It’s too late for this budget, but PM will need a proper free-market growth plan

If slogans and sound bites were the route to supercharging the economy, Britain would be on the verge of an enormous economic boom

In 10 days’ time, the Chancellor, Rishi Sunak, will present the newly elected government’s first budget. Expect it to be very dull and almost entirely unremarkable.

In part this is because Mr Sunak will have had less than a month to consider his options. However, the wider reason is that Boris Johnson’s administration has yet to settle on a long-term economic strategy, beyond displaying a fetish for taxpayer-funded infrastructure and reciting a vague aspiration to “level up” poorer parts of the UK.

If slogans and sound bites were the route to supercharging the economy, Britain would be on the verge of an enormous economic boom. At last year’s Conservative party conference, the PM committed to “dynamic, freemarket capitalism” and a “low-tax economy”.

Prior to winning his party’s leadership election, he also noted that falling corporation tax rates appeared to generate greater revenues, that so-called “sin taxes” fell unfairly on the poor and should be reviewed and that he was intending to be the “most probusiness prime minister in history”. Since then, a string of public spending pledges have severely limited the Government’s room for manoeuvre, if it cares at all for fiscal prudence.

This leaves us in the curious position where the Government’s rhetoric implies considerable reform of Britain’s tax and regulatory system is required, but there is a reluctance to carry out such surgery. Total tax-take as a proportion of national income now stands at 35 per cent, its highest for about half a century.

Even if Mr Sunak feels he has little room for tax cuts this month, he should commit to getting tax revenues to below 30 per cent of GDP over the next few years. If you really want to maximise growth, the economic literature is clear that you need to be striving for about 20 per cent.

Simplifying the tax rule book – which currently amounts to more than 10 million words – should also be a centrepiece of the Government’s strategy. A bold administration would announce an intention to reduce the word count by nine tenths and rewrite the entire tax code from scratch.

The Cabinet is now full of those who argued that a major benefit of Brexit was the ability to escape EU red tape. But where is the list of specific rules they actually mean to scrap? The Government should commit to rescinding all European laws imposed on Britain via qualified majority voting, when the UK was against.

The early signs are that “Johnsonism” is peppered with free market sentiment but in content has an all-too-familiar feel of central planning and a faith that spending decisions in Whitehall are key to growth.

It’s too late for this year’s budget to signal a major change in trajectory, but if a more market-orientated approach hasn’t been adopted by next year, this new government risks squandering a historic opportunity.