HOW CAN Britain prepare to compete with fast-growing emerging economies? Jeremy Browne thinks he has the answer. Race Plan, released yesterday, is refreshingly radical for a book written by a former Lib Dem minister. Browne argues that Britain must not only learn to cope with globalisation, but embrace it wholeheartedly. And it is only through an ambitious package of liberalising reforms that the UK can find the right solutions to our greatest problem: weak relative competitiveness.
While at times Browne does not go far enough, it is on education that he is most radical. First, he proposes a vast extension of free schools. He then calls for an end to the ban on schools making profits, to fund the provision of new services and buildings. Combined with a school voucher system, this would give parents greater choice and should ultimately lead to better educational outcomes. This is bold stuff compared to the timidity of much of our political class, but boldness is needed if we want to compete globally.
Elsewhere, Browne has less provocative prescriptions. He wants more ambition in the size, speed and scope of infrastructure investment, including the faster introduction of HS2. He also recognises some of the critical brakes on Britain’s competitiveness, by backing the mayor’s plans to substantially increase aviation capacity through a new London hub airport. And on spending, Browne is unafraid to argue that, with worsening demographics, difficult decisions will need to be made (for example, by reforming the NHS). Current deficit reduction risks being overwhelmed by long-term unfunded promises if we don’t make serious decisions soon.
He is also right that cutting the 45p income tax rate should be a priority. Too many are still afraid to argue that, not only are such high tax rates punitive, but they deter investment, don’t raise revenue, and drive talent overseas. But it’s not just rates that are problematic. Browne could have called for radical tax simplification, to banish the perverse incentives caused by reliefs, exemptions and discounted rates. He could also have called for further action to cut marginal rates at the lower end of the income scale, through national insurance cuts, for example.
But ultimately Race Plan is right that the key ingredient for a more innovative and efficient economy is competition. Businesses should not be shielded from international trade, but free to explore and compete in markets globally. Underpinning Browne’s ideas is the philosophy of classical liberalism: the belief that, by extending individual freedom, responsibility and opportunity, we will be a more prosperous nation. This cuts across party lines, must be the driving force behind a renewed Britain, and is the best foil to those who propose state intervention to protect us from globalisation.
Yesterday marked a year since the death of Margaret Thatcher. As she once said, a number of her ideas “were often accused of being impractical when they were first put forward, but are now universally accepted”. While Browne may not be quite as radical, he is right that “competition, choice, wealth creation and profit” must again be the template for success. This book is both timely and welcome.
Adam Memon is head of economic research at the Centre of Policy Studies. Race Plan, by Jeremy Browne, is published by Biteback Publishing.