Magazine article The Spectator

The Chancellor's Challenge

Magazine article The Spectator

The Chancellor's Challenge

Article excerpt

First the good bit: the pronouncements of George Osborne's early weeks at No. 11 helped to pacify investors who might otherwise have treated our government bonds to the same degrading treatment as those of Greece, Ireland, Spain and now Italy. As a result of a credible programme to reduce (albeit not eliminate) the deficit, confidence in UK government debt held firm and the Treasury is now able to borrow money at a shade above 2 per cent, rather than at the 7 per cent now being imposed on Italy. This is, today, the Treasury's greatest single boast.

Unfortunately, however, Osborne has not kept up the momentum. Impending disaster averted, No. 11 ought to have begun churning out reforms to set the country on a path towards prosperity. The duty of a Conservative chancellor is not just to publish a five-year spending plan, but to identify and sweep away the many obstacles and disincentives now confronting those who would start companies and hire workers.

Yet the impression emanating from the Chancellor's offices is one of inactivity. It is not that he is floundering for a plan B; the problem is that it seems he never really had a coherent plan A. Economic policy, to borrow an analogy from Mr Osborne's family business, seems little more than wallpaper. Words like 'deficit reduction' are used, and phrases like 'put fuel in the tank of the British economy'. But a disconcerting gap is emerging between the rhetoric and the ambition of the policies.

Soon, the Chancellor will publish his growth review. The good news is that there is much he can do. In this issue, various Spectator contributors have supplied their own proposals to revive the British economy.

Readers will not agree with all of them, but they serve to show the range of options the Chancellor has at his disposal.

The contrast here between Britain and the US is remarkable. There, would-be Republican candidates compete with each other to come up with the most imaginative and radical ways to rebuild the economy. Herman Cain's proposal for a flat tax of 9 per cent on income, corporate income and sales briefly propelled him to the front of the field. Cain's campaign style might be a bit unusual for British tastes, but he and other Republicans are right to convey the clear message that, when it comes to the economy, this is no time to tinker. Radicalism is required.

Osborne once flirted with the idea of a flat tax in Britain. That now seems a long time ago. These days, he talks about his corporation tax cut as if businesses were unaware that most of the money they'd save would be clawed back by other tax rises. …

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