THE news coming daily from Ukraine is relentless and weighs on all our thoughts. The world order has changed for a very long time.
At home, financially this is a very difficult time for so many. The cost of living crisis is getting worse, inflation is soaring and much of it is totally self-inflicted by Government policy. This is primarily due to the failings of their energy policies over many years coming home to roost.
The Chancellor has a chance with his spring statement today to ease this crisis, but I am not optimistic that he grasps the scale of it. He is likely to tinker at the edges when he has the capacity to make a significant difference. He seems determined to proceed with tax rises when he should be cutting them hard to create more growth.
Lower taxes mean more money in people’s pockets, and they will spend it more wisely than civil servants spending it on their behalf. The proof is all around us: our taxes are at the highest for 70 years and it is not a coincidence that the medium-term growth forecasts are the lowest for 60 years. The UK’s total tax take is over 35 per cent of GDP. Countries such as the US, Australia and Singapore that have a tax take well below 30 per cent have long-term growth rates way above that of the UK.
The Government’s finances are much stronger than the Treasury makes out. They could be boosted dramatically if we started extracting our shale gas treasure which has a value potentially equal to our national debt. We at Reform UK have led the way bringing this debate back to the table, and this is a sign how we can shape and influence matters.
Today the Chancellor should immediately scrap three things. First, the National Insurance rise, which is a tax on jobs, especially when businesses are struggling with higher energy costs. Second, the 25 per cent renewable subsidy levies on all domestic electricity bills, a system that takes money from the poorest and gives it to rich landowners and wealthy foreign investors who own so much of the wind farm sector. Third, a Brexit bonus is available so use it by scrapping the 5 per cent VAT on our energy bills, which we could not do when part of the EU.
Finally the Chancellor should reduce fuel duty by at least 10 pence per litre and consider having a moderator scheme that adjusts the fuel duty to keep fuel prices relatively stable, depending on oil price levels.
These reductions would be paid for by higher growth over the coming years and by cutting so much wasteful spending. We all know examples of Government waste and inefficiency in every department.
It is vital to learn from past mistakes. The Tories’ austerity programme from 2010 onwards, when they raised taxes, led to lower growth. Why do they think it will be different this time?
Instead let’s go for growth. The Chancellor has a chance to set a new direction of travel for taxes. He claims to be a tax-cutting Tory. There is no better time to prove it than today.