Balanced, shrewd and effective route to prosperity
NORMALITY has returned to British politics. In place of last autumn’s turmoil at the Treasury, stability now reigns. It is a tribute to Jeremy Hunt’s authoritative stewardship of the economy that he was able to deliver his Budget in an atmosphere of calm rather than crisis. Pragmatic, solid and optimistic, the statement itself reflecting this mood of reassurance.
Remarkably, Hunt yesterday became only the second Chancellor out of the last five actually to deliver a Budget at all, another indicator of the recent turbulence that has engulfed the Tory government. The other was Rishi Sunak, the Prime Minister, who shares his Chancellor’s command of detail, mainstream Conservatism, coolness under pressure and a successful background in business.
In contrast the reigns of Sajid Javid, Nadhim Zahawi and Kwasi Kwarteng were so short or shambolic that they never had the chance to brandish the famous red box.
Like its architect, yesterday’s Budget was balanced, shrewd and effective. It contained no grandiose vision nor did it sound the trumpet for revolution. Instead, it held out the prospect that the Government would keep Britain on a steady course towards prosperity.
Some found all this a bit boring and lacking in audacity. Julian Jessop, a fellow of the Institute of Economic Affairs, said: “I would like a bit of danger and a little bit of risk.”
Well, that was tried with Kwarteng, for whom the Institute was one of the biggest cheerleaders, and the results were, frankly, catastrophic. The image of the Budget’s dullness was reinforced because it held few surprises, since all its high-profile measures had been heavily trailed before Hunt reached the Despatch Box.
Long gone are the days when the contents of the red box were a tightly guarded secret up to the moment the Chancellor spoke, so much so that in 1947, Labour’s Hugh Dalton had to resign from the position after admitting that he had given a London journalist an outline of his plan just before he entered the Commons.
A decade earlier the loquacious Minister Jimmy Thomas was expelled not just from the Cabinet but even Parliament for leaking some Budget material.
Yet neither the downbeat nature of Hunt’s statement nor the limits of his ambition should be exaggerated. He may have lacked rhetorical boldness but his plan had plenty of ingredients for growth, built on business investment and greater labour market participation.
Robert Lowe, the Liberal Chancellor of the early 1870s, once said that the postholder “is entrusted with a certain amount of misery which it is his duty to distribute as fairly as he can”. But misery was not the hallmark of Hunt’s performance. On the contrary, he was consistently positive about both Britain’s prospects and the impact of his measures. He pointed out that in defiance of most predictions in 2022, our economy is unlikely to enter a recession this year. “We are proving the doubters wrong,” he said with justified pride. Meanwhile, according to the Office for Budget Responsibility, inflation will probably fall to just 2.9 per cent by the end of 2023.
Furthermore he outlined Britain’s potential to become “a science and technology superpower”, given that we have the world’s third largest tech sector after the US and China, we are global pioneers in renewable energies, our advanced manufacturing companies are world-beaters and our film and television industry is Europe’s biggest.
It must be admitted, however, that all this optimism was somewhat diluted by his awkward delivery. Normally the epitome of self-confident fluency in public, he not only stumbled over parts of his text but also sounded at times like he was losing his voice. Perhaps he was unwell or had a touch of nerves, since this was his first Budget.
In fact, in 1909 when Lloyd George was delivering his famous People’s Budget, his voice gave out after three and a half hours, and he could only resume after a rest of 30 minutes. Even with his hoarseness, Hunt managed to keep going for an hour.
Privately, some Conservative MPs were disappointed that he had not indulged in
any fireworks by the time he reached the end, such as dramatic tax cuts or spending increases. Their argument was that, because of the improving economy and public finances, he had plenty of fiscal headroom to be more generous.
WHAT aggrieved them in particular was his decision to press ahead with the planned rise in corporation tax from 19 to 25 per cent, a step that they claim will undermine Britain’s competitiveness and impose new burdens on the consumer.
But in defence of Hunt, the scope for fiscal looseness has been overplayed. The recent gains made through restraint could easily be blown away by any perceived recklessness or a global downturn.
Enthusiasts for tax cuts or spending hikes should recognise the vulnerability of economies across the developed world, with China growing in strength and menace, war continuing in Ukraine, and the possibility of another banking crisis looming in the distance, with two US banks having collapsed this week and Credit Suisse now in trouble. At home, there is no sign of an end to the public sector strikes, just as the cost-of-living crisis continues to cast its shadow.
In addition, the corporation tax rise will annually bring in £18billion, money that is badly needed at a time of profound concern about the underfunding of public services. To lessen the impact of the increase, small businesses with profits of less than £50,000 will not pay more, and there will be tapered relief for those companies whose profits are under £250,000.
Just as importantly any investment in equipment, plant and machinery can be offset in full against tax bills. Arguing that this step will be worth £9billion-a-year to businesses, he quoted the Office for Budget Responsibility’s prediction that it will boost investment by three per cent a year.
Far from feeling defensive about corporation tax, Hunt said his approach was part of a wider strategy to make Britain more dynamic. Other policies to improve growth include the creation of 12 special investment zones, tax incentives to boost nuclear power, and further devolution to local mayors and councils so they can guide the economic destinies of their own areas.
Just as vital for growth will be Hunt’s effort to encourage more people back into work. At present, there are no fewer than seven million people of working age who are economically inactive, a prodigious waste of human talent. With 5.3 million of them on benefits, it is also a huge drain on the welfare system.
To achieve the necessary change, Hunt set out an impressive set of measures, among them a vast expansion in subsidised childcare which he said should reduce costs to parents by 60 per cent.
There will also be a farreaching reform of the social security system with the abolition of the Work Capability Assessment, which will in practice mean that disabled people can take jobs without worrying about losing their benefits.
This is a humane and enterprising step which makes a mockery of the fashionable caricature of the Tories as a party bent on wilful cruelty against the marginalised.
But mild-mannered Hunt is willing to take tough action where necessary, as shown by his pledge to introduce benefit sanctions for those who can work but refuse to do so. Living on welfare should no longer be an easy choice.The wilful promotion of benefits dependency is bad for claimants, the economy and the taxpayer.
The other element of the “back to work” Budget was to end the perverse tax rules on private pensions, which at present disincentivise high earners – such as badly needed, experienced doctors – from remaining in the workforce because they have to pay such huge penalties on their income.
At a stroke, Hunt has removed these barriers to retention by raising the annual taxfree allowance on pension contributions to £60,000 and completely abolished the Lifetime Tax Allowance, which effectively limited the amounts that could be held in pension pots and thereby acted as a discouragement to continued, well-paid employment.
There were a host of other measures, like the maintenance of the energy price cap at £2,500 for another three months to help households with the cost-of-living crisis.
Similarly, fuel duties are to be frozen for another year, just as motorists will gain from a new £200million fund to fix potholes.
Some critics say there was too much tinkering in the Budget and not enough verve. But the truth is that, as with the economy, Hunt and Sunak are slowly beginning to revive their party’s fortunes.
Labour still enjoys a huge poll lead but are starting to become apprehensive, as was illustrated by Sir Keir Starmer’s floundering reply to the Budget.
With Hunt at the helm of the Treasury, a brighter future now beckons for the Government – and the country.
‘With Hunt at the helm, a brighter future now beckons for Britain’
DEAR old Meghan Markle is having bright ideas again: hot on the heels of allowing it to be known that her children are a prince and princess of the Royal Family she has spent the last three years attacking, she is to revive her lifestyle blog, The Tig. She is said to have an eye on the Gwyneth Paltrow market and is hoping to emulate the success of Goop, but while Gwynnie may be slightly batty, she also possesses a certain charm which many of us, in Meghan, below, have so far failed to spot.
No matter. Here are a few of Meghan’s lifestyle tips:
Never... ever underestimate the importance of family. When you need to hit the headlines, cut-off all your relatives and then just sit back and let your father and siblings embarrass you with tell-all interviews, while maintaining a dignified silence. If you have managed to annoy your half-sister so much that she starts to sue you, then all the better. Then, when you run out of your own family members to antagonise, encourage your husband to do likewise to his lot. Sit back and enjoy the wall-to-wall coverage, while never forgetting to demand that privacy you so desire.
While on the subject of husbands, everyone should look for their very own handsome prince, but between you and me, it helps an awful lot if he’s an actual prince too. It’s all very well marrying a handsome television producer as I did with my starter marriage, but frankly, his father wasn’t the King of the United Kingdom and Northern Ireland and a good deal more besides. Your prince doesn’t need to be very clever, but healthy measures of petulance and long-held grievances will afford you no end of opportunities to hit those allimportant headlines!
Feel free to mock your prince’s grandmother on national television, by the way – she’s hardly going to react.
Don’t be too extravagant. I try to limit my private jet usage to no more than four times a week and I really wouldn’t spend much over £10,000 on a piece of clothing, unless of course it’s a really special occasion, such as an engagement announcement. And don’t forget those designers are going to offer you a discount! I mean, what’s 25 per cent off between friends?
And finally, get that message out there. While you are busy cutting off your nearest and dearest, to say nothing of friends who are of no use to you any longer, just remember to keep reminding everyone to be kind.
Be thoughtful. After all – you are there to serve.
“My mom used to say: The older you get, the better you get, unless you’re a banana” Rose (Betty White), The Golden Girls