Exclusive: Free Market Forum suggests scrapping free childcare hours and abolishing corporation tax
A free-market thinktank with close links to Liz Truss and Kwasi Kwarteng has drawn up a blueprint of “slash and burn” ideas that could form the basis of the government’s supply-side reform programme to be set out in coming weeks.
The document from the Free Market Forum (FMF), an offshoot of the Institute of Economic Affairs (IEA), suggests scrapping free childcare hours, releasing green belt land for housing, abolishing corporation tax and dropping teacher training qualifications for graduates.
Other ideas include remote learning so parents can pick the best teachers, amending the Equalities Act so white working-class boys are better protected, and restoring the link between tax and household income so a married woman’s income could be seen as part of her husband’s.
Truss plans to unveil a package of supply-side reforms, primarily involving deregulation, as part of the chancellor’s medium-term fiscal plan later this month, but the government has remained tight-lipped on details.
Kwarteng is expected to announce changes in eight areas including planning, business regulation, childcare, immigration, agricultural productivity and financial services.
The prime minister’s allies hope her proposals, a key element of her drive for growth, will help get her on the front foot after a bruising two weeks since the mini-budget unleashed market turbulence, followed by a Tory party conference that was dominated by a U-turn over the top 45p tax rate after a rebellion by MPs.
The foreword of the Free Market Forum paper, published in September last year, said it aims to “incubate and promote ideas” among Tory MPs on future policy direction.
The document is billed as “a collection of policies for a better brighter Britain by the end of this decade”, which it says will “kickstart the conversation about where we go next, and place the FMF at the forefront of those discussions”.
However, a Labour source said: “It is deeply worrying that the prime minister and the chancellor – neither of whom have any mandate from the British people for their plans – are supporters of this shadowy group. Having already crashed the economy, Liz Truss must now distance herself from these slash and burn ideas and the people behind them.”
In one chapter, the IEA’s Annabel Denham proposes scrapping free childcare provision, arguing that the 15 hours a week provided costs the state around £6bn a year “but there isn’t much to show for it”.
She suggests that adult-to-child ratios are “unnecessary and damaging” and early years assessments should be dropped.
Another proposal, from the Cabinet Office minister Brendan Clarke-Smith, suggests restoring the link between tax and household income.
“Under the previous system … a married woman’s income had been seen as part of her husband’s,” he writes. “Of course attitudes towards women’s careers have changed … however the debate over the merits of individual taxation have raged on.”
The Tory MP Richard Fuller, currently economic secretary to the Treasury, suggests moving education online so parents can pick teachers for their children. “The ability to learn remotely provide[s] opportunities … give schools the ability to identify the best teachers and offer access to time-slots.”
Meanwhile, Sam Collins, then the FMF’s outreach director, proposes revisiting “uniform” minimum wage rises as they are “set centrally for the entire country” but have led to “significant and harmful unintended consequences”.
Prof Len Shackleton, an IEA research fellow, wants the government to allow graduates to teach in state schools without teacher training qualifications, as part of a lifting of requirements for entering skilled professions such as law and social work.
Dr Kristian Niemietz, the IEA’s head of political economy, urges ministers to release green belt land for more housebuilding, a move likely to be unpopular with Tory MPs. He suggests green belt land within an 800-metre radius of a commuter station, which is not otherwise protected, should be released, with extra infrastructure paid for by taxing the uplift in land value.
Other less controversial proposals include tackling NHS staff shortages, encouraging cooperatives and extending the super-deduction on businesses, which allows companies to cut their tax bill by up to 25p for every £1 they invest, to help promote growth.
The IEA has inspired Truss’s policy prospectus and its alumni pack the ranks of government, including the prime minister’s chief economic adviser Matthew Sinclair. It is not claiming to represent the PM’s views.
The FMF counts 60 Tory MPs among its “parliamentary supporters” including Truss, Kwarteng, the deputy prime minister, Thérèse Coffey, the levelling up secretary, Simon Clarke, and the trade secretary, Kemi Badenoch.
The former chancellor Norman Lamont and ex-minister John Redwood are also backers, while her No 10 deputy chief of staff, Ruth Porter, is on the advisory board.
The thinktank was launched as a successor group to two other bodies: the Free Enterprise Group – an organisation of Tory MPs founded by Truss at her party’s conference in 2011; and Freer, a joint initiative of Tory MPs and the IEA, launched in March 2018.
Sam Collins, now the head of FMF, said: “Regulation has been estimated to cost the UK economy £220bn a year. If the prime minister wants to succeed with her economic agenda, there will need to be significant reform to make it easier for businesses to form and grow.
“Many of the 30 policy suggestions made in our paper focus on removing these barriers to growth that make it harder for people to build houses, start businesses, create jobs, or move into new sectors.
“But it is not just growth numbers on a spreadsheet that supply side reform impacts. The cost of living crisis facing British families is caused, in part, by government regulations artificially keeping the price of everyday items such as food, child care and energy artificially high.
“Supply side reforms, well targeted, will not only help the economy grow but also help improve the financial situation of the most vulnerable.”
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