Issues

Economy
Lower taxes, more enterprise
Aiming for tax simplification
The average British worker spends five months of the year working solely in order to pay the demands of the tax authorities. Our annual Tax Freedom Day calculation shows just how big the tax burden has become.

But evidence from Britain and other countries shows that high tax rates are counter-productive: people strive to avoid or evade them, or move their capital or themselves overseas, or just give up work because the reward is not worth the effort. The tax system has also become hugely complicated.

For these reasons, many countries are benefiting from the flat tax – where taxes are set at the same low rate for everyone, making them easy to understand and difficult to avoid, and eliminating the need for complex exemptions.

But many taxes should simply go: capital taxes such as those on savings and inheritance are a drag on the economy and contrary to human nature. Local services should be paid for through local charges, and a local sales tax, rather than through the complicated system of government transfers of today.
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Issues: Education
Diversity, high standards, fair access
Reforming state education
Today’s state education system is failing too many of our children, many of whom leave school without the skills they need for life and work. The problem is worst in the most disadvantaged communities; but only the wealthy can escape. The state school system is a near-monopoly, too centralized to respond to the individual needs of its users. The answer must be to diversify provision and use competition to help spur performance.

There are many ways of doing this. In some EU countries, the cost of a state education is met by the government, but if you choose a non-state school, the same sum is available to offset the fees: so even the poorest have choice. Other countries have Charter Schools, set up and managed by local people but paid for by the government. Even in the UK, some state schools are privately managed.

The challenge for the UK is to overcome the political barriers and make such innovative systems work.

Universities, too, should compete, setting their own fees just like any other service supplier. Students can decide for themselves whether particular courses are worth the cost. Government support can focus on promising students who cannot afford the fees on their own.
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Government
Making the state work properly
Reforming the government machine
Why does the state have to do so much? It owns and controls an enormous range of industries, from health and education, through the post office, down to ferries and forestry. It may well be true that government must ensure these things are provided and are accessible to all. But there is no need for the state to actually do them, when a competitive market can work so much better.

Of course, many people work for the state and there are huge obstacles in the way of such a transformation. The industries still in state control are the most difficult to change. Some promising strategies – like public-private partnerships – have been twisted to serve the interests of the politicians, rather than the public. In other areas, cumbersome regulation reduces the ability of entrepreneurs to construct deliverable alternatives.

The job of reforming government requires not just a clear objective. It requires considerable ingenuity, skill, and finesse.
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Health
Extending access to quality healthcare through diversity and competition
Reforming the state healthcare monopoly
Despite the billions poured into Britain’s state-run healthcare system, people still face long waits and complain of unresponsive service. But that is no surprise in such a centralized tax-funded monopoly. Its sheer size makes it impossible to manage, while its politicization makes it impossible to reform.

Instead, we should follow the lead of almost every other country, and shift the balance of healthcare spending away from tax and more to the individual. There are many examples of social-insurance systems, tax credits, and direct payment plans that give healthcare users real customer power over the providers, while still ensuring that everyone has full access to the care they need.

At the same time, we need to transform today’s state monopoly providers into independent, competitive ones – giving them the incentive to drive improvement and ensure that users are fully satisfied with the service they receive.
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Industry
Setting entrepreneurship free
The threat of regulation
Not long ago, the big threat to the free economy was state ownership. Now it is government regulation. Politicians have discovered that they do not have to own enterprises to control them: they can use regulation to force them to behave as they want. And regulation has many supporters: politicians use it to escape blame when things go wrong; large companies use it to squeeze their smaller competitors; the public believes it reduces their risk. But it also has many costs, eating into corporate revenues, investment and jobs, and replacing the culture of entrepreneurship with one of box-ticking. We need innovative policies to stem the tide of regulation and make existing regulation work better.

In energy policy too, government intervention and regulation has eclipsed market pricing. We need to radically liberalize energy markets.

Corporate governance is another area where politicians demand more box-ticking. Our view is that restoring real ownership rights to shareholders would provide far better control without losing diversity and flair. And do we really need a Department of Trade and Industry at all?
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Justice
Liberty and the state
Is the state our protector?
High-profile events – terrorism, new scientific evidence long after people have been acquitted, petty cases tying up jury time – prompt politicians to ‘modernize’ the justice system. But many of the rights they seek to curb – habeas corpus, no double jeopardy, jury trial – are there for good reason after centuries of bloody struggle. How can we maintain security and efficiency without doing violence to these fundamental legal rights?

The court system is a state monopoly, characterized by long delays, restrictive and outdated practices, and extremely high costs, putting justice out of the reach of many people. Other countries allow alternative ways of settling disputes – and the whole of the court system benefits from that competition. Prisons, too, are slowly discovering the benefits of private management over state monopoly. And the police, likewise, suffer under far too much central control and funding, poor management, and a lack of customer responsiveness to the public. Is this another nationalized industry which needs a dose of new non-state skills?
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Media and Culture
Rolling back state dominance of our lives
Domination or freedom
Too much of our culture is dominated by state ownership or state control. People complain about the power of international media groups, for example, but by far the dominant presence in the UK media is actually the state-run BBC. We don’t have government newspapers or publishing houses, so why do we need a government-run broadcaster?

Other walks of life are dominated by the growing ranks of state regulators and state practitioners. Local interest and enthusiasm is being squeezed out. It is no wonder that our opinion polls show young people alienated from their culture, and in particular, from the government’s agenda for them.

What can be done? We need to understand the reasons for this widespread interventionism in our media and culture. Insofar as the reasons are sound, we must ask whether there are less intrusive ways of achieving them – ways which harness individual effort and innovation, rather than relying on state control.
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Transport
Using the market to move people
Reducing state control of transport
Our transport system suffers under too much state control and a growing burden of government regulation. We need to let the market do its work.

Bus transport has improved since competition was improved in the 1980s, but now local authorities want to extend regulation. This is a mistake. Metro systems too need private management to replace unresponsive local-government control.

Meanwhile, congestion charging has done much to improve road travel (and the use of public transport) in London, but it needs to be extended as a national scheme, replacing the motoring taxes of today. Underground

In air travel, competition has given the public greater choice and lower air fares. Meanwhile, technical solutions are cutting noise and pollution. But we need to attract new private capital into airport development.

UK rail privatization brought many benefits but was bureaucratically over-complex. We need to make the system simpler, not re-nationalize it.
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Welfare
Self-sufficiency through the market
Unbundling the welfare state
The state benefits system is a jumbled mixture of welfare transfers, insurance, and savings. But governments are not very good at running insurance or savings companies. We should unbundle the different parts of the system. Government needs to focus on its proper role – the welfare element – and draw the market into providing the rest.

But even welfare is changing. Just sending people welfare cheques does nothing to get people off welfare. Indeed, it deepens the perverse incentives in the system and traps people in poverty. The aim now must be to re-integrate people into the workforce and make them self-sufficient. That means tailoring work, housing, childcare and other support services round the individual. Most of this too is better outsourced to independent and voluntary groups.

The benefits system has become more complicated, but it needs to be made much simpler. Saving for a pension should be at least as easy as buying a lottery ticket. We need to cut through the confusion, remove the perverse incentives against saving, and tailor lifetime support round the individual, using the market. That is just what our Fortune Account proposal would do.
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