Drastic times call for drastic measures
Rumours from Liz Truss’s camp suggest that the presumed prime minister-in-waiting is to announce a cocktail of tax cuts that only recently might have been considered a once-in-ageneration intervention. By any measure a 5 per cent cut to VAT is dramatic. But combined with significant tweaks to income tax, and team Truss could end up with a truly radical package with the potential to save households thousands of pounds a year and kick-start consumer confidence. Of course, it is also a measure of how successive crises have normalised the extraordinary that the tens of billions that such giveaways might cost, at least initially, are no longer considered politically or economically eye-watering.
Rightly so. Drastic times call for drastic measures, and the fact that several crises have succeeded one another does not make them any less threatening. The true danger comes not in the application of emergency measures, but in the failure to learn lessons from them that will make the nation more resilient in future.
At present we instead seem to be lurching from one disaster to another. The great financial crash of 2008 was met with measures then deemed “unprecedented”. More than a decade of central bank easy money followed. But far from being a one-off, those measures segued into the Covid pandemic, with its astonishing interventions from the Treasury. Barely are we beginning to think beyond plague today, and war, energy and inflation present themselves as the new grim horsemen stalking household – and national – finances.
Ms Truss’s radical proposal to cut VAT echoes that made by Gordon Brown in response to the financial crash. But like so many politicians of the post-cold War era, Mr Brown was a short-termist who believed problems could be corrected as they occurred, before the world moved on as before. There are also rumours that another (soon-to-be) former PM – Boris Johnson – is set to insist on his own political hangover, in this case that any successor maintains net-zero aims in dealing with the energy crisis. That too must be avoided.
For as we are now seeing on multiple fronts, Britain needs – as it always has – to set out its national priorities and stick to long-term plans to deliver them. Relentlessly resorting to political sticking plasters must end. Their cost is growing exorbitant. In future, better a culture of preparedness and long-termism that cushions the impact of crises, or averts them altogether.