Democracy depends on a free market, but the liberal balancing act of the power of the private and public sectors has tipped too far towards the former. This issue has led to growing inequality and subsequent economic instability. Politics needs to reach a consensus on this issue: what should be controlled by the market, and what should be controlled by the state? A pragmatic approach should be taken: the market should be in control if sufficient competition can exist and market control poses no threat to human rights or civil liberties. Otherwise, the state should take control.
This means public services being in public hands, either owned by the government or regulated by it. In this model, a bus route would be agreed upon by democratic means but then could operate either in a franchise agreement or by a publicly owned company to guarantee cost-effective service provision. This approach takes into account what is best for the state and the consumer, mitigating the risk of monopolisation and loss of service provision when dependent on the private sector alone, yet controls spending in areas where the private sector can deliver.
Reform of the welfare state is fundamental to growth, and progressive policy must be able to be viewed positively through a pro-market lens for it to be successful. A pro-growth welfare state should push the idle into employment through targeted support aligned with a modern industrial strategy, whilst acknowledging that disabled people need support by scrapping reassessments for those with incurable illnesses. In simple terms, it should encourage innovation whilst minimising poverty.
The health service cannot be ignored. A technocratic approach should be taken, maximising efficiency by using AI and patient safety through regular assessments. The postcode lottery should end by using a market-style system to allow people to choose hospitals based on clinical excellence – but without jeopardising public services being in public hands, by implementing this within a publicly owned framework. Market principles encourage best practice whilst reducing pressure on hospitals that are poorly performing, giving them the opportunity to improve.
We must fund these changes through a modern tax system. The status quo does not promote upward social mobility, instead reproducing wealth inequality. To encourage growth of small to medium enterprises, inheritance tax should be scrapped and replaced with a two per cent annual wealth tax on assets over £10 million. Cuts to taxation for those earning low to moderate amounts are also necessary given the cost of living crisis, whilst a small increase in income tax for those earning high amounts and a new bracket for extremely high earners would be a fiscally responsible approach to balance the books and raise tax revenue for public services.
We should also support small businesses with changes to the way that they are taxed, maintaining a flat rate of corporation tax but encouraging growth by replacing business rates with a land value tax, supported by think tanks including the IFS. Exploitative corporations that have a net negative impact on society and the environment should pay more tax to encourage best practice. This approach is effective at maintaining stability and encouraging growth.
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