SIR HOWARD DAVIES, DIRECTOR, LONDON SCHOOL OF ECONOMICS
The first thing on my agenda would be a bacon sandwich. The one unambiguous improvement Gordon Brown made during his decade in the Treasury was to introduce the practice of providing bacon sandwiches for working breakfasts. They are particularly good, and I might have two, given the tough task ahead.
My second agenda item would be a wholesale reform of the Income Tax and National Insurance structure. The existing arrangements create curious kinks in the marginal tax curve and are not progressive - certainly at a time when we are going to need significant increases in the tax take, which will surely be the case after the recession is over.
So, I would merge Income Tax and National Insurance, starting at a lower rate for National Insurance, but with NI applying all the way up the income scale. Together with the projected change in the top marginal tax rate, up to 45%, adding a new NI charge would push the top marginal rate a little bit over 50%, to achieve the same tax take.
My guess is that other countries are going to need to do this to recoup the damaging losses to the public purse that the recession will bring, so the competitive disadvantage will be small. And the equity arguments are powerful.
I would make the tax concessions on charitable giving and giving to arts organisations more generous. We have a mixed-economy funding model for the arts and many charities, and that will be under serious pressure. If we don't want a wholesale massacre of cultural and charitable organisations, they will need help.
This reform will create a few winners and a lot of losers. The chancellor's e-mail box will be groaning with complaints for months to come. But by that time, I will be safely back in my ivory tower, looking for another source of bacon sandwiches, as I will certainly never be invited back to Number 11.
LUKE JOHNSON, PARTNER, RISK CAPITAL PARTNERS, AND CHAIRMAN, CHANNEL 4
Assuming I was rather more than chancellor, and in full charge of government, I would ...
- Institute a moratorium of much employment legislation for companies employing fewer than 100 staff. Small businesses - which provide most new jobs - should be encouraged to hire and retain workers. They need relief from the bureaucracy.
- Cut employer National Insurance by half. Again, it would encourage employers to keep staff and make hiring new staff cheaper.
- Provide a government facility to underwrite credit insurance so that suppliers can trade with confidence. The abandonment of whole industrial sectors by the oligarchy of credit insurers means that many industries are seizing up, exaggerating the damage of the credit crunch.
- Close public-sector defined-benefit pension schemes. These are a huge cost to the taxpayer and a gross inequality between the public and private sector.
- Scrap incapacity benefit for those claiming depression or stress. It's a malingerers' charter.
- Refuse to make any further net contributions to the EU until its annual accounts are signed off in a timely fashion. This would save money and/or help rid the EU of corruption.
- Ask the Queen to dissolve Parliament to form a coalition government. Such a step would help boost confidence and provide some desperately needed fresh thinking.
- Permit pension schemes to ignore current gilt yields when calculating their obligations. This would mean fewer plans would have such gaping deficits, which are giving many companies a huge extra problem to deal with.
- Introduce welfare-to-work schemes with private-sector contractors. The huge growth in unemployment in the next 36 months means there will be large numbers who must re-train. Projects should be launched to qualify them in areas of skill shortage.
VINCE CABLE MP, DEPUTY LEADER AND TREASURY SPOKESMAN, LIB DEMS
First, get a firm grip on the policies of the banks that are now being supported by taxpayers' money. They are effectively owned by the Government yet not controlled by it. We need to ensure that there is a flow of lending to good companies, that bad debts are identified, that extreme remuneration practices and tax avoidance are stopped, and that banks are prepared for a profitable sale back to the private sector.
All this can't happen under the current uncertain, insecure arrangements. You need government directors on the boards, and government needs to set a very clear mandate - which it is currently missing.
Second, the budget is deteriorating rapidly. Government needs to have a clearly articulated strategy about how to get the budget back into balance once the crisis is over. It will have to have severe discipline when it comes to public-sector spending and that can't just be done by salami-slicing. It is going to have to involve real decisions. The Lib Dems are identifying a whole lot of activities that should be stopped, including the national ID scheme.
Third, I would want to ensure that the tax system is much fairer. We have proposals for cutting taxes for people on low incomes by lifting the thresholds substantially.
Fourth, most of us now accept that the authorities have reached the limit about what can be done with interest rates, and that means there has to be a deliberate attempt to create credit through the Bank of England.
Lastly, the important thing for small businesses is to get the banks lending. Apart from those banks that are publicly owned - and which should be lending the adequate volume on reasonable terms - there are some specific areas, such as leasing and credit insurance, where the government-elected banks should be intervening to make sure lending happens.
RUPERT HOWELL, MD, BRAND & COMMERCIAL, ITV
The first thing I'd do if I were chancellor is resign, hopefully provoking an early general election. Any government facing an economic crisis of this magnitude needs the impetus and strength that only a fresh electoral mandate can give it. So the sooner we have an election, the better - regardless of who wins.
The welcome intervention of the electorate aside, I would do three things. First, every private-sector manager knows they can trim 10% from their cost-base without hitting front-line services. So, on roughly £600bn of annual public expenditure, I would cut at least £60bn and give it back to the long-suffering taxpayer.
Second, I'd use the bulk of these savings to raise the income-tax threshold, lifting millions of the less-well-off out of income tax altogether. You have to earn just £6,035 before you start paying tax. What sort of society taxes the income of the very poorest people? My long-term aim would be to create an income-tax regime with a starting threshold of £10,000, which would then be index-linked to keep pace with prices. This would do more to restore consumer confidence than any cut in VAT.
Third, I'd work very closely with the business secretary to simplify regulation and, where possible, abolish regulators. The UK still suffers from over-regulation. The competition authorities need much more latitude to allow new businesses that are in the public or national interest, particularly where market definitions are narrow. The Competition Commission's refusal of the Kangaroo deal (the joint internet TV venture) between the BBC, ITV and Channel 4 is a recent example of precisely that.
So, I'd make judicious savings in public expenditure, target income-tax cuts at the lowest paid to stimulate spending and cut away the poverty trap; and burn a raft of regulation to free British business to actually do business, and hopefully lead the recovery.
CILLA SNOWBALL, CHAIR AND CEO, AD AGENCY ABBOTT MEAD VICKERS BBDO
If I had free choice of what role I'd take, I am not sure I would choose to be chancellor. When Gordon Brown was chancellor, he had unbridled control of domestic and economic policy. But he has taken those powers with him to Number 10, ably supported by Lord Mandelson. So the traditional dominance of the Treasury over economic policy cannot be taken for granted. Still, there's a lot of work to be done, and the opportunity to make big choices and take tough decisions. To be the first woman in the role (even for a day) would be too tempting to turn down.
On kick-starting the economy, I'd have to be bold and effective. Government continues to trumpet multiple measures to halt our downward slide, but there is confusion and consternation from business as to what these actually mean, and it is hard to know which lifelines you are eligible for. So, I would start with an audacious move: reduce corporation tax.
Businesses, particularly SMEs, would not have to juggle VAT receipts or apply for different grants or loans; firms would feel an immediate financial impact. We would build our status as the home of global business, and our creative industries would flourish still further as a global powerhouse.
But that is not enough on its own - I am ambitious for my one-day tenure. We are in a time of flux, one of those chaotic moments when conventional wisdom is questioned and we start to perceive things differently. It is too good an opportunity to miss, so I would want to lay the foundations for a new economy.
I would address the balance of consumer savings and debt. I'd change the tax status of saving, giving people a reason to act responsibly with their cash, despite interest rates being low. At the moment, while savings advice and sales are tightly regulated, debt products have a freer rein, so I'd ensure they were realigned.
With a falling pound, I would reject the business model of outsourced manufacturing. We are leaders in innovation, R&D and energy technologies. I would offer support to industries that represent the future. If we get this right, we can again become the workshop of the world. Finally, I would do away with the chancellor's famous red box and replace it with a red laptop, sending a clear signal of the importance of digital Britain to the economy.
TIM MARTIN, FOUNDER AND CHAIRMAN, WETHERSPOON PUBS
My first principle is that a problem acknowledged is one half resolved, so, unlike Gordon Brown, I won't blame the Americans for our banking problems. Sub-prime loans in Ohio are nothing to do with Northern Rock.
My second principle is that humans are prone to 'irrational exuberance', so I won't be claiming the end of boom and bust. On the contrary, I won't forget the primary duty of the chancellor, in concert with my colleague Merv (King) at the Bank of England, of taking the punchbowl away just as the party gets started.
But let's get down to brass tacks. When he became chancellor, Brown masqueraded as a man of prudence but made Imelda Marcos look thrifty. Gordie increased public expenditure from £300bn in 1997 to about £640bn today. I'm a big fan of sensible public expenditure, but you can't increase spending at this rate and spend it wisely. Also, the spending increases have surpassed taxpayers' ability to pay. I don't fancy making spending cuts in the middle of a recession, so I'd keep public expenditure flat for the next two years, increase it in line with inflation for the five years after that, and then review the position.
At the same time, I'd give the beleaguered taxpayer a chance to re-group. A democratic society is really the relationship between an economic horse, comprising taxpaying companies and individuals, and a public service cart. The horse will always be willing to pull the cart but you mustn't overload it or, worse, put the cart in front of the horse. My predecessors forgot this point and started loading the cart on a downhill run during the last economic boom. Now that the bust is here, the horse is struggling to gain momentum.
I would freeze taxes at their current levels for the next seven years to correspond with the period of public spending restraint just described. Before my present job, I ran a pub company, and it was almost impossible to keep pace with changing tax rules. The Government had no real tax strategy apart from grabbing as much as it could at every opportunity. Last year, Wetherspoon paid £11 in tax for every £1 of profit. No wonder so many village pubs have had to shut down.