of the Exchequer, should use the parliamentary recess wisely. Once the Olympic Games are out of the way, Britain must return to work. It needs to be incentivised to do so. As a country we require decisive leadership to fix what is broken. Indeed, an end to politics for the sake of political point scoring combined with common sense policy initiatives.
The letter F has been prolific when defining the government’s performance. Fiasco, farce and failure.
The fiasco surrounding G4S and their inability to fulfil their contractual obligations. The farce surrounding one of the worst budgets in living memory and the failure of both banks and regulators to piece together what went wrong with the Libor fixing scandal, international money laundering and miss-selling of financial products. Entertaining and enthralling as those stories may be, this coalition’s failure is as much of its own making as the prevailing conditions surrounding it.
Deficit reduction is important. Indeed some of the measures being taken are beginning to work. Inflation is now a manageable 2.4% and unemployment is falling. But at 2.58 million it’s still too high. Real interest rates are also too high, borrowing remains difficult and expensive whilst the tax system is fiendishly complex. As we reach the mid-term of the coalition’s time in office the government must focus. It’s doing too much while fighting battles that could be saved for another day.
Every single policy in the next phase of the coalition should be focussed on fixing the economy. In particular the supply side element of the equation. Our chancellor appears to be a bit of a part-timer, so I’ve done some of the work for him.
An emergency budget should be set for November.
Lending and investment must be prioritised. Implementing a clear strategy to encourage investment from the domestic and international private sector enterprises would bring jobs and growth. Banks must be incentivised to lend at appropriate and affordable rates with the simple goal of creating an environment where business wants to hire and expand while supported by their banks to do so.
Furthermore, the war of words on quangos and red tape needs to be enacted. Stoke up the fires: I want a bonfire of unnecessary rules and regulations as well as an end to armies of highly paid technocrats who do little more than cost a lot.
Pernicious layers of taxation implemented by the last government should go. Air travel duty, excessive car tax, showroom tax, stamp duty, national insurance and inheritance tax should all be abolished.
Simple tax rules for individuals and companies will not only cut down on avoidance but also stimulate the economy. If he cannot cut income tax, then VAT should be reduced to 15%.
Meanwhile we need to re-engage on Europe. What a mess. If there is a battle to be fought on waste and inefficiency surely this is where to start. I am all for a functioning EU that works for all member states. However the institution that supports its activities is far too expensive, cumbersome and wasteful. As a nation we spend too much money on it. The overseas development budget should be cut. We should not be supporting and paying for programmes and initiatives that we cannot afford in our own country.
Recent transport issues have demonstrated that we have no vision when it comes to air, road, rail and cycle strategy.
Enough of the green wash.
A clear replacement and investment programme is required. New runways, rail lines, roads and cycle lanes. With sensible taxation rates and subsidy, people would use public transport without penalising motorists who have few alternatives. Has anyone thought that some of our major arterial routes are old? They cannot continue to be closed and patched up. Replacement is the only option. Similarly an end to these ghastly traffic calming schemes and ridiculous speed limits.
Then there’s the high street.
Mary Portas is a lovely and dynamic lady. But will her Portas Pilots funded by a few million quid really save an important element of our economy? No.
From business rates to parking rules, employment law and taxation, the whole lot is a basket case designed to put people out of business rather than encourage them to do well and invest.
At the core of all these proposals is tax. It is the biggest single issue facing our nation. A simplified system is required.
We should be taxing income and profit, while encouraging investment and saving. The current system is confused and greedy. Taxing companies to employ people. Taxing success to pay for failure. And taxing people who move house with stamp duty whilst raiding pensions which are ever more important in a society that’s living longer.
Britain has one more chance to stem the tide of decline. George Osborne has one more chance to prevent being reshuffled. Let’s hope he’s listening. The nation is sick and tired of hearing excuses when it’s obvious what needs to be done. It’s also sick and tired of fiascos, farces and failure too.
This isn’t a time for denial or political posturing. The economy needs fixing, tax must be simplified and action is required now.
James Max presents Weekend Breakfast every Saturday and Sunday mornings on London’s Biggest Conversation, LBC 97.3 FM. He is a qualified surveyor and worked in property and finance for 15 years. After working for one of the country’s leading property advisory firms, he completed healthy stints in investment banking and private equity, before becoming a candidate on The Apprentice, which launched a career in broadcast media. Visit JamesMax.co.uk.