Let’s build Britain a better future with a balanced Budget
RISHI Sunak has been one of the political stars of the pandemic. Almost unknown outside Westminster before being appointed Chancellor in February 2020, he has shown remarkable creativity of purpose, grasp of policy and command of detail over the last year.
But as Britain begins to emerge from the crisis, Mr Sunak faces his sternest test.
He is tasked with a highly delicate balancing act between two competing objectives.
On one hand, he has to boost the fragile economy. On the other, he must begin to repair shattered public finances, with national debt now more than £2.1trillion and by far the biggest peacetime deficit in history.
It is this duality that makes Wednesday’s Budget so intriguing and challenging.
An emphasis on economic growth has to be accompanied by a return to fiscal restraint.
Siren voices claim the Treasury’s empty coffers are of no immediate concern, given the low cost of borrowing and the need to prioritise recovery.
It is a stance that recalls the old Ronald Reagan joke: “Don’t worry about the deficit. It’s big enough to look after itself.”
No responsible Government could take that approach.A rise of just 1 per cent in interest rates would push up the cost of Whitehall borrowing by £25billion – the equivalent of 5p on the basic rate of income tax.
As one Government source put it yesterday, current levels of debt are “totally and utterly unsustainable and expose us to huge risks”.
FOCUSED on the twin goals of reviving prosperity and fiscal consolidation, the Budget’s outline is already becoming clear.
The proposed expansionary measures are likely to include a welcome £5billion programme of grants for 700,000 beleaguered high street businesses, an extension of the furlough scheme until June, the creation of a £22billion National Infrastructure Bank, the continuation of the stamp duty holiday on home sales, and the launch of a green savings bond.
More controversial will be Mr Sunak’s tax rises, among them freezing the £12,500 earnings threshold at which people start paying income tax and the £50,000 threshold for the 40 per cent rate. He also reportedly plans to reverse a Tory flagship policy, by raising corporation tax from 19 to 25 per cent.
The Chancellor will argue that such prudent changes are vital to balance the books, reassure the markets and avoid financial meltdown.
But any tax rises that undermine enterprise and wealth creation should be avoided. After all they have been through, this is not the moment to hammer all successful businesses with additional burdens. Moreover, corporation tax cuts since 2010 have been a great British success story, fuelling a jobs miracle and pushing up revenues from £34billion to £60billion.
Our competitive advantage from a low company tax regime should not be abandoned. On the contrary, the Government should widen the scope of help for firms through steps like Enterprise Zones and reduced business rates.
There are alternatives that could raise substantial revenues, like a windfall tax on hitech giants and big online retailers that have made vast profits during the pandemic.
Similarly, even with the stamp duty holiday, there is scope to increase the levy on buy-to-let landlords, second home owners and purchasers of the most expensive properties.
Indeed, the Government’s whole approach to the property market is inconsistent. Ministers
screech about “affordable housing”, but they do all they can to push up prices with endless tinkering, subsidies and incentives to developers.
THE NEW mortgage guarantee scheme, in which the taxpayer will underwrite home loans of up to £600,000, is a classic example.
Presented as a bold initiative to assist first time buyers, it is essentially a rehash of the expensive Help to Buy scheme, which stoked house price inflation and benefited the wealthy.
A 2019 National Audit Office study found 63 per cent of buyers using it could have purchased without state aid.
We need more home building, not more mortgage guarantees. Elsewhere, we need: more on practical training, less on pointless university courses; more on real transport improvements, less on the extravagant HS2; more fairness for the English, less excess for mismanaged Scotland, where expenditure is £2,000 per head higher.
Mr Sunak has had a impressive first year in office. But he needs to show cool, authoritative judgment to ensure the Government fulfils its promise to “build back better”.
‘Tax rises that undermine enterprise and wealth creation must be avoided’
SO NOW we’ve had a week to reflect on Boris and his road map out of whatever you want to call this life we are leading. Personally, I have managed for the last year not to go into crowded places and to work from home. I know I’m very lucky but I have to say I am getting to the stage where “stir crazy” could become a term you hear me using regularly.
Why I have to wait until April 12 before I can sit outside a pub or a restaurant is beyond me. I can travel on public transport, I can go to a supermarket, I can do lots of things that I would consider more dangerous than sitting outside somewhere with social distancing rules in place. So what’s the delay?
I know we don’t want Covid coming back. I really don’t want to catch it. I understand the rules, but please, a little more common sense.
Then there are those who are moaning about the vaccine and whether they should have it. They are not great in number but seem to make an inordinate amount of noise. The so-called anti-vaxxers are a misguided bunch of people in my view.
I would allow businesses – shops, bars, restaurants, theatres, any venue that feels it doesn’t want anti-vaxxers risking the lives of customers and staff – to ban them.
So the vaccine passport is a great idea. I know from my talkRADIO shows this is very unpopular only among those who look at practically every conspiracy site going.