Fox Calls For Tax Cuts To 'Shock' Economy

Former Cabinet minister Liam Fox has called for radical tax cuts paid for by welfare savings to "shock" the economy into growth.

He said scrapping capital gains tax (CGT) for three years would send out the message that Britain was "open for business".

The tax on the profit made on asset sales raises £3.7bn a year.

Dr Fox said the tax should be reintroduced after a three-year suspension at 10% - well below its current level of 28%.

He also urged ministers to axe paternity leave and benefits for wealthy pensioners such as free TV licences and winter fuel payments.

Dr Fox said it was also "irrational and unreasonable" for those in work to continue receiving benefits.

He also called for employment laws to be relaxed to make it easier for bosses to hire and fire workers - to make Britain more competitive.

The former defence secretary who quit the Government last year after he allowed businessman friend Adam Werritty access to his meetings and official trips, warned the Conservatives would lose the next general election unless risks were taken to restore growth.

He said Chancellor George Osborne's deficit reduction policy was not enough to revive the economy.

"We should simply throw down the gauntlet and say that we are cutting our taxes, we are making Britain more competitive, we are going to reform our labour laws, making hiring and firing easier and do what we know works because it's worked before," he said.

"If we don't take some risks, we'll not get growth and if we don't get growth we'll not get re-election."

"Deficit reduction alone won't be enough. We have to have a growing economy. We need to shock the system."

His comments in an interview in The Times come after he helped to launch the Conservative Voice group to promote traditionalist Tory views.

The move earlier this week was widely seen as an effort to push the party back to the right and an implicit challenge to David Cameron's attempts at "modernisation".

Asked whether Mr Cameron was the right man to lead the Tories into the election, the MP who finished third behind Mr Cameron and David Davis in the 2005 Tory leadership election, said: "Yes, I think the PM is capable of delivering that."