How Cameron can save the economy and win the election

I am sure neither David Cameron nor his political advisers feel in need of some advice from a nobody but I am going to give it any way.  Just to get it off my chest.

Most on the centre and the right think Cameron is a reasonable Prime Minister and his chances of reelection are surprisingly good given the state of the economy and most people's personal finances.

However it frustrates me that his government is not more radical particularly when it comes to the economy.  Apologists often claim the government is being held back by their Lib Dem coalition partners but I sense an opinion poll led fear of straying too far from the centre ground.  Thatcher he 'aint.

But there is an alternative to centrist policies. Here's how he could be radical and position the Conservatives to win the next election at the same time.

His objectives should be to (a) cut a deal with the LibDems which achieves for them some of their cherished goals  but also gets through some more right wing policies that their rank and file won't like (b) wrongfoot Labour by accepting to some extent their argument about cutting the deficit "too far, too fast" (c) bring his own right wing back on side to unite the party (d) appear radical, decisive and like he is doing everything he can to boost the economy in a fair way.

This is the deal he needs to do with the Lib Dems to achieve these 4 goals:

1. Drop the 50 p higher rate of tax back down to 40p
2. Cut corporation tax as part of a package of measures to encourage multinational companies to invest/base in the UK (copying what Ireland has done).  Other measures to include making it easier to hire and fire, and make it easier to get permits for non-EU staff
3. Cut employers' National Insurance to boost job creation
4. Increase the personal income tax allowance to £10,000 (a key Lib Dem objective which Conservatives should have no trouble supporting)
5. Partially offset these tax cuts with a mansion tax (another key Lib Dem objective which will help undermine the argument that the package favours the rich)
6. In a similar vein to 5. close some tax loopholes used by rich people to avoid taxes; again a Lib Dem policy which will help achieve the fairness objective.  It is also good economics to cut high tax rates and close loopholes - Obama has just proposed something similar in the States.
7. Offset some of the tax cuts with benefit cuts.  Despite the outcry among the left-leaning establishment the benefit cap, cuts to housing benefits and crackdown on fake incapacity claimants are extremely popular and necessary policies, they just don't go far and enough.  What about asking the million young unemployed to do some work for their benefits?  Many will stop claiming.
8. Leave some of the tax cuts (1-4 above) unbalanced by spending cuts / tax rises (5-7 above).  Although cutting the deficit is vital, the markets will not be spooked by a loosening of the reduction target if it is in the cause of radically boosting Britain's growth potential which these measures will do.  This will steal Labour's main criticism of George Osborne: they will have to either applaud the move or look stupid criticising what they have been asking for for months.  The coalition should also argue that some of the tax cuts will be self-financing, particularly no 1.

Obviously there is no chance of the government doing anything half so bold but I would love to see them try!

From our website:  Massive tax rises for Spain in 2012