We had expected Chancellor of the Exchequer Rishi Sunak to deliver the Magic Money Tree but what he has actually delivered is a Cloud Cuckoo Land budget. Really, you don’t need to be a Goldman-Sachs-trained economist to realise that the numbers just don’t add up and that this is a stop-gap, smoke-and-mirrors exercise to fool us into imagining that the UK economy is not on the brink of total disaster.
Sure, during his lonely speech, delivered to an almost empty chamber, Sunak dropped some heavy hints that all was not well.
Sunak said: “It is going to be the work of many governments over many decades to [pay the money borrowed] back”, and just a one per cent increase in interest rates and inflation now would increase the cost of the government’s debts by £25 billion at a stroke.
But the impression given was that with a bit of tinkering here and there – ‘special economic zones’, ‘bounce back loans’, ‘restart grant’ etc – we will all somehow muddle through.
The elephants in the room are, of course, the SAGE and NERVTAG (New and Emerging Respiratory Virus Threats Advisory Group) committees, which have assumed the role of Britain’s unelected government.
As Chancellor, Sunak ought by rights to have a much bigger say in the direction of Britain’s economy than, say, Neil Ferguson (aka Professor Pantsdown) whose heroically pessimistic and discredited Imperial College coronavirus pandemic computer model first got us into this mess; or than, say, Susan Michie, the behavioural expert and Communist mostly cushioned from the effects of her own proposed policies thanks to the £50 million she shared with her siblings in 2019 when they sold a Picasso inherited from their mother.
But in fact, as we’ve seen in the last twelve months, it’s these unaccountable scientific advisory groups that have made all the running in dictating Britain’s seemingly endless series of lockdowns.
In the early days of the pandemic last year, Sunak was known to be the senior minister most opposed to lockdown and the keenest to get the economy up and running again. Back then, he was overruled by Chancellor of the Duchy of Lancaster Michael Gove and Health Secretary Michael Gove. Now it looks like he has pretty much resigned himself to the inevitable. His announcement that the Furlough payments — i.e. the methadone drip which keeps all the people made unemployed by the lockdown vaguely appeased and semi-content — will be extended into September looks less like the light at the end of the tunnel and more like an oncoming train.
More and more states in the U.S. are abandoning mask mandates and opening up for business. Sunak, who was a Fulbright scholar at Stanford, must be looking across the pond with envy. But as just about the only voice of resistance at senior level in the Boris Johnson administration, there’s precious little he can do to avert the inevitable disaster.
And it is inevitable.
Britain has suffered its biggest economic collapse in over three hundred years — since the Great Frost of 1709 when the Thames froze over. Sure, its economy might have bounced back under a government with any appetite to put people and business and jobs and freedom and education and cultural survival and decency and common sense before the draconian ordinances of an unelected body of activist scientists. Unfortunately, with the hopeless Boris Johnson at the helm, it simply hasn’t got one of those governments.
So Sunak had to make the best with the very feeble material he has been given. It helps that he has a tame Office for Budget Responsibility (OBR), predicting that the economy will grow this year by 4 per cent, by 7.3 per cent [yeah right] in 2022, then 1.7 per cent, 1.6 per cent and 1.7 per cent in the last three years of the forecast. It also helps that he has a vivid imagination, which allows him to pretend that ‘more than 700,000 people have lost their jobs since last March’ – when he must surely know that the real unemployment figures (which the furlough is concealing) already run into the millions.
As for the budget itself — well it’s clear that Sunak has learned a lesson from his most Machiavellian predecessor, the dark lord ‘George’ Gideon Osborne, that if you keep moving those cups round fast enough when you play the shell game no one will be able to spot where you’ve hidden the pea — or indeed have lost the pea altogether because you are totally broke and your creditors took it as collateral.
So, for the moment, he hasn’t actually — as was feared — raised income tax directly. He’s just done it indirectly by freezing personal allowances, thus bringing more people into the higher tax brackets within the next few years, especially as Britain heads towards the racing certainty of galloping inflation.
As a bread and circuses sop to us proles, he has abandoned a mooted hike in duty on booze, and on fuel too. (Let’s see how long that lasts: Boris’s green government LOATHES car drivers, for a start).
And though he has increased Corporation Tax from 19 per cent to 25 per cent, he has attempted to maintain the illusion that his government is pro-business with another fancy-pants wheeze called a ‘super deduction’ incentive for businesses to invest.
The new rule would allow companies to reduce their tax bill by 130 per cent when making capital purchases — as Sunak said, a construction firm buying £100 million of new equipment could reduce its tax liability by £130 million.
Maybe this will work. Maybe it won’t. But it certainly won’t impress those of us who believe government’s job is to get out of the way of business rather than try to micromanage it with endless taxes and subsidies, as though the state knows better than entrepreneurs how to do their job.
The other major disappointment is that this budget extends the Conservatives’ track record of raising the national tax burden to ever greater heights. Even before the Chinese Coronavirus pandemic, taxes were at their highest levels since the 1960s. This latest budget — according to Paul Johnson of the Institute of Fiscal Studies — takes taxes to ‘their highest sustained level in history.’
We might have expected this under the leadership of a neo-Marxist such as former Labour leader Jeremy Corbyn. I don’t think many of us realised that it would happen under a Prime Minister who once wrote in a column that ‘voting Tory will cause your wife to have bigger breasts and increase your chances of owning a BMW’. Liar.