The Organisation of Economic Co-operation and Development (OECD) has delivered its diagnosis on the health of the British economy. The verdict? It's not good. In short, the medicine is right but the dosage may be wrong. The Chancellor's deficit reduction plan remains 'appropriate' but the Chancellor may have to slow its pace and ease up on tax rises and spending cuts. The OECD makes the usual calls for Infrastructure investment to boost economic growth. With that in mind, I was interested to read this latest proposal from Boris Johnson:
http://www.bbc.co.uk/news/uk-england-london-21350729
Boris wants to keep the £1.3bn of London's stamp duty revenues in order to boost housing and provide regeneration and employment opportunities. At the moment, the proceeds go to central government. Boris wants to use his powers under the Localism Act to distribute London's stamp duty proceeds. He also wants the government to raise the borrowing limits of London's councils (so they can invest in affordable housing) and transfer any surplus government land to city hall.
Boris' proposal is sound. It could create the opportunity to build more affordable homes, provide a shot in the arm for the construction industry, increase employment and boost economic growth. That said, the plan was rejected by the Treasury as 'interesting but not something we are planning to take forward at the moment.' The Treasury may well have missed the bus. The OECD (in Paris) tells the Treasury (in Whitehall) to consider Infrastructure investment just as Whitehall brushes aside a proposal from city hall.
Well, I guess its back to the drawing board.
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