Dear Philip Hammond,
The Autumn Budget you announce tomorrow is an opportunity to convince the country that there is a long-term vision for the economy.
Planning for the next quarter is not enough, we need a plan for economic strength throughout the next quarter of a century.
At the moment, net national debt already stands at £130,000 per household – and is expected to grow to £2 trillion in the life of this parliament. This is the highest since the aftermath of World War II. Worryingly, the Debt Management Office hasn’t published a strategy since 1995.
You committed to reach surplus by 2025 – this would be the best thing you can do for Britain.
As it stands, the government is trying to cut a millstone of unsustainable debt, which will continue to be hung around the necks of the younger generation. The government says it must tackle intergenerational unfairness. This cannot be done if we go on borrowing against earnings they haven’t yet even made.
So how can you deliver a better Britain for them?
There are a number of measures that could be utilised to ensure we begin building a more confident, and ultimately more resilient, economy for everyone.
Our current tax code is bloated and complicated. Rather than add greater complexity to our national tax system, it is vital to start thinking how it might be simplified. It is far too complex – so byzantine that even professional tax advisers struggle to understand it all. This is already a problem for business – it is a regulatory burden that undermines confidence, quashes entrepreneurialism, and inhibits growth.
You must resist the temptation to make changes that will create additional bureaucracy at such a fragile time. But the tax code is also becoming out-dated, if not obsolete.
The ever-increasing adoption of e-business models, and the rise of the gig economy, means that the traditional tax base is being undermined. A system based on the idea that taxes would be largely paid by and for employees will struggle to cope with a society where more and more are self-employed. We need a proper debate on how to square this circle.
Economic growth is going to be more vital than ever as we navigate the uncharted waters ahead. The good news is that businesses are cash rich. But in a climate of uncertainty they are understandably reluctant to make major capital investments.
The new industrial strategy is an opportunity to inject some optimism into the economy, and make it worth their while to invest in technology, training and development, to help drive economic growth in 2018 and beyond.
The UK has always found funding for profitable companies. But many innovative high-growth businesses in emerging sectors need capital up front. These companies may not have proven technology, but are developing areas like artificial intelligence, robotics, materials sciences, alternative energy, advanced engineering, and life sciences. These are sectors where Britain leads the world, but this can only continue with support.
This will become especially relevant once these firms no longer have access to the European Investment Fund.
I know that anything you do is overshadowed by the uncertainty represented by Brexit. But the biggest mistake we can make is to spend the next two years peering into the distance to discern the shape Brexit will take, but failing to address the very real problems staring up from our doorstep.
We face some tough choices, but must be bold, ambitious and flexible as our country embarks on a historic new chapter. I know you understand that planning and preparing today will secure our economic prosperity for the future.
Read more: Is there ever a popular way to raise taxes?