Rafe Fletcher is the founder of CWG.
Singapore-on-Thames is back.
The former chancellor Jeremy Hunt has urged Keir Starmer to heed the city state’s example as he confronts President Trump’s new tariffs. Hunt believes the UK should follow Singapore’s lead in avoiding retaliatory measures – and that it should take Singapore’s free-trading, low-tax model as a wider example.
Libertarian-minded Brexiteers first proposed this during the referendum. Writing here in 2017, Daniel Hannan argued that “lower tariffs, lower taxes and lower regulations…turned Singapore from a steamy island with no resources into a gleaming metropolis”.
As Singapore approaches its 60th anniversary of independence this August, figures attest to its phenomenal success. GDP per capita has increased from US$516 in 1965 to US$84,734 in 2023.
I’ve lived and worked in Singapore for almost three years. I started a business and a family here. I can understand why conservatives idealise the place.
But Singapore’s success isn’t the product of an Ayn Randian paradise. It’s a nuanced mix of state planning, strict immigration control and hybrid policies that defy ideological labels.
Yes, Singapore has very low taxes by social democratic European standards. There is no tax on capital gains, inheritance or dividends. The top marginal income tax rate is 24 per cent and only kicks in at $1 million (c.£575,000). Most median earners pay somewhere between 11 and 15 per cent.
Corporate tax is capped at 17 per cent, low by international standards, but not a wild outlier. George Osborne wanted the UK to adopt this rate by 2020, before Boris Johnson shelved the plans.
But the government doesn’t rely on tax. Singapore is unique in building a trillion-dollar sovereign wealth system without any natural resources. Instead, it uses land leases, budget surpluses and compulsory savings to accrue funds. Its primary entities – GIC and Temasek – act as long-term investors, managing the nation’s capital for future generations.
The state owns most of the land in Singapore. It sells plots on long-term (usually 99 year) leases. Private developers then build the fancy apartments, offices, hotels and shopping malls that dominate Singapore’s skyline. The government invests, rather than spends, the proceeds.
Singapore is one of the few OECD nations to run consistent budget surpluses. The constitution requires the government to balance its budget over each full term. Surpluses are channelled into the sovereign funds, which provide a sustainable income stream. The government can draw up to 50 per cent of the long-term expected returns each year to fund its operations.
And Singapore’s Central Provident Fund (CPF) is a stark departure from the UK’s pay-as-you-go system. In the UK, today’s workers fund today’s retirees via National Insurance. In Singapore, workers save into personal accounts, deducted directly from their pay. These funds are then invested by the state. Individuals can draw upon them for retirement, housing and healthcare costs. It’s compulsory, paternalistic and highly effective.
The low taxation model works not because the state steps back but because it intervenes differently: as landowner, investor and planner.
And nowhere is the design more evident than in Singapore’s approach to immigration. The model promises opportunity but owes non-residents nothing.
Immigrants constitute around 30 per cent of Singapore’s population of six million. But very few become citizens. The small minority that does must forsake other passports, as Singapore does not allow dual citizenship.
Only Singaporean citizens can access the country’s public services. As a “foreigner” (the official classification), you must use private schools and hospitals. Foreigners are also excluded from Singapore’s widely acclaimed public housing.
The Housing Development Board (HDB) builds high-density housing estates with excellent infrastructure. Around 80 per cent of Singaporeans live in HDB flats, which they can purchase at heavily subsidised rates using their CPF savings.
Foreigners are also heavily restricted from investing in private property. A 60 per cent additional buyer’s stamp duty applies to most foreign purchasers, pricing many out of the market altogether. A few nationalities, like the Swiss and Americans, are exempt under free trade agreements but the principle is clear: housing access is a privilege of citizenship.
Singapore’s lower-skilled foreign workers, largely from neighbouring countries such as the Philippines, Burma and Bangladesh, perform vital roles in construction, healthcare and domestic care. They work under tightly regulated contracts and are generally barred from bringing dependents. Employers are responsible for their wellbeing and the state offers no integration pathway or state benefits.
This segmented approach is central to Singapore’s economic strategy. Well-paid foreigners generate demand to build luxury condominiums the state profits from (private companies build them and lease directly or through Singaporean owners). They pay taxes and make CPF contributions on behalf of their Singaporean employees. Labourers benefit from wage arbitrage with low earnings by Singapore standards going a long way back home. But they have no claim on the country’s welfare system, housing stock or political community.
Conservatives understandably admire Singapore from afar. US Treasury Secretary Scott Bessent recently quoted a visiting leader of GIC telling him Singapore and the Trump administration had a “lot in common”. They both liked “small government and “personal safety” and hated “illegal immigration”.
But Singapore’s model cannot be replicated. It is a democracy yet a one-party state. Founding Prime Minister Lee Kuan Yew’s PAP party has never been out of power. Supporters credit its phenomenal policy success. Critics point to gerrymandering and its control of the press.
Vibrant democracies like the UK cannot pursue the same long-term planning. Nor can it rely on a centralised land bank or overhaul its pension system without effectively denying a generation their retirement. And it certainly can’t conjure up a sovereign wealth fund after decades of spending instead of saving.
But that doesn’t mean there are no lessons.
The UK could experiment with special economic zones. Targeted areas could offer lower tax rates, lighter-touch regulation and fewer entitlements. These zones, with smaller, more manageable populations, could feasibly trial a Singaporean-style model.
It could also rethink how quickly immigrants access public services. At present, eligibility is almost immediate. The United States, for instance, imposes much more stringent waiting periods and means tests for new arrivals. Denying automatic entitlement would attract those seeking opportunity rather than handouts.
The UK cannot ape Singapore. But it can strive to be a country where people come not because the state is generous but because the country works.
