Richest man in Westminster falls back on his magic money tree again
Fiscal conservatism goes out the window as the Chancellor finds himself out-toried by Labour
There was a reason the words “windfall” and “tax” were not uttered once by Rishi Sunak during his 22-minute address to the Commons yesterday.
The Chancellor called it an “energy profits levy”, but as his Labour counterpart Rachel Reeves later pointed out, this was “a policy that dare not speak its name”.
“Let there be no doubt who is leading the battle of ideas in Britain,” she declared as the Government’s only representative in the Rich List’s top 250 once again gave the magic money tree a Corbyn-esque shake.
Having spent half a million quid finding out that voters love being given free cash, the Treasury chief announced an extra £21billion in state aid to ease the cost of living crisis.
Brylcreemed to the max, this was Dishy Rishi back in Just Giving mode – a Hand Out to Help Out scheme, if you will.
And it didn’t matter that he had previously decried a windfall tax as “unconservative” and a “silly” idea – because this was something very different to Labour’s suggested levy on the excess profits of oil and gas companies. No, this was a levy on “extraordinary” profits, which would “encourage investment, not deter it”.
“That’s the whole point!” exclaimed the Prime Minister, whose policy on cake has always been “pro having it and pro eating it”. “Genius!” he affirmed, clearly enthused by the idea of energy companies being forced to build the wind and nuclear plants he has been clamouring for – or face tax hikes.
Pre-empting accusations of adopting a Labour-lite policy, Mr Sunak insisted: “We should not be ideological about this, we should be pragmatic,” yet it was not enough to assuage Tories growing increasingly concerned at the pinkening of their once true blue party.
As Richard Drax, the MP for South Dorset (59 per cent Conservative) pointed out: “Can I warn [Mr Sunak] that throwing red meat to socialists by raising taxes on businesses and telling them where to invest their money is not the Conservative way of encouraging those who create our prosperity and jobs to do just that.”
David Davis, ever a thorn in No 10’s side, summed up the concerns of grey-hairs, by asking: “Is there not a risk that the Exchequer will lose more in growth than it will gain in the windfall tax?”
Sunak’s response, insisting there was “nothing noble in burdening future generations with more debt”, was the closest to Thatcherism the Chancellor was willing to go.
Clearly emboldened by the fact the Iron Lady introduced a levy on banks in 1981 – followed by George Osborne’s North Sea surcharge in 2011 – Sunak sought to justify the move by arguing that the “temporary, timely and targeted fiscal support” would not only “get inflation under control”, but “help households being hard hit right now”.
Announcing one-off payments of £650 to those on benefits, £300 to pensioners and £150 to the disabled – on top of the £200 loan already offered to all households in the UK (now converted to a £400 grant) – his
The words ‘windfall’ and ‘tax’ were not uttered once; instead it was an ‘energy profits levy’
‘It was left to Labour’s Reeves to suggest a better solution might have been to cut VAT for businesses’
reference to people feeling “some of the pressure eased, some of the burden lifted” felt almost rhetorical.
Yet in neglecting to come up with any relief for businesses, the Chancellor once again found himself in the bizarre position of being out Toried by... the Labour Party.
It was left to Reeves, of all people, to point out that a better solution might have been to “spike the NI hike” and cut VAT for businesses.
Conservatives were similarly at pains to point out that adding to the highest tax burden since the Second World War instead of tackling the green levies that push energy bills up in the first place was hardly Lawsonian (the Chancellor has a portrait of his tax-cutting predecessor above his desk).
The role reversal was later exemplified by the normally Leftleaning Joseph Rowntree Foundation hailing the package as “very welcome” while the Right-leaning Institute for Economic Affairs denounced it as “a policy victory for Labour”, adding: “The default setting of the Conservatives now is to respond to virtually any problem by increasing taxes and spending even more money.”
In the face of yet another economic “emergency”, fiscal conservativism appears to have once again been put on furlough.