UK success

… and let’s stop shooting ourselves in the foot!

The attitude that the UK Prime Minister specifies in this recent speech to the UK CBI is exactly what is needed. This is stirring stuff which will motivate the people in the UK who can do something about it. The challenge for the government is to design and implement the attitude.

Both businesses and the government have legacies of behaviour which are inconsistent with this attitude and can hamper its implementation.

Business behaviour

There is such a strong legacy of UK businesses looking to the government for assistance, that it will be difficult to educate many of them to understand that the value in this admirable and necessary leadership is unrelated to any direct funding that they might assume is associated with it.

Government behaviour

At the same time, the government also has a strong legacy that it will need to change. Levels of taxation are being adjusted to increase incentives for businesses. This is desirable and, if successful, will in the medium term increase taxation revenues required to fill the huge hole dug by the last government. This spirit is captured by the superb suggestion that the HMRC, rather than badgering businesses to pay taxes, might do better to send them “thank you” letters!

However, there is little point in reducing taxation on profits, while maintaining high taxation on costs. For example, the extremely high taxation on road fuel and air fares constitute entirely self-inflicted costs on the movement of goods and people which significantly reduce the competitiveness of UK businesses.

What benefit is there in “UK plc” continuing to do this to itself? Let’s propose much bolder moves, for example: why not scrap hydrocarbon duty and airport taxes and replace them the adjusted levels of VAT (if necessary, flat rate rather than percentage, to retain UK’s degearing of real oil prices). And, while we are at it, stop charging businesses VAT so we can stop operating the charade of VAT reimbursements and repayments to everyone’s cost and no one’s benefit.

Let’s release the brakes!

If we can identify and change the areas which are holding us back, then this can only contribute to the success of the UK.