Simon Heffer’s plan for growth – cut public spending further, cut taxes for the rich, scrap the Minimum Wage for the young and cut the winter fuel allowance

And this is why political commentators don’t necessarily make good economists or politicians.

Simon Heffer from The Daily Mail has come up with a remarkable ten point plan to boost growth for George Osborne today, which reheats many of the tired clichés of the Tory right and their naive views on how governments can boost economic growth.

His first point suggests cutting public spending by a further £35 billion. Allegedly this could easily be made by cutting the international development budget, NHS bureaucracy (which he neglects to mention the Tories are adding to) and cutting salaries in local government.

Given that the cuts already announced have annihilated confidence in the economic recovery and the private sector is clearly unwilling to step in like Messrs Cameron and Osborne predicted I have no idea on what basis a further £35 billion cut to public spending would do to promote economic growth.

But needless to say even if you cut the entire £12 billion international development budget and the rest of what Heffer suggests you wouldn’t come close to finding the £35 billion extra that he believes should be cut.

Next he brings up the old canard about cutting the 50p tax rate to boost growth. Allegedly it will help basic-rate taxpayers because the wealthy would spend so much more that it would create jobs. It’s a new one on me – surely if he wanted to help basic-rate taxpayers most he should be arguing for a cut to the basic rate of income tax. The most obvious response from a supporter of the government would be that they are helping taxpayers by raising the income tax threshold to £10,000 over time. Even I support that over scrapping the 50p tax rate even if Michael Howard rejected the idea because it doesn’t help the poorest who pay the highest proportion of their income in taxes.

At least he acknowledges it probably does raise money for the government, before adding that cutting it would probably raise more because it would incentivise people to earn. Given the massive job losses occurring right now and the shortage of jobs I’m not sure cutting taxes for people earning £150,000 a year or more is going to provide much more incentive for your standard unemployed person to get a job, or for your middle-earning person to work harder.

Cutting VAT is an interesting suggestion not least because it even goes further than Labour’s own proposal to cut VAT. Like Ed Balls, Heffer also argues that it would pay for itself through increased consumption and therefore employment. In which case why stop at 15% and not cut it right to the lowest level possible?

That’s the problem with the right-wing myth about cutting taxes automatically raising growth, employment and tax revenues. If it’s so obviously true, why stop at cutting taxes by just a few percent? Surely as soon as a Tory government came in they’d just cut them to the lowest level possible? After all, it automatically increases the amount of money the Treasury bring in so what’s to stop you?

The reason they don’t is because they know that while taxes need to be competitive going beyond that brings reduced returns for a greater outlay, which is an admission that cutting taxes does not always lead to higher tax revenues.

Heffer also suggests scrapping the Minimum Wage for under 25 year olds. Allegedly it’s not enough that a million young people are out of work but those in work should also work for pennies.

Of course his point is that this would make it easier to hire them and blah blah blah. Even if it worked in the way Heffer envisages it would surely just distort the market as older workers stayed on the dole queues as younger ones were employed to work instead of them at half the price? The net effect would be the same except we’d now have lots of young people trapped in poverty wages with older people trapped in unemployment.

A further suggestion is another Tory myth (though obviously they believe it), that businesses don’t take people on because they might not be able to sack them easily at a later date. Therefore we should be making it easier to sack people as that will provide a boost in employment. It’s as oxymoronic as a fiscal contractionary expansion, which isn’t exactly working out well for George Osborne at the moment.

To be honest, what I never understand about Tories putting this idea about is why none of them question the effectiveness of a companies hiring procedure if they constantly find themselves lumbered with ineffective staff? Surely their own hiring procedures should separate the wheat from the chaff before they’re hired?

Whether there is enough quality employees out there to hire in the first place is a different question entirely, but personally I feel it’s a businesses own responsibility to ensure they hire the right staff and the correct solution to that problem is not to strip their employees what rights they do have. If they’re not up to snuff the company should consider training them.

Another measure suggested by Heffer is to means test the winter fuel allowance. Regardless of the affordability of this policy as it stands, cutting it is hardly tantamount to a boost to economic growth. At best it might pay for a tiny part of Heffer’s suggested £35 billion extra cut to public services but it’s not going to boost growth.

While we should always be vigilant against unnecessary health and safety legislation, in ensuring our labour market is flexible enough to respond quickly to changing economic circumstances and that our tax rates remain competitive, if we want to pull what small levers the government has to boost growth properly in the current economic circumstances then we need to do better than Heffer’s tired and unimaginative proposals to cut taxes for the rich while scrapping the minimum wage and employment protections for the poor.

That won’t boost growth but it will make like tougher for millions of people who are already getting kicked in the teeth by the government’s policies.

George Osborne’s Autumn Statement 2011: A 10-point plan to boost British growth | Mail Online.