A Three Point Budget for Investment Led, Market Driven Economic Recovery

Last year my Budget shopping list had main four points in the middle of a complex justification. Those four points could be summarised as:

1)     BIS to be tasked to look at replacing all technology subsidy and “challenge” programmes by “smart procurements”: akin to the Victorian Admiralty and Royal Mail contracts which pulled through the development of fast reliable steam engines and ships and the telegraph system.

2)     100% Capital allowances for investment in communications and energy infrastructures that are fit for the 21st century: upgradeable and sustainable in line with international inter-operability standards. These need to be linked to a streamlining of regulation that will allow current and would-be customers (business and domestic) to invest direct in return for discounts on future services

3)     Tax free training: those following professionally accredited programmes (including those to  maintain and update the skills of those already in the workforce) and/or covered by apprenticeship and other contracts for supervised and structure work experience, to be taxed in the same way as students (i.e. not liable to tax on scholarships, grants, subsidised loans etc.). Those paying for their own training, whether full or part time, to be similarly able to offset the full cost against income tax.

4)     A cross-cutting programme to rationalise the regulatory complexity and compliance overheads that are driving on-line businesses off-shore, with a rolling programme to merge regulators with overlapping and conflicting responsibilities.

A year later and the economy is running on empty. We may have cut the deficit but all that means is that our debts are growing more slowly.

We have to make the UK a location of choice for all those pensions and sovereign wealth funds with £billions looking for long tem investments

We have to enable not just our children and grandchildren, but also our current workforce to acquire the skills of the presnt and future

We have to set our innovative small firms free to grow.

At the same time we have to better motivate our elephantine public and private sector bureacracies (inlcuding those in the IT and Communications industries) to learn how to innovate and compete, by breaking open their proprietary cartels and removing the regulatory protections they have negotiated over the past decade and a half . 
I have therefore made a 25% cut in the number of proposals and a further cut of over 30% in the word count. Regretfully I have come to the conclusion that we cannot wait for HMG to learn how to become  an intelligent customer – as it was in Victorian times. The best we can hope for, in the time available, is to block some of its more stupid procurements.

Therefore my “modest” three point plan is:

1) A two year period (to the next election) of 100% capital allowances for investment in communications networks that use international standards to give customers, (business as well as consumer), world class, neutral, open access inter-operability, at all levels (from the interchange of traffic to choice of services and contents).

2) Apprentices (FE, HE and Post Graduate) following programmes that are professionally accredited and employer recognised (e.g. via Sector Skills Councils) to be exempt from PAYE and National Insurance and the expenses incurred by those following accredited Continuous Professional Development Programmes to be fully tax deductable.  

3) Small Firms ( those employing 10 staff) to be exempted from all regulations which cannot be adequately explained in 2,000 words or less.  

I leave you to ponder the implications. But do not take too long. If we do not take radical and effective action the pain will only mount. My three points are nowhere near enough to do the job – but they might help show foreign investors that we are serious enough to be worth considering as a home for their growth funds and not just their property portfolios