Economists ask Labour to prioritise planning reform and cut tax to boost growth
A survey of economists and policy experts has put pressure on Labour to “spend political capital” on planning reform to encourage more home building and on reforming the welfare system, reflecting the urgency of the government’s mission to grow the economy.
A centre-left think tank focused on growth policy, the Centre for British Progress, has said around 100 economists, policy researchers and industry officials believe further planning reform and developing the Oxford-Cambridge corridor could boost the UK economy.
The survey showed that planning reform and streamlining environmental regulation to allow more infrastructure to be developed should be the two main priorities for the Labour government.
Increasing nuclear energy production and reforming the welfare system followed as the next biggest priorities cited by the group.
Economists and researchers also said they were “less sure” about whether building more social housing would bring benefits.
The survey comes as Labour officials are mulling whether to introduce additional planning reforms in a bid to boost the growth forecasts set by the Office for Budget Responsibility.
The first set of legislation received a positive endorsement by the OBR at the Spring Statement but it has since been watered down due to environmental amendments, putting forecasts at risk of being downgraded.
A Tory peer and leading barrister, Charles Banner, has been asked to stop judicial review costs spiralling at the expense of taxpayers.
An international treaty that allows campaigners to appeal government decisions on the environmental grounds could also partly be abandoned under new moves by Labour.
Economists believe such growth policies may help Chancellor Rachel Reeves to minimise the size of the fiscal hole awaiting her at the Budget, which is likely to total some £30bn.
Planning changes could ease energy costs
Efforts to double down on building more energy infrastructure have also materialised in recent weeks after energy firms agreed to build a dozen small nuclear modular reactors across the UK.
Sizewell C has also received the green light from the government in a £38bn project set to test the strength of UK’s planning rules and government’s ability to keep costs down.
Economists responding to the survey were also asked which taxes the government should raise to boost receipts at this year’s Budget.
Stamp duty, national insurance and corporation taxes were among the taxes economists said the government should reduce in order to spur growth.
Economists also called for cuts to business rates and capital gains taxes.
However, they suggested further excise duties and fuel duties – as well as VAT – should be raised if the government wishes to “minimise the economic costs of taxation”.
The survey also showed that the high cost of energy was the most underrated issue as the UK’s weakness while three quarters of respondents supported further exploration activity in the North Sea.
The think tank concluded, however, there was “little the government can do” about high energy prices in the short term.
Most economists also agreed the government was not underspending, with tax reform and scrapping the triple lock pension seen as possible ways to fix precarious public finances.
High talent immigration was also highlighted as an easy way for Labour to yield big wins for the UK economy. The government is set to expand the Global Talent visa but top economists have suggested the OBR is unlikely to score changes as a growth policy.