I DON’T know how you can spend another £150billion when you are already £2.5trillion in the hole, yet are still called mean and callous for a £2billion tax cut.
‘In terms of revenues, the top tax rate is not a big earner,’ according a ‘Fact Check’ analysis by Reuters. ‘The finance ministry said getting rid of it would cost about £2billion a year, a fraction of the total £45billion in tax cuts in the mini-budget. The bigger moves included a reversal of higher social security contributions, a cut in income tax for all workers and abandoning a corporate tax hike.’
This ‘not a big earner’ tax cut has been reversed. Liz Truss has been forced into a humiliating, spineless U-turn that makes her a lame duck Prime Minister five minutes into the job. I don’t know how she did it, but Liz Truss has managed it.
There are a few other things Liz Truss has managed to do; make tax cuts look like a bad thing per se; feed the ever-hungry Leftists who think the only moral thing to do is plunge future generations into even more debt; borrow more money and expand an already bloated state. She has done more damage to the moral case of why we should have a smaller state than any Prime Minister before her.
Truss and her Chancellor Kwasi Kwarteng handled this mini-Budget so badly that I think the lads on the Titanic who mislaid their binoculars and missed the iceberg made a better fist of things.
This was the wrong policy at the wrong time and very poorly sold. For those of you who think I am too harsh on Truss, we should remember that politics is all about messaging and selling your case. Otherwise you should stick to accountancy. I appreciate that the media are against anything vaguely Right-wing, but that means you must work twice as hard to sell the case.
There is such a thing, dear reader, as humility. If Truss had any humility, she would have appreciated that she didn’t win a general election to become Prime Minister, but was elected by a tiny group to run the country, and she had no mandate for her mini-Budget.
Prudence would have told her that to cut taxes, after a decade of free money, to an electorate who had been paid by Boris Johnson to stay at home and watch Netflix (cost £70billion) and who, when they were not being paid to stay at home, were being paid to ‘eat out to help out’, was always going to be a tough sell.
What annoys me most about this catastrophe of a mini-Budget is the laziness of Truss and Kwarteng. They blithely dived in with the idea that they could just come along and try to administer a policy that they had done no work to promote.
The truth is, both of these jokers still think they are in some PPE seminar group. Their arrogance and their hubris know no bounds. As many have pointed out, Margaret Thatcher didn’t cut taxes until she had relentlessly laid the groundwork for the policy, both in the messaging and getting the country’s finances under control.
Thatcher, having suffered an early defeat at the hands of the militant miners, didn’t take them on again until she had stockpiled enough coal to get the country through another strike. Change worth making takes time and patience.
It is bad enough to propose an inflationary policy at a time of inflation, but then to U-turn on it only compounds the error; it makes things worse and you powerless. But it is probably just as well that this pair are powerless, as they are clearly totally clueless.
Ed Conway pointed out in the Sunday Times: ‘Had we made decisions purely on the basis of economic data, this country would have been shunned by many of its investors years ago. We have a large and inexorably growing current-account deficit. Every year for as long as anyone can remember, the Government spent more than it generated in taxes. (My italics).
‘Our productivity was low and our demographics were worsening, and rather than reducing trade frictions, we recently divorced our main trading partner. But somehow the plane kept on flying. We carried on borrowing and investors carried on lending.’
The interest on the £2.5trillion debt had already hit £19.4billion, the highest since monthly records began in April 1997. As much of this is linked to inflation, the interest will go even higher.
I am sick to death of hearing Conservative ministers harping on about feeling everyone’s pain. What I want to hear them say is that a country that seeks to pass on £2.5trillion in debt to the next generation is not just bankrupt on paper, but morally bankrupt.
A country that every year for as long as anyone can remember, spends more than it generated in taxes, is morally reprobate. They need to make the case that this is unsustainable, and in fact disgracefully greedy. It is truly nasty to go on in this fashion and must stop.
Unless the Conservatives want to get crushed at the next election, they need to regroup, gather their thoughts and get rid of all the morally reprobate politicians who think running up obscene levels of national debt and expanding an already bloated state is a good idea. The only U-turn we need is against Labour spending policy and towards sensible, moral and responsible conservative governance.