There’s an interesting paper out from a number of members of the Conservative Free Enterprise Group this morning. The report, called Policy Bites: Seven Shots in the Arm of Britain, makes these seven recommendations for reforming the economy:
1. Over 65s still in work should continue to pay National Insurance contributions on their earned income to fund NIC holidays for young low-paid workers. 2. Exempt businesses with up to three employees and less than £75,000 annual turnover from employment regulation. 3. Reform the Treasury to place greater emphasis on supply-side reform. 4. Give planning permission for a third and fourth runway at Heathrow. 5. Create a new Ministry of Infrastructure covering transport, communications and utilities. 6. Offer tax-free savings allowances – or ‘care ISAs’ to cover care costs within a family. 7. Introduce simpler regulation for financial products.
The first recommendation will be of particular interest to Downing Street. Ministers and advisers are desperately looking for ways of tackling growing voter concern about the cost of living, as it is one of the key reasons voters are looking to other parties. The paper estimates that an 18-year-old working 40 hours a week on the minimum wage of £4.98 would gain £375 a year, while their employer would spend £450 less each year if given an NIC holiday. A 21-year-old would gain £675, and their employer would save £800.
These are compelling figures and would go some way to providing an alternative to the living wage that Ed Miliband is pushing for. But would the Conservative party’s natural voters, who are closer to retirement age than they are to being a young person on a low wage, appreciate the move? The paper suggests it is difficult to argue that someone who chooses to continue working beyond the retirement age should suddenly see a significant increase in their take-home pay. But it depends whether voters see this as a valuable concession to struggling younger workers, or a raid on the incomes of older people who have paid their way all their lives.
Zac Goldsmith is not a member of the Free Enterprise Group, and nor is he likely to become one following this report’s push for planning permission for a third and a fourth runway at Heathrow.
The economic function must be ‘bolstered’ by more investment in the Treasury funded by cuts on departments such as Business, Innovation and Skills. Vince Cable might not be an enormous fan of that, and others may see it as a power grab by the Treasury.
But the report is pushing debate on a number of issues which have been rather ignored recently. We haven’t heard that much, for instance, on scrapping red tape for businesses since the row over the Beecroft recommendations. Watch out for some of these ideas making their way into ministerial speeches and announcements over the next few months.
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