£17bn savings package for the Autumn Statement

19 November 2012

CentreForum, the liberal think tank, has put together a £17 billion savings package ahead of next month's Autumn Statement.

The paper 'Freedom, fairness and responsibility', which will be published on Monday, calls for the government to deliver a package of tax and welfare reforms along with supply side reforms to cut through red tape and boost economic growth.

As well as proposing ways that the government could trim the welfare budget by targeting those least in need of support, the paper sets out a series of innovative measures to make the tax system fairer, simpler and more efficient.

CentreForum has estimated that its proposals would raise over £17 billion a year.

Co-author of the paper Adam Corlett said:

"The government can achieve significant savings without hammering the poor. We urge the government to consider our ideas in the run up to the Autumn Statement."

NOTES TO EDITORS

The CentreForum report 'Freedom, fairness and responsibility: a submission to the Autumn Statement 2012' by Adam Corlett, Tom Frostick and Sean O'Brien can be downloaded.

Executive summary

The Autumn Statement on 5 December is an opportunity for the coalition to reflect on the past two and a half years in government and renew its commitment to the values of freedom, fairness and responsibility.

This paper sets out a number of specific proposals that we would like to see contained in the Autumn Statement. The intent and purpose of the paper is deliberately narrow.

We put forward practical ideas that would realise important savings and additional revenue for the Exchequer at a time of fiscal consolidation.

However, we do not enter into the broader political debate over the government's fiscal mandate or the appropriate ratio between tax increases and spending cuts.

Our proposals deliver tax reforms and marginal savings to the welfare budget, raising over £17 billion in total. We also call for supply side reforms that reduce red tape and boost economic growth.

Fairness and shared responsibility

At the same time as making the tax system broader and fairer, we propose measures that address intergenerational inequities and the relatively painless impact of fiscal consolidation on wealthier pensioners:

  • Make universal pensioner benefits taxable
  • Reduce the maximum pension pot limit for tax breaks to £600,000
  • End the national insurance exemption for richer pensioners
  • We call for different forms of income to be treated more equally:
  • Increase capital gains tax rates to 20 and 40 per cent
  • Introduce an additional rate for capital gains tax
  • Merge the personal allowance and capital gains tax allowance
  • End inheritance tax reliefs for business and agricultural property
  • End the exemption of capital gains unrealised upon death

We propose reform to dysfunctional taxes and unjustified tax exemptions and benefits:

  • Limit statutory maternity pay for the highest paid
  • End the national insurance tax break for self employment
  • Introduce council tax bands I and J
  • End the council tax freeze for bands F, G and H
  • Replace vehicle excise duty with an upfront tax on new cars
  • End the vehicle excise duty exemption for pre-1973 cars
  • Phase out red diesel

Freedom

Finally, we propose a mix of macro and micro reforms that promote economic freedom by removing unnecessary and burdensome red tape:

  • Extend the 'red tape challenge' to cover all government departments
  • Improve access to equity funding for SMEs
  • Unlock the planning system and remove impediments to lending
  • Relax student immigration controls for bona fide institutions