In a publication launched by Labour thinktank Progress today (20th February), Chris Leslie (Vice Chair) and Jessica Asato (Acting Director) set out proposals for the Chancellor to consider in his forthcoming April Budget which will help to ‘define 2009 as the turning point year’ for the economy, including:

• Kick-starting the housing market back into life by suspending stamp duty for residential transactions below £1m in value and introducing a new home purchase tax credit worth £1,000, only for the duration of 2009
• Cutting the capital gains tax rate on new investments made before the end of 2009 from 18% to 10% to encourage the bringing forward of investment today
• Halving the small companies’ rate of corporation tax for the remainder of 2009
• Doubling the R&D tax credit for SMEs in 2009, also to encourage investment for those businesses struggling the most
• Suspending the aggregates levy in 2009 to help the construction industry
• Suspending DVLA first registration fee of £55 on new ‘green’ vehicles in 2009 to encourage consumers to buy new green cars
• Doubling the amount of ‘Healthy Start Vouchers’ for all families with children aged under five on child tax credits to help the government meet its child poverty and health targets
• Increasing Jobseekers’ Allowance by £10 in 2009 by bringing forward the next four years of uprating which will get money back into the economy quickly and also help to raise Britain’s low out-of-work benefits at a time when many ordinary people will find themselves dependent on them.

The paper recommends a combination of £12.5billion additional support and tax reductions stretching to all sectors across the economy, and encourages the Chancellor to add a further £7.5billion in capital infrastructure investment in this current spending review period.

“In retrospect, the Chancellor was wise to opt for a major cut in VAT last November to inject money back into the economy, since when it has become clear that more is needed. The ideas we suggest are designed to ‘define’ 2009 as the bottom of the recession, and prompt activity in the coming months by make shrewd investors and consumers realise they can be better off by acting now rather than waiting longer,” said Chris Leslie.

The paper also recommends a suite of new steps to revive credit markets, including new options for public sector banking. Measures to help savers and facilitate a small state-backed equity release scheme for pensioners wanting to make renovations or home improvements are also proposed.

“Doing nothing would cost us all dear in the long run. Injecting money into the economy in 2009 will allow the country to return to growth more quickly than if we let the market continue to spiral downwards, which would lead to even greater budget deficits in the longer term. We hope that the Chancellor will look seriously at these ideas but we are under no illusions about the difficult task he faces in an era of global recession and international credit dysfunction.”

A copy of the publication can be obtained by calling 020 3008 8180 or emailing [email protected]

Media contact: Jessica Asato, Acting Director, Progress 07939 594 634
Chris Leslie, Vice Chair, Progress will be available for comment on request