Tom Clougherty

To be sure, there was some good stuff in the budget, and I probably feel more positive about it than I expected to. The additional 1 percent cut in corporation tax, above and beyond what had already been announced, was perhaps the high point, although it will be the 1p cut in fuel duty (replacing a planned 5p rise) that draws the most favourable headlines. The rise in the personal allowance, meanwhile, is something the Adam Smith Institute has advocated for a (very) long time. Still, there were, as always, downsides. The goal to make UK corporation tax the most competitive in the G7 is a laudable one, and the Chancellor should be saluted for it. But as welcome as the corporation tax cuts are, they are only one part of the picture.

I am in two minds about Andrew Lansley’s proposed reforms of the National Health Service, the cornerstone of which is the transfer of commissioning responsibility from Primary Care Trusts to GP-consortia. On the one hand, the NHS desperately needs radical reform. On the other hand, I’m not sure these are the right reforms, and I’m not sure they are sufficiently radical to deliver a real difference to patients. Let’s start with why the NHS needs reform. Firstly, it is eye-wateringly expensive at 8.1 percent of 2010 GDP, or £120bn a year. Costs have skyrocketed since 1999, doubling in real terms in the 10 years to 2009. Over that same period, productivity fell. We are spending more and more, and getting less for our money.

The government says that the forthcoming budget is going to be all about growth. And rightly so: the economy is still in the doldrums, and without much stronger growth than we are currently witnessing, the coalition has no hope whatsoever of balancing the budget by 2015. But few of the measures being trailed in advance are likely to have much effect, so long as Britain is stuck with a highly uncompetitive tax regime.    International tax surveys highlight just how bad our comparative situation has become. According to KPMG, out of the 86 largest economies in the world, we now have the fourth highest top rate of tax.

In economic terms, the role of the Comprehensive Spending Review is a fairly straightforward one: to set Departmental Expenditure Limits for every government department, and outline some of the policy measures that will be undertaken to keep spending within those limits.   Fraser Nelson has already ably summarised the real impact that the spending review will have on public expenditure, so I won’t go into that here. Suffice it to say that, yes, the cuts are significant but, no, they aren’t nearly as severe as the BBC would have us believe.    But just as interesting as the cold, hard numbers themselves is what they will tell us about the government’s wider agenda.

Britain’s legal aid system continues to fail, and should be abolished for virtually all compensation claims. Reformed Conditional Fee Agreements (CFAs for short) should take its place. Those are the headline recommendations of the Adam Smith Institute’s latest report, written by legal expert Anthony Barton.   It’s not difficult to point to problems with legal aid, but the main one is that it encourages risk-free, speculative litigation, and fuels a costly compensation culture. The fact that claimants receiving legal aid are not responsible for defendants’ costs if their case is unsuccessful essentially puts them in a no-lose situation. Defendants, on the other hand, just can’t win – they’re going to be out of pocket whatever happens.