What's behind the proposals?
Gordon Brown wants to bring about a US-style productivity revolution in Labour's second term. As the chancellor pointed out last month, labour productivity - the main determinant of living standards - lags other major countries. In the most glaring case, the productivity gap between the US and Britain is 45%.
What does Mr Brown propose to do about it?
In his major policy speech last month, the chancellor said he had laid the foundations for a stable economy and that it was time to make policy changes. He outlined a whole raft of measures, including plans to cut capital gains tax rates on business assets in his next Budget from 30% to 10% after two years. There will also be more favourable tax treatment for small companies.
What do today's white papers contain?
Today's white papers flesh out the Brown vision. On competition, the government wants to "depoliticise" decisions on mergers and monopolies in the way that interest rates were taken out of the hands of politicians by entrusting monetary policy to the Bank of England.
So who will decide on mergers?
A beefed-up competition commission. Take the recent case of Lloyds TSB's bid for Abbey National. The decision to block the takeover came from Patrica Hewitt, the trade and industry minister. Under the new regime, the decision will be up to the competition commission. The idea is that the commission will be less susceptible to political pressure than ministers.
What about plans to outlaw price fixing?
The government wants to adopt measures already in place in the US, where directors face prison if they are found to be price-fixing. Consumer groups like the idea, but the Confederation of British Industry, the industry umbrella group, called the plan draconian and warned that British firms would be put at a disadvantage to European competitors.
And the other white paper?
This one focuses on bankruptcies and seeks to make a distinction between "honest bankrupts" and those who set out to deliberately defraud. Honest bankrupts will be allowed to get back into business after one year. Under present law, a bankrupt faces restrictions on access to credit and other constraints for three years before the slate is wiped clean. Meanwhile, fraudsters face tougher penalties. The problem will be how to distinguish legitimate and fraudulent bankruptcies.
Any other major changes on bankruptcies?
The government wants to abolish its preferential rights as a creditor when a company goes bankrupt. This means that the government will no longer be first in line for the repayment of debt, ahead of other people owed money.
Related articles
19.06.2001: Brown seeks to create a new USA
18.06.2001: Labour to target price fixers
12.06.2001: Brown unveils US-style regulation
05.06.2001: Byers confirms reform of DTI
Useful links
HM Treasury: productivity in the UK (pdf)
Department of trade and industry
Confederation of British Industry
