Ahead of the Budget, members of the Free Enterprise Group met with George Osborne to talk through ideas on tax and spending. The Free Enterprise Group of Conservative MPs has proposed free market ideas ahead of each budget since 2011, a number of which became government policy. The policies include reevaluating the ways in which family members can contribute to small business creation and investment, revisions to the pension framework, and increasing incentives to get women back into the labour force. All of these policies are predicted to have a positive effect on jobs and the labour market.
The ideas presented to the Chancellor came from Craig Mackinlay MP, Michelle Donelan MP and Kit Malthouse MP. James Cleverly MP, the Convenor of the group, outlined the future work programme.
Kit Malthouse, MP for North-West Hampshire suggested liberalisation of the rules around family members investing in small businesses. He said:
“Family investors are a vital part of early-stage funding due to the leap of faith that start-ups often need. Family members are often among the few willing to invest, but they are restricted from making use of the special incentives.
“If the aim of the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme is to encourage investment in early-stage companies, it becomes self-defeating by including this restriction. If we want to create a more entrepreneurial society then this is the kind of signal we should be sending.”
Craig Mackinlay, MP for South Thanet, advocated for revisions to pensions policy. He said:“Pension Tax relief changes are obviously in the Chancellor’s sights given the tax relief at stake; I propose a flat rate relief of 30% to incentivise basic rate taxpayers to make greater provision for themselves, but within an elegant system to minimise complexity that might be the temptation through unwieldy anti-avoidance legislation. This mirrors tax measures and rates within EIS & VCT rules.
“Within any new pension taxation framework I also propose the first £5,000 of pension income upon drawdown or annuity being exempt from tax for basic rate pensioners to broadly mirror new dividend tax rules. Throughout, I am attempting to reduce complexity and will continue to make proposals across the tax system to achieve tax simplification.”
Michelle Donelan MP for Chippenham called for policies to encourage women back into work with tax support for post maternity leave training, as well as more pension support for the self-employed. She said: “We should make it finically attractive for small businesses to train women re-entering the labour market after a career break of two years or more. This would help encourage women back into employment by offering more support, which in turn would be another small mechanism to address the productivity crisis.
“There is already a similar model to use for this in the form of R&D tax relief, where companies can get tax relief plus an add-on to incentivise. Set at two years and more it would assist women most in need of training and be more affordable and realistic for the Treasury to roll out. This is a policy for women and the business community in the UK, highlighting that we a true One Nation Conservative Government.”
On pensions, she said: “By 2021 the OBR estimates that there will be 4.7m self-employed people in the UK who will not benefit from the auto-enrolment scheme and will pose a potential long-term threat to the state, especially with an ageing population. It is unfair that the self-employed do not get as much pension support from the state given that they do not qualify for auto-enrolment.
“One way to remedy this could be to set up a ‘self employed auto-enrolment scheme’ with the self-employed paying an additional percent on their NI contributions and the state paying in the employers percentage in line with the standard scheme. There would be a cost to the Treasury but in the long term it would pay off.”
Commenting on the proposals, James Cleverly MP, Convenor of the Free Enterprise Group, said:
“The Chancellor was very positive about the work of the Free Enterprise Group proposals and the ideas for the future. We have a strong history of putting creative policies to government and influence policy.
“Clearly George Osborne is keeping his budget ideas close to his chest and made no commitments at the meeting but he was very positive about our work and keen to keep a flow of free market ideas coming.”
Notes to editors:
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The Free Enterprise Group was established in mid-2011 (www.freeenterprise.org.uk). It aims to:
• Encourage a competitive and free economic environment
• Raise the global economic standing of the United Kingdom
• Challenge monopolies and oligopolies
• Free individuals to create, innovate and take risks
DISCLAIMER:
All supporters of the Free Enterprise Group subscribe to the aims of the group; however articles written under the auspices of the group are the author’s own and do not necessarily reflect the views of all group members.
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