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Tim Montgomerie

Screen shot 2011-02-21 at 09.02.01 For all those interested in boosting Britain's long-term economic competitiveness I recommend a series of blogs from the IEA that Sir Humphry Appleby would no doubt tell ministers were "courageous"…

Philip Booth looked at the way Britain's planning system was hampering business: "[Britain has] some of the highest property prices in the world in all sectors which has an effect on labour mobility as well as business expansion in retail, industrial and service sectors. All these problems reduce growth and prevent resource re-allocation in recession that follows a boom. Just to give one example, retail space per head of the population in the UK is approximately 23 sq ft per capita as opposed to 53 sq ft in the US where land markets operate more freely."

Peter King proposed reform of social housing: "The key problem is that government is persisting with the division between social and private renting as if they ought to fulfil some different functions. Clearly there is the need for some form of specialist supported housing for those incapable of looking after themselves, but for most households there need be no distinction between landlords. The government therefore should liberate social landlords from the panoply of regulation that currently hampers them and let them compete with private landlords and manage their borrowing as they see fit. Government is still not prepared to let go, even if it has gone some way towards a more market-based system."

Kristian Niemietz urged IDS to go even further on housing benefit: "In places like Hackney, Tower Hamlets, Islington, Haringey, Lambeth and Brent, HB rates for a two-bedroom flat can easily be £1,200 per month or above (this is after the impending HB cuts) – an amount which many people could not earn in the labour market. In each of these boroughs, more than 30% of all households receive HB. Note that this situation will not change with the introduction of UC. HB will become a component of UC, but retain its present structure."

If you don't have time to go through the detail I recommend Mark Littlewood's blog (which also appeared on ConHome) and, in partricular, a concluding blog from Philip Booth. He touched on tax, energy prices, financial regulation and employment law:

  • Tax: "The tax system is very complex and taxes have increased dramatically in recent years. The recent increase in VAT, for example, reduces real take-home pay for those in work whereas those on benefits will be compensated by the indexation of benefits. The complexity of the tax system bears especially heavily on small firms who have a tax-administration cost burden 16 times that of the largest firms as a proportion of turnover."
  • Energy prices: "The government’s energy policy is imposing greater energy costs on businesses and households alike."
  • Increased financial regulation: "The regulation of hedge funds and bank capital requirements – none of which resolve the problems that caused the financial crash – are in danger of stifling the supply of new capital to businesses."
  • Employment law: The British Chambers of Commerce estimate that the cost to employers of forthcoming changes to employment regulation will be £23bn in the remaining life of the coalition."

11 comments for: The IEA warns that tax burdens, energy prices, financial regulation and employment red tape threaten recovery

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