I have set out my big idea – a competitive banking industry with money available to lend for business growth, for individuals to buy homes, and for infrastructure projects paid for by the private sector. It has had on the whole a positive response here. It could make say a 5% or £75 billion difference to output by Year 4.
The government is looking at several ideas, according to the press. They do see that lower taxes might make a difference. However, they feel boxed in, both by the size of the deficit, and by the worries of some Liberal Democrats who like high taxes. The 50% rate may not be cut soon, and the report from the Treasury on whether it loses revenue or not may be inconclusive.
They might decide to invent an entrepreneur’s relief for new business start ups, perhaps with a limited life. One of the stumbling blocks the Treasury will see is how to stop people transferring existing business into new companies to take advantage. It might just be CGT, or it could also include an Income Tax break.
They could extend the number of Enterprise Zones, and increase the area covered. They could offer bigger concessions within each Enterprise Zone.
They might consider switching some revenue expenditure into capital expenditure. If they could economise more on day to day running costs, they could free some spending for larger projects which might help stimulate UK competitiveness.
They will probably look again at their deregulation programme, and consider introducing more items. Deregulation is the tax cut that does not cost the Treasury money, as it cuts the costs of doing business.
Whilst all these improvements would be welcome, and would make a modest difference, all of these taken together are not going to make much difference to the UK growth rate.
It is possible the Bank will embark in due course on another round of quantitative easing. I have expressed some misgivings about this in a previous blog, which have mirrored the concerns of many readers.
Tax cuts across the board on income and enterprise would make more of a difference. A larger deregulatory programme would help. Giving to the whole country some of the advantages that Enterprise Zones enjoy would speed it up a bit.
I fear UK policy making is stuck in a mode which does not come up with ideas large enough to shift the big economic problems the government has inherited.