Introduction
We would like to use this document as the starting point for supporting you in developing your economic and fiscal strategy. This material attempts to draw together your stated tax, spending and economic growth priorities, our thinking on the current economic and fiscal situation and on the effectiveness of monetary and fiscal policy responses, and ideas and alternative options that you may find useful. Our aim is to:
1. ensure that we understand your economic and fiscal priorities well
2. add value to your thinking by providing you with advice on particular areas that are of interest to you, and
3. help you to develop a coherent fiscal and economic strategy, in order to drive your agenda forward.
The areas that are covered in more detail in the document are what we understand to be your main policy priorities:
- personal tax reduction
- disciplined government spending
- halting the growth in the bureaucracy
- improved education standards
- investing in the infrastructure the economy needs to grow
- regulatory policy agenda
- innovation as part of your economic growth agenda
- saving and financial markets
- climate change policies
- law and order, and
- health.
The Government faces a difficult and uncertain economic and fiscal environment that will shape the choices available over the near future. During this time it will be particularly important for you to signal your medium term agenda to increase economic growth and to begin to deliver on your priorities. This is reflected in the structure of the document.
Section 1 - Sets out what decisions you will need to make and how they fit together. We thought that covering the frameworks up front could help you use the tools available to deliver on your policy agenda and to work through the difficult fiscal and economic situation.
Section 2 - Sets out a high level framework that we found useful for thinking about how to increase growth and productivity. Despite the short-term situation, we think it is important not to lose sight of medium term opportunities.
Section 3 - Sets out our advice around the short term financial position, as this is likely to be an immediate priority.
Section 4 - Before going into your particular policy priorities, this section sets out what you might like to consider in developing a fiscal strategy, describes the likely impact of the short term situation on the fiscal position and walks you through a potential way of managing through this situation.
Section 5 - Recognising that disciplined government spending is a major priority for you, this section sets out a framework for ensuring that the public sector is well placed to deliver on your policy priorities.
Section 6 - Sets out detailed, free and frank advice on your policy priorities. We suggest issues you might like to consider as you develop and implement your medium term agenda, and some issues relating to your 100 day plan.
