Discarding the entire UK tax system and rebuilding it from scratch to be as simple as possible. A radical overhaul of the state pensions system to address intergenerational inequality. Replacing tuition fees with a graduate tax on anyone holding a degree from a UK university.
These are just some of the dramatic – if potentially unpopular – policies I’d be considering, if I were handed the keys to Number 11 Downing Street or Philip Hammond’s Budget Box.
Sadly, the most effective ideas are often the hardest to sell to the electorate. Nowhere is this more apparent than when it comes to collecting and spending public money – everyone has an interest, and politicians are always wary of upsetting the potential losers in the short term, even if that means putting off taking the tough decisions that could alleviate future problems.
But if we had a chancellor who was prepared to throw caution to the wind and be radical, what should they do in Wednesday’s Budget? I asked five business leaders, from a range of fields, for their most radical ideas.
Digitalisation drive – Bina Mehta, partner, KPMG
I would put digitalisation at the heart of how government interacts with SMEs.
Embracing the full breadth of digitally-enabled services will greatly reduce the burden of red tape. Acceleration of current plans would free up valuable time to focus on growth by reducing processing and compliance around VAT and PAYE, for example.
Digitalisation will be key in helping more SME businesses with their overseas agenda – such as consolidation of regulatory approvals and licenses, adoption of blockchain to provide a platform for fast movement of goods across borders and validation and compliance, artificial intelligence to support trusted trader recognition, and risk profiling to minimise physical checks.
Despite uncertainty on what an outcome for Brexit will look like for productivity and supply chains, exports are increasing, and digitalisation will be key in the success of many SMEs. And let’s not forget it will also help attract more investment into the UK.
While going global can be a complex task, research out last year suggested that, by trading goods and services internationally, the typical exporting SME added over £287,000 in revenue over 12 months. Having an overseas strategy makes sense for any business looking for growth and can mitigate against market risk.
We have just launched an in depth “Going Global” guide and online export assessment tool for businesses considering the opportunities presented by overseas markets to boost sales, as the UK defines a new trading regime as part of Brexit plans.
Merge, merge, merge – Michael Izza, chief executive, ICAEW
I would merge income tax and national insurance.
Tax is a regulatory burden on business. Successive governments have talked a great game about reducing red tape for business – while all the time piling on more and more tax law. It’s got to stop.
Our tax code is now over 17,000 pages long and one of the longest in the world. That cannot be right. It is so complex that there is no evident way to simplify it – each and any suggestion quickly reveals unintended consequences and ends up as a game of regulatory whack-a-mole. Each time governments add to it, they are making life more difficult for British businesses when we need them to be fighting fit.
We need a more radical approach. In other areas of legislation – a “one in, two out” approach has been suggested. We could start to simplify UK tax by combining these two major areas.
Tax until they build – George Bull, senior tax partner, RSM
I’d focus on measures which did more than one thing – for example by simultaneously increasing the supply of new houses and broadening the tax base. In England and Wales, planning permission has been granted for 450,000 houses on which development has not yet begun. Can tax help get building work started?
Development land tax, which came into force in August 1976, may point the way. The tax applies to the development gain – broadly, sale price minus current use value. Subject to an exempt amount of £10,000, the first £150,000 of development value realised was taxed at 66.66 per cent. Any land value realised in excess of £160,000 was to be taxed at rates of up to 80 per cent.
Almost as soon as the intention to impose eye-watering tax rates on development gains was announced, the steep decline in housing construction, which had begun in 1968, was reversed, as it was no longer profitable to hang on to undeveloped land without building on it. From 1974 to 1977, housebuilding soared.
More new homes and extra tax too? “Son of Development Land Tax” could be the answer.
Teach them to export – Emma Jones, founder, Enterprise Nation
I’d introduce a national programme of match-funding for SMEs to get training and advice from private sector experts on how to export.
It’s critical at this time as small businesses need to start getting Brexit-ready, which means managing current costs while planning for future markets to enter. The majority of smaller export firms trade with the EU, which is very straightforward as EU members. But once we leave, they will need specific help.
An “Export Vouchers” programme would both stimulate the private sector market – as it would use government funds to ensure export experts are matched with small businesses – and it would also show that the government recognises the fact that smaller firms will need a helping hand.
There is so much export specialist talent in the market – and so much potential for young firms to sell worldwide. What’s required is a platform to match the two, and a nudge from government to make the connection.
Be unpopular – Bruce Dear, head of London real estate, Eversheds Sutherland
Chancellors have no easy options in Brexit-bound Britain – and, whatever happens, get blamed. So I might as well be disliked for a reason.
First, I would add a penny to basic rate income tax and two pence to the higher rate. We have problems in the NHS, education and social care. If we want high-class public services, we have to pay for them. To build public trust, I would ringfence this tax rise so it could only be spent on health and education.
Second, I would borrow £50bn to mass build millions of modular council houses. In Japan, factories are making 6,000 modular flats a week. My Budget would use this technology to solve our housing crisis.
Finally, I would revive Theresa May’s excellent (and unjustly decried) ideas on pensioner social care: end triple lock pensions, means-test winter fuel allowances, and oblige rich pensioners to contribute to their care from their own wealth.
Then I would resign because the press would force immediate U-turns on all of these policies.