The article originally appeared in the Economist.

Support social institutions to reduce the structural dependence on the state, argues the attorney-general

Napoleon once derided Britain as a nation of shopkeepers. Seen another way, we were just as much a nation of low taxes and light-touch regulation. My plan for productivity and growth has five pillars: light-touch and industry-informed regulations; lower and reformed taxation; strong working families and communities; high-quality education; and better planning and regional growth. The health of our economy depends on strong households and strong communities. We need to support social institutions to reduce the structural dependence on the state in the long term.

The Common Law tradition of pragmatic, business-friendly law will underpin our economic success. The October 2021 Oxera report on English law tells us it is the most frequently used governing law in global transactions. It is often used even by those with few or no links to Britain. English law comprises an estimated 40% of all governing law in global corporate arbitrations. And when forward-looking states in the Gulf seek to create special economic zones, they choose English law as the model. We need to rediscover the legal formula that made Britain a commercial powerhouse and cut back laws inherited from the European Union.

On taxation, the path is clear. This Conservative government needs to approach taxes as a Conservative government should. For a start, reverse the planned increase in corporation tax next year; scrap increases in national insurance; cut green levies and get rid of the investment-corrosive windfall tax.

There are also ways we can simplify our tax system, making it less of a burden on small- and medium-sized businesses. Reforms to value-added tax (smoothing out differential rates and exemptions), and national insurance are obvious contenders. We should also look to merge national insurance and income tax into a single system to boost transparency and efficiency. Licensing fees and approvals are backward and should be reduced and streamlined to encourage new entrants. We should also encourage investment in machinery and equipment, and allow businesses to deduct 100% of capital investment at the point of investment. This would simplify the current burdensome rules.

Increased taxes should only ever be the result of definite policy, not drift. I would unfreeze income tax thresholds and tie them to inflation, so that taxpayers are not bumped into higher tax brackets. The British Empire grew “in a fit of absence of mind”, but the tax empire shouldn’t change unless Parliament votes for it. This unconscious drift to increased taxes is a drag on growth and profoundly unconstitutional.

Tax cuts in the short term can be funded by cuts to government spending (including reducing the number of civil servants back in line with their number in 2016) and spreading out debt payments over a longer period. In the long run, cuts would be funded by growing the economy.

We should prioritise tax relief for low income households, especially those with children; increase the spousal allowance and provide an uplift for each child. This will reduce burdens by reducing taxable income rather than increasing welfare. It will get and keep more people in work. As a government, we can’t sit idly by when there are 5m people claiming out-of-work benefits and 1.3m job vacancies. For those out of work, we should be doing everything we can to get them into work, even if that means further training or childcare support. If a job centre can find appropriate work for a jobseeker, and they refuse even to apply, then benefits should be cut. This is not just an economic problem, it’s a human problem. People of working age are at their best when they have a purpose, whether that’s working at home or working caring for loved ones. A sense of self-worth and achievement is something we want more people to have. Our communities and our economy will be better for it.

An important part of our future growth will be the talent of our workforce. Our education policy needs to return to a focus on outcomes and free choice. A government I lead would say yes to new grammar schools in any county that wants one (voted on at a local level). Whatever their type, we need more schools to adopt the principles that make the Michaela Community School so successful: discipline, responsibility and knowledge. I helped set up this free secondary school in Wembley along with educator Katharine Birbalsingh. Its founding principles used to work in schools around the country, but they were thrown away by all but the best public schools. All children should have the chance to study in schools that encourage similar values. We need to look at ways to incentivise the best teachers with better pay and conditions. Pupils are judged on their results and teachers should be, too. We should seriously look at the funding model of higher education and end the Blairite obsession with university attendance, however poor the courses or outcomes. We should reconsider the split between funding for subsidised university fees and vocational training. The taxpayer should not continue to subsidise poor-quality degrees and inefficient universities to current levels.

For places that have been left behind when it comes to economic growth, we need to embed the “levelling up” agenda and put critical decisions in the hands of local authorities. That requires investment that makes sense locally: setting a framework for government services and infrastructure spending, based on areas in the UK that actually need levelling up. For authorities that want growth, we would offer an alternative planning regime that will encourage predictable consents, not micromanagement. In short, we have to drive private enterprise and encourage businesses to move into the areas deprived of economic activity and advancement. We should cut taxes for those businesses that go in and help develop left-behind places. For example, we can reduce corporate-tax rates and give them 100% tax relief on the cost of making the move.

Looking again at The Economist’s explanation of Britain’s low economic growth, I might have the temerity to point out a much simpler explanation for our current woes: the strong productivity of the Blair years could well be the delayed result of the Thatcher and Major-era tax and regulatory reforms. By the same token, subsequent poor productivity growth since then might well be the delayed result of the anti-market reforms under Prime Ministers Tony Blair and Gordon Brown. However long they take to actually enact, we must always remember that reforms take time to have an effect, for good or ill.