Letters | 10 October 2009

Invest in the state

Sir: David Cameron will never be a revolutionary if he follows your advice and concentrates only on government spending (‘Is Cameron a revolutionary?’, 3 October). He needs to completely rethink taxation, too.

You say that taxes must rise. But putting up taxes now, as conventional wisdom suggests, will increase the government deficit, not reduce it. Cameron should make massive cuts in taxes on personal incomes, savings and capital. Suppose he reduces taxes and at the same time allows individuals wishing to set up new schools to issue ‘education convertible bonds’ underwritten for the first ten years by the government? As long as these are made attractive to savers, individuals will have a reason to buy them. So the government will be able to replace a huge percentage of its expenditure on state education with private funding.

If Cameron did the same for health and other services, a large percentage of the government deficit would be replaced by private individuals’ investment in public services.