Read between the lines, and Sunak is betting on the private sector

Rishi Sunak is certainly a Chancellor who is prepared to take risks – politically as well as economically – but it was gratifying yesterday to see which side he is betting on.

There may have been government interventions by the dozen – lots of new bodies, new dedicated funds, new initiatives, even a new Northern base for the Treasury – but the important thing that they virtually all had in common was that they were designed to stimulate and assist the private sector. The freeports, the green industrial revolution, the infrastructure projects in the North and the Midlands: their objective was clearly to create new wealth of the kind that only private business initiatives can produce.

Instead of the Treasury printing money, Sunak wants real people to make, and spend, and invest, real money. You could see how effective this was by the fact that it left the Labour leader, Sir Keir Starmer, with only one basic complaint: the public sector was being ignored (no pay rise for “key workers”).

Perhaps Sunak’s most startling and brave idea was the quite stupendous (unprecedented, I think) offer to businesses that have been reluctant to invest in their own expansion: in future, small- and medium-sized enterprises would be able to offset the cost of new investment by 130 per cent against their tax bill

– a super-deduction, as he called it. In other words, there would be a concrete reward for entrepreneurs to enlarge and expand – which would, of course, create more jobs.

Much of the Chancellor’s message was – as it had to be – about jobs. He made it clear from the outset that his major objective was to protect “livelihoods”. Clearly, he hopes that the furlough extension will be able to wither away before its official end date as the economy recovers, but prolonging it was – for now – the right thing to do. It will prevent a sudden cliff-fall into catastrophic unemployment, which would have demoralised the country just as it emerged from lockdown. That was a political decision from an ambitious Chancellor, but it was also compassionate and well-judged.

He made a point, too, of acknowledging the particular plight of self-employed people who only last year, were being threatened in a peculiarly demonic way, with the prospect of having to file four tax returns a year. Maybe the fate of the cultural sector and its creative denizens has softened a few hearts at the Treasury.

The green economic revolution is being put to good use as a way of, as he described it, “changing the economic geography” of the country, which was a way of making it clear that the Government’s “levelling up” project had not been sidelined by the pandemic. In fact, Sunak said, the aftermath of the crisis now presented an opportunity – and it was not, mercifully, seen as a repeat of the post-war scenario of state takeover of industry and services. This would be a recovery led by free-market forces – which would be facilitated by the state but not run by it.

Will his gamble on the latent vitality of private enterprise pay off? Who knows? We have never put an economy into an induced coma before so we have no idea what happens next. But if the Chancellor really does, as he said, trust the national character to be “determined, generous and fair”, he probably won’t be far wrong.

read more at telegraph.co.uk/opinion