The Chancellor’s Post-Pandemic Choices
Conditions for growth are not a mystery – we have seen them in the UK in the recent past.

This paper examines the UK’s historical record, and identifies the best-performing periods in the past 40 years under two criteria: rising real government revenue and rising labour productivity. It then reviews the economic policies which facilitated these ‘golden’ periods. As it turns out, the periods largely overlap, but are centred around 1993-2003.

The policies that spawned these successful periods have a proven track record and hence can form a practical basis for policies that could be pursued now to achieve growth. In summary, in the best-performing period there was:

  • A top rate of income tax of 40 per cent.

  • Corporation Tax ranging from 33 per cent to 19 per cent, falling throughout the period.

  • Highest rate of Stamp Duty on residential property rising from one per cent to four per cent.

  • VAT rate of 17.5 per cent.

  • Capital Gains Tax set at the same rate as income tax, but with Taper Relief (from 1998-99) reducing the rate on shares by up to 75 per cent (i.e. giving a top rate of 10 per cent).

    The regulatory burden on all productive sectors was much lighter than in 2020. The best performing periods had much less financial regulation, much less labour market regulation, more targeted health and safety regulation, and much less energy sector regulation, with fewer subsidies.

    Governments have choices. This government may not choose to adopt some or any of these successful policies. There will be good reasons for those decisions, but in the round, if the government in general, and HM Treasury in particular, is serious about pulling the UK out of the very serious financial and economic position it currently faces, then the evidence presented here should weigh heavily on their decision-making.

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Chairman of IEA Board

Neil Record was elected as Chairman of the IEA Board in March 2015. Neil is also Chairman of Record plc, a listed specialist currency asset manager. He was educated at Balliol College, Oxford, and University College London, from where he holds an MSc in Economics (with distinction). His first job was as an economist at the Bank of England; this was followed by a stint in industry. In 1983, he founded Record, the firm he still chairs.  He has lectured on Investment Management at Cambridge University, and is author of the first book on specialist currency management within an investment context: Currency Overlay (John Wiley & Sons, 2003).  Neil has been a prime mover in attempting to improve transparency in public sector pensions in the UK, and is author or co-author of four papers on this topic, including Sir Humphrey’s Legacy (2006) published by the IEA.  He is a member of the Investment Committee and Visiting Fellow of Nuffield College, Oxford.