The Tory manifesto declares support for a more balanced economy, but a dispute has opened up between the think tanks about how best to achieve it. In a recent report, Policy Exchange advocates among other measures, the winding up of Labour's Strategic Investment Fund, which has given Rolls-Royce a grant to build a new factory in the UK and Nissan a grant to develop battery technology. This policy is denounced as slipping back into 'intervening in markets' in ways that could 'distort the allocation of capital'.
Civitas has just published Prosperity With Principles, available from Amazon or as a free PDF from Civitas. It argues that our government needs an industrial policy if we are to avoid further economic decline. It lists 22 measures:
1. Set an exchange-rate target consistent with a higher-level of manufactured exports, subject to a monetary policy aimed at achieving sound money.
2. Reduce government debt as rapidly as possible to reduce the cost of borrowing so that investment can be increased.
3. Aim to move towards a main corporation tax rate of 15% within a few years. Preserve and extend R&D tax credits. Move towards 100% capital allowances.
4. Cut personal tax and inheritance tax to increase the funds available for private investment with the intention of encouraging a renewal of private and family-owned enterprises.
5. Apply a moratorium on all new business regulations in the legislative pipeline.
6. Aim to abolish employment tribunals and all related laws, and in the meantime, place a cash limit of £5,000 on all employment-related compensation awards.
7. Abolish business rates on empty property.
8. Restrict all climate-related measures to those that are consistent with keeping the UK within the top three most competitively priced energy markets in the EU and the G20.
9. As an extension of the export credits guarantee service, provide an exchange-rate hedging service for raw and semi-finished materials imported for use in manufacturing, and for exports of finished products.
10. Use public procurement more effectively to incubate innovative companies.
11. Increase taxpayer support for basic research when financial constraints permit.
12. Preserve and extend the Enterprise Finance Guarantee scheme.
13. Develop an Industry Bank, modelled on the Industrial and Commercial Finance Corporation.
14. Encourage saving and enterprise banks modelled on German savings banks.
15. Transform regional development agencies into arms of the Industry Bank.
16. Maintain a list of strategic industries, including defence, support them and prevent foreign takeovers.
17. Make vigorous use of WTO reciprocity rules.
18. Encourage the WTO to permit 'adjustment protection' for a time-limited period.
19. Ensure that importers are not placed at an advantage by home taxes and regulations. If necessary equalise the burden.
20. Examine all substantial foreign investments to ensure compatibility with competition law.
21. Place apprenticeships as far as possible under the control of employers, and whenever feasible provide the prospect of a job at the end.
22. Repeal the 2002 Enterprise Act to allow the relevant Secretary of State to intervene to protect the public interest in cases of acquisitions, mergers and other potentially anti-competitive activity.
