Response to the Chancellor's Conservative Conference speech - strategic investment and tax fairness needed in reset
Today's confirmation from the Chancellor that he will 'reset' fiscal policy is welcome. However there is a bad reset, and then there is a good reset.
Alfie Stirling, IPPR senior economic analyst, responding to the Chancellor’s speech at Conservative Party Conference, said:
“Today's confirmation from the Chancellor that he will 'reset' fiscal policy is welcome. However there is a bad reset, and then there is a good reset, and currently it seems the Chancellor is unclear which he is going for.
“A bad reset would see the Chancellor abandon Osborne's target to get to a surplus by 2020, but retaining the insistence on returning the public finances to balance without any plan to unlock serious resources for further investment or to modernise our creaking tax system. This is likely to mean the country borrowing more in the future out of necessity, to cover higher welfare and lower tax receipts further down the line.
“A good reset would see a framework that allows the country to borrow strategically to increase future productivity, a clear plan for that new investment, and a strategy to improve efficiency and fairness in the tax system. Tax streams from wealth should be expanded, and inefficient tax reliefs – such as those on buy-to-let mortgages, some elements of capital gains and pension contributions for high earners – should be revisited to bring in new resources. This doesn't mean giving in to fiscal unsustainability - in fact it's the only way to ensure our public finances are sustainable over the long term.”
Kieren Walters 07921 403651 [email protected]
IPPR has been calling for some time for removing public investment from deficit targets and set a longer time frame for reducing government debt see: http://www.ippr.org/news-and-media/press-releases/ippr-says-chancellor-should-set-out-plans-on-investment-and-tax-following-chancellors-fiscal-reset-comments