Economic problems won’t be fixed through small tweaks

The New Economics Foundation responds to the chancellor Rachel Reeves’ economic speech today.

Lydia Prieg, chief economist at the New Economics Foundation, said:

“Rachel Reeves is right to say the economy isn’t working — but the challenges we face can’t just be solved by cutting regulation and making small tweaks to the tax system. We have a country that’s been ravaged by austerity, as well as an ageing population meaning spending on health and pensions is only set to increase. The scale of spending the country requires to get our public services and living standards up to scratch is significant.

Two things needs need to happen. Taxes will need to go up — and the chancellor should focus on those who are most able to contribute. To start with this government needs to equalise capital gains tax with income tax and get to grips with taxing land. Secondly, this government will need to invest more — to do this they need to reassess the fiscal rules and the OBR’s position in assessing them. This is how we will achieve long term stability.”