Today saw the submission to the Shadow Cabinet of the report by the Economic Competitiveness Policy Group, chaired by John Redwood and Simon Woolfson. The report is called \"Freeing Britain to Compete\".

Probably many financial advisers will be gratified to note that included in the team that prepared this report are our industry\'s own Ken Davy and Howard Flight.

In his introduction, John Redwood emphasised that the UK has fallen from 4^th to 10^th in international competitiveness tables since Labour came to power. We have far more regulation than ever before, and the number of civil servants has increased by 300,000 in just ten years. Ireland has grown faster than the UK, mainly because the very low Corporation Tax rate there has attracted much more foreign investment. He focused particularly on the need to deregulate industry.

The report identified 10 economic mistakes by Labour:

1. Much of the increased National Health Service income has been spent on administration rather than healthcare;
2. The taxation of dividends in pensions has caused major decline in pension values;
3. Manufacturing industry has been damaged by too much regulation;
4. We have a huge balance of payments deficit;
5. Inward investment has been damaged by uncertainty over whether or not we would join the Euro;
6. Too much gold was sold just when the gold price was at its lowest;
7. An effective tax on the telecoms industry set the sector back 3 years;
8. Far more was effectively spent on railtrack through a public guarantee when it went into administration than would have been necessary to turn it around as a commercial venture;
9. The transport infrastructure is woefully inadequate;
10. Private Finance Initiative and Public-Private Partnership contracts have been highly financed out of tax revenue without any clear indication of the potential liabilities these create.

The suggestion is made that the government has hidden massive liabilities through creative accounting in the public accounts in a way that would be completely unacceptable in a set of company accounts. This is the only way Gordon Brown has been able to keep to his \"Golden Rule\". The accusation is that Labour has returned to the \"borrow from the future to spend now\" philosophy of which it was accused in the past.

There is not space here to comment on all the proposals in the report. Some of the highlights, however, are:

Pensions

Annuity purchase compulsion and a maximum age by which pensions must be drawn should be abolished.

We should introduce a Lifetime Savings Account like the US 401K pension - an account that would allow the investor to borrow money to buy a house or fund education, but whose purpose is still to provide income in retirement.

The link between pension fund valuation and bond rates should be broken.

Regulatory Burden

The labour government has added £56 billion cost to British industry through extra regulation. A lot of the regulation is unnecessary, as the force competition and normal civil and criminal redress would give the same end result.

Most regulations in the UK come through Statutory Instruments, which cannot be debated in Parliament unless sufficient MPs demand, and then the debate can only approve or reject and cannot amend the regulation. Full debate should be allowed.

One recommendation which will bring a smile to all our faces - all the regulators should be abolished!

The following regulations should be repealed:

• Working Time Regulations
• Data Protection
• Most of the Money Laundering Regulations
• Mortgage regulation
• Financial Services regulation for rich and sophisticated investors
• Home information packs for property vendors
• Gaming licenses for charities
• Food supplements
• Horse passports [I didn\'t even know these existed!]
• Metrification
• IR35

There should be a lighter touch with the following regulations:

• Traditional herbal medicines
• Care homes
• Statutory dismissal procedures
• Planning permission
• Health and Safety at Work

Companies should only have to send in one report each year, rather than have separate reporting to Companies House, Revenue & Customs - Corporation Tax, and Revenue & Customs - VAT.

Public Sector Efficiency

The proposed Identity Cards scheme should be abandoned.

Unelected regional governments should be abolished.

The civil service should be reduced by natural wastage and should be made more accountable.

The number of quangos should be reduced.

Taxation

Inheritance Tax should be abolished

Capital Gains Tax should be abolished for all assets held longer than 10 years.

The high rate threshold for Income Tax should be raised.

Most of these recommendations are about ending or abolishing things. With most of the tax related items this certainly seems like a good thing, although we should bear in mind that unless we are anarchists we have to accept that the tax has to be raised in one way or another. Cutting red tape is a good idea and has a lot of popular support. But do we really want a society with little or no data protection, or where our elderly live in homes which are less safe than they have to be now?

We all know that Labour tends to tax more in order to spend more, and that the Conservatives have traditionally argued the state should intervene less and therefore does not need as much tax revenue. That is the theory. In practice the situation is often radically different. Labour has cut some taxes (although it is true to say it has also quite significantly increased the overall tax burden), and when actually in power the Conservatives have not necessarily reduced state intervention and spending. Whether Cameron and Osborne really would introduce many of the Redwood recommendations if they came into power, or whether they would water them down so much that they became pretty meaningless, remains to be seen.