Found: A Conservative Government
Several months ago, I wrote that a Conservative Chancellor was missing in action.
Today, under the leadership of Liz Truss and her Chancellor, Kwasi Kwarteng, I tentatively herald a new chapter. A new era, if you will, of bold, radical, courageous corrective action. We have dispensed of the worthless windy rhetoric of the Sunak-Johnson aberration and finally unashamedly embraced the very principles that underpin our Conservatism.
But, of course, this is a bold gamble, the success of which lays in abeyance. For this is the overwhelming narrative surrounding what boils down to a common sensical package. Take just a few highlights from the Plan for Growth.
The effective cut to corporation tax is estimated to unlock £29bn every year in annual investment and contribute to a £100bn output boost over the next decade.
Businesses, far from being evil organisations intent on crushing the poor, are directly responsible for the jobs of 83% the UK labour force. From SME’s to MNCs, excessive taxation of their profits, justly earned through meeting the needs of consumers around the globe, doesn’t mean we’ll abolish poverty, but it does mean less investment, meaning other firms lose out and less jobs for working people, it does increase the likelihood of offshoring to lower tax regimes, and all this reduces the wealth necessary to pay for schools, hospitals, safe streets and defence.
It’s not a gamble: it’s common sense.
Britain should be a place where talent, hard work and achievement are rewarded, not punished. Provided the government redouble efforts in the march towards true equality of opportunity- through allowing new grammar schools, say – allowing high earners to keep more of their earnings is both morally right and economically sound. Forget talk of trickle-down economics, this sends a clear signal to anybody wanting to get on, take risks and use their talents. Gone is the effective 60% tax. Gone is one of the biggest inhibitions to enterprise and work. Millions will also benefit as a result of the cut to the basic rate, again making work pay and trusting the British people with their own money. From a situation where income tax rates were higher than Italy and Norway, this government is rejecting the limp caution of its predecessors: we’re back in business.
The Chancellor grasps that tax cuts alone will not revive an ailing economy. The promise of a Planning and Infrastructure Bill sounds positive, albeit light on detail at this stage. Whilst our international competitors consistently outstrip our delivery of major projects, we remain obsessed by stifling bureaucracy, endlessly checking, re-checking, reviewing and contemplating when we could get on with the mammoth task of bringing British infrastructure into the 21st century and seizing the innumerable avenues to unleash the potential of so many regions right across our country. The sphere of planning also takes on an even greater importance (if that were even possible) in the wake of the stamp duty changes. If the government cracks in the face of the inevitable onslaught from Tory MPs and members, then it will have largely fuelled already mounting inflationary pressure in a housing market too many are locked out of.
Full-blooded investment zones offer the opportunity to literally transform left-behind areas into thriving powerhouses of regenerative growth and spread prosperity across the country. That, rather than funds for flower gardens, is meaningful levelling up. It is, as the Prime Minister promised on the campaign trail, levelling up in a Conservative way.
The government has also taken the side of ordinary, working British people by ensuring essential services cannot be so easily and cynically disrupted in indulgent power games between union bosses, firms and the government. Minimum service requirements will not only ensure people can go about their business as is their right but also bring parity with several other comparable countries. As Conservatives, we are giving union members a greater say in the organisation that should be their robust and responsible voice by forcing union bosses to present companies offers to the men and women who actually do the jobs rather than politically motivated executives who are often hopelessly detached from their members.
For all the welcome and refreshing announcements, there was one major missing element: tough talk and resolute action on public expenditure. The UK needs lasting, sustainable, enterprise-based economic growth. Tax-cuts, taken together with meaningful and unprecedented supply-side reforms, are the route to resolving the productivity puzzles of the last 14 years since the 2008 financial crisis. Tax cuts, morally sound and economically vital as they are, can only be afforded and be deemed credible through equally bold cuts to public expenditure. Immediate trimming would have reassured the markets and the instincts of many in the party and country. The fact that the government failed to outline any clear direction on this is deeply concerning and runs immense risks. The promise of more detail, and a medium-term fiscal strategy goes some way, but arguably not far enough yet, in mitigating and allaying these fears.
We have entered a new era and embarked upon a courageous new direction, founded on core principles and common-sense logic. The proof of the pudding, however, is in the eating of it. Time will tell whether we’ll taste sweet fruits or witness a most spectacular failure. Here’s to glad, confident morning…..