Moving from the financial crisis to sustainable growth

Vince Cable
September 2011

The prime preoccupation of the coalition government has been to manage the fallout from the global financial crisis. This remains very much an ongoing concern, and a creative and flexible policy mix is necessary.

In this paper, the coalition business secretary Vince Cable provides a detailed account of how the government has worked, and will continue to work, to reduce the deficit, rebalance the economy and promote growth.

"There is a lot of uncertainty about the economy, globally and in the UK. The issue is how to maintain growth in the face of weakening demand. The Government has a key role in stimulating growth and the essay describes what is being done and could be done, consistent with achieving UK fiscal stability and with the overall strategy for maintaining policy credibility.

"It is not ideology but sound economic theory and I have always believed in the value of politicians engaging in the intellectual as well as political debate.

"I look forward to reading the essays that follow in this series from CentreForum. There is a wealth of ideas and experience that the Government wants to drawn on in the years ahead as we get the economy back on course.”

- Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills

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Tax and the coalition: fairness and responsibility?

Dick Newby
September 2011

With economic inequality at levels not seen since the late forties, and with the issue of tax avoidance at the forefront of political discussion, a fairness deficit has arisen in the public consciousness. In this publication, Lord Newby, Co-Chair of the Liberal Democrat Parliamentary Treasury Policy Committee, sets out how fiscal retrenchment during the current Parliament can be achieved in a fair way.

The report shows how the coalition’s policies on tax can marry the liberal value of personal freedom with the need for fairness and responsibility. It examines current issues such as the 50p income tax rate and the mansion tax, as well as looking at proper enforcement to reduce avoidance and evasion.

With these suggestions, the report shows what the coalition government could do to make Britain fairer within the lifetime of this parliament.

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Early repayment of student loans: should government impose early repayment penalties?

Tim Leunig and Gill Wyness
September 2011

The CentreForum report 'Early repayment of student loans: should government impose early repayment penalties?' criticises the government's intention to introduce early repayment charges for graduates on high incomes or those making large repayments.

The thinking behind the charges is that the government will be able to recoup some of the money lost through non-payment of interest. But CentreForum believes that the sums raised will be small relative to the costs and that it will add an unnecessary layer of complexity to the student loan system.

The report suggests that debt aversion not affluence is the biggest cause of early repayments, most of which are small and made by relatively poor graduates who will not be affected by the proposed penalties.

It points out that the people the government is hoping to charge (the very rich) will often pay their university fees upfront, bypassing the loan system altogether.

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Climate change: the science, the geopolitics and the economics

Chris Huhne
September 2011

In these three speeches, Chris Huhne, Secretary of State for Energy and Climate Change, sets out four key points reminding Britain why climate change must once again be put at the forefront of the agenda, and how it can best be dealt with. Addressing climate change as a systemic, globally interconnected threat, it is argued that:

  • Avoiding disaster necessitates global emissions to have peaked by 2020;
  • Achieving this requires new emission targets to be enforced by a global legally binding treaty;
  • Doing nothing about climate change will continue to cause vast geopolitical repercussions;
  • It's not all bad: growth in low-carbon technologies should be perceived as an opportunity that will not only benefit the environment, but also invigorate, stabilise and protect the economy.

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International aid and educating the poorest

International aid and educating the poorest

Pauline Dixon and Paul Marshall
September 2011

The government has stated that it plans to raise the aid budget to £11.4 billion by 2013; a move that is sure to anger many who view systematic (government-to-government) aid as inefficient and dependency inducing. This report proposes a solution to the mismanagement of aid, through its allocation to a younger generation of social entrepreneurs at grassroots level who understand what needs to be done and how to do it far better than their frequently out-of-touch governments, whose primary concern is often that of self-preservation. In so doing, this report aims to show how the government can effectively manage its aid budget, whilst still maintaining public support in these times of austerity.

Looking at the empirical evidence available from various control trials, the report focuses on the particular example of school voucher schemes in some of the world’s poorest countries that facilitate a burgeoning private education sector. These private schools have come about quickly and organically in response to the failures of the government’s charity supported state system. Parents have made their opinions clear and these schools, charging minimal fees whilst providing high quality education, are frequently being chosen over the supposedly free and seemingly inadequate state equivalents.

However, whilst often cheaper than their state counterparts, many still cannot afford entry into these private schools. This has been noted by some charities in the developed world who have implemented privately funded and targeted voucher schemes in the developing world with great success. These vouchers, given directly to the poor without the government acting as middleman, have proven extremely effective whilst avoiding much of the waste and corruption that is often associated with aid. Furthermore, this report notes that such schemes could be applied to a much wider field and has positive effects in other sectors such as health.

Using a more rigorous and empirical approach, CentreForum proposes that through listening and engaging with those at ground level, the British Government could be far more effective with its increased aid budget, whilst also quietening those in opposition to it.

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"This is the right thinking to aid. Innovative schemes around educational vouchers allow aid to be targeted at the grassroots level and give real choice to those most in need."

- Dambisa Moyo, economist and author of the New York Times best-seller 'Dead Aid'