A former Tory minister gives a beleaguered Rachel Reeves some trenchant recommendation: With falling development, rising inflation and taxes, you’ve got made a sorry begin. But there IS a approach to flip issues spherical… if solely you are courageous sufficient, says JOHN REDWOOD

Firstly, let me say I admired your ambition in saying you would turn the UK into the fastest-growing G7 economy.

You were wise to understand that only if Britain enjoys faster growth will you be able to generate enough tax revenue to fund good-quality public services without excessively burdening people and businesses.

You are also right to be disappointed in growth and inflation rates during your first six months in office.

Unfortunately, your autumn Budget damaged confidence, jobs, growth, inflation and investment. Weeks of publicly debating tax rises and spending cuts deflated the upbeat mood after July’s General Election, while large increases in National Insurance and taxes on family businesses and farms confirmed the downturn.

Hitting pensioner spending power by removing the winter fuel payment just before Christmas did not help, either.

As a result, the economy fell from 1.1 per cent growth in the first half of the year to zero in the third quarter.

The Centre for Economics and Business Research (CEBR) recently predicted that Britain’s growth in GDP per head will be among the weakest in the G7 over the next five years, trailing America, Japan, Italy and Germany until the end of the decade – and soon to be overtaken by Malta.

Inflation has risen from 2 per cent to 2.6 per cent since your Budget. Ten-year interest rates, important for mortgage costs, soared above the levels seen in October 2022, at the time of Liz Truss and Kwasi Kwarteng‘s ‘mini-budget’ and the crash in pension investment funds from bad regulation.

Rents and energy bills are currently rising by a massive 10 per cent, and, only this week, M&S chief executive Stuart Machin warned that the retail giant cannot rule out raising prices in shops after absorbing £120 million in extra costs from your tax raid and looming wage increases.

When interest rates hit 4.3 per cent for just one day two years ago, you claimed that amounted to ‘crashing the economy’. But now they stand at 4.75 per cent – and with no sharp fall in prospect as there was in 2022.

So far, so gloomy. But there are urgent measures you can take to get the UK firing again on all cylinders, reaching US levels of performance – and even higher.

First of all, you need to reverse the National Insurance rises, which have already hit jobs and led to a fall in vacancies. This tax is especially painful to those in lower-paid jobs in care homes, shops, leisure venues and hospitality, forcing employers both to put up prices and cut payrolls.

Next, you should reinstate the pensioner winter fuel allowance so that older people can afford to keep warm. The Government should also end the VAT on school fees, which is driving private schools to close and stretching the state sector as parents withdraw pupils from fee-paying institutions.

But your mission to make Britain the fastest-growing economy in the G7 needs more than just reversing the measures of your Budget that have hit confidence and incomes so hard. You need to go even further.

Get rid of IR35 rules – which are supposed to ensure that contracted workers broadly pay the same tax and National Insurance as salaried employees – to allow more people to be self-employed and to grow their own business without tax restrictions.

Increase the turnover threshold before a small business has to pay VAT from its current rate of £90,000, so Britain enjoys more growth from all those entrepreneurial businesses.

Pay more grants to farmers to grow food – and less to larger farms to leave fields wild. Allow more exploration and development of UK oil and gas instead of driving us to imports.

Delay the 2030 ban on new petrol and diesel cars as the Tories had planned – as the deadline is causing our car factories to close down before customers want electric vehicles in sufficient numbers.

Our high energy prices, compounded by carbon and windfall taxes beloved of Energy Secretary Ed Miliband, are making much of our industry uncompetitive: steel is only one casualty.

How can you pay for all this? The answer is the right kind of cuts to public spending.

Cancel the £19 billion of planned carbon capture and storage. Even Greens are against it: it just makes our energy more expensive. Scale back the budgets of Great British Energy and the National Wealth Fund, allowing for a higher ratio of private investment. The green investments we need are far bigger than their budgets – and need to come from private capital.

Take seriously the collapse in productivity in the public sector. Freeze external recruitment to the civil service (which now employs 513,000 people, up by a third on 2015 levels, as the Mail revealed yesterday), as well as to administrative roles in the NHS and to quangos, which are only proliferating under the new Government.

Even the Treasury claims that lower productivity is costing us £20 billion more than in 2019 – before worsening inflation adds even more to the bill. We can get this down simply by working as we used to five years ago, before seeking further gains from applying smarter computers.

Tell local government to stop investing in renewable energy projects: they often go on to lose large sums for taxpayers. Council losses in too many cases have reached unacceptable levels, so prevent them for the future and ask them to sell portfolio assets to raise money for reinvestment in local infrastructure and facilities.

Speed up the bipartisan plans to get more people of working age back into employment. As ministers have said, anyone of working age should be looking for a job unless he or she has severe disabilities. The state should help those with special needs and offer ways to overcome difficulties.

Talk to the Bank of England about its plans to sell large numbers of bonds at significant losses – covered by the taxpayer.

The Office for Budget Responsibility says the Bank will bill taxpayers £240 billion for bond losses from 2022 to the final sales of its badly bought bonds in several years’ time.

No other central bank gets bailed out like this, and no other central bank sells long bonds at big losses in the market.

The Bank could easily cut losses by £10 billion in the year ahead simply by following the bond policies of the European Central Bank.

All this represents a target to spend £60 billion less, leaving freedom to cut taxes and bring down the deficit. No Labour government should be cutting benefits or pensions: this plan avoids the need to do so.

That leaves the question of how to tax business. Ireland has gone for a much lower rate of corporation tax than Britain’s, at 12.5 per cent compared to our 25 per cent. As a result, Ireland collects around four times as much business tax per head as we do.

President Trump will be going further with lower business tax rates to increase investment in the U.S. We have to compete with Ireland and the U.S. if we want GDP per head to ever reach their level, with their faster growth rates.

Trade deals help at the margin: and the priority today must be seeking a free trade deal with the US at a time when Trump is threatening tariffs. We already have such a deal with the EU.

Trump is very critical of the EU’s 10 per cent tariff on cars and the planned tariff on energy-intensive products under the so-called Carbon Border Adjustment Mechanism. The UK has no need to match these EU tariffs and anger the US.

The UK has much talent and plenty of opportunity. The right tax cuts, and lifting some of the restrictions on business, could make a lot of difference.

It is possible to cut taxes, have more nurses and teachers, and bring the deficit down.

Less borrowing will ease interest rates and start to control the runaway debt interest taxpayers are paying.

It is a tough target to make us once again the fastest-growing G7 economy, but doing so will require us to be more like the US, which is in the fast lane.

Sir John Redwood is an independent commentator on economies and markets and was MP for Wokingham from 1987 to 2024.