16 MARCH 2023 | OPINION
Spin, bluster, sound and noise always rage around any Budget. Do you get that strange feeling of having heard all the woolly warm words before? The patronising platitudes from a Chancellor of jam and honey just around the corner, when you are more likely to get a gallon of gruel. Where is the growth? Why not take advantage of the Brexit opportunities?
Often, it is best to read first the Editor’s notes and the small print at the back to find the truth. Yet there is always a sense of wishful hope, and Chancellors love to pluck a rabbit out of the hat to grab a headline. Well, this budget had no live rabbits, no tasty jam, just more turgid stodge, delivered in a bureaucratic tone by Jeremy Hunt. Forget all the tinkering.
The man who led his Tory leadership campaign just 9 months ago on cutting corporation tax to 15% has instead raised it to 25% – an increase of almost one third. The fear of this tax raid has already led to large businesses taking their investment to other nations, or not to come here. We are now much less competitive to do business in than for a decade, which means growth will be lower. Higher company taxes mean higher prices for consumers, which means inflation goes up. Growth in the economy is vital to create higher wages and more medium-term tax revenues to pay for better public services.
Just stand back and ask how this supposedly Conservative Government is aiming to create growth with this Budget. Taxes are at a record high for over 70 years, rapidly approaching 40% of GDP. Government spending – much of it very wasteful – has increased by one third over 20 years and is now approaching 50% of GDP. The number of public sector workers is 500,000 more than 2019, whilst in the private sector, there are some 700,000 fewer. There can be no real, exciting growth with this backdrop.
What has this Budget done for ordinary families on average incomes? Reach for the spectacles to spot any real help. Personal tax allowances for the lowest-paid remain frozen. My party, Reform UK, would make work pay by increase the starting point for paying income tax to £20,000 from £12,500. This would free some 6 million people from paying any income tax, yet Mr Hunt wants to make the least well-off pay even more of it.
The Government is happy to waste some £10 million per day housing illegal migrants, whilst being unable to help British citizens by creating conditions for growth.
There is nothing for small businesses – the engine of the British economy – which will suffer more taxes, whilst the freelance IR35 tax remains.
Complex tinkering with childcare arrangements, though it sound appealing, will in fact be hard to access. It may suit bureaucrats, but fails to deal with the big picture. We are all overtaxed and over-regulated, and for too many people, work does not pay.
Yet more fiddling with already fiendishly complicated pension arrangements may help some higher paid professionals to delay retirement, but for many, this is too late – they have gone from the labour market forever.
Meanwhile, the Budget’s extension of the energy price cap for 3 months disguises the unpalatable truth. Gas prices have dropped back to mid 2021 levels, way before the Ukraine war – as have UK wholesale electricity prices. So why are energy prices paid by consumers and firms still double the rate just 15 months ago? The answer is the huge increase in subsidies for the renewables industry to meet Net Zero targets.
We are being misled again and softened up for permanently expensive energy costs. Net Zero will reduce growth and make us all poorer and colder. This Budget just cements this trend. Whilst other nations are sensibly and rapidly pulling back from unaffordable, disproportionate Net Zero measures, Westminster becomes ever more obsessed. The result is to send more of our money and jobs overseas.
This Budget is a tragic lost opportunity to take advantage of Brexit and go for growth. Suffocating tax rises leads to stagnation, while our lower-taxed competitors push on ahead. Gruel is neither exciting, nor tasty.