Written by Christopher J. Wilkinson
This week, incompetence met inconstancy as political observers and economists were treated to Rishi Sunak’s latest mid-year fiscal statement. While the rhetoric was unashamedly positive, the reality is set to be unbearably bleak for many individuals and families.
The background could hardly be worse –at 8.2 per cent RPI inflation is at its highest level since March 1991, a real terms reduction in wages has heralded a new cost of living crisis, a slowdown in economic growth has cast doubts on the strength of the recovery, and there’s talk of COVID-style interventionism in the energy market as the Invasion of Ukraine has exposed Britain’s chronic dependency on imported fuels. Unlike the three-day week of 1973, the lights will stay on… but only if you can afford it. The mass of tax increases, especially regarding Corporation Tax and the freezing of many tax thresholds, represents an unwinding of previous Conservatives’ manifesto commitments and is likely to erode ‘true blue’ support in England at the next election.
Despite raising more revenues than ever before, our not-so-Conservative government seems bent on making the pips squeak across all incomes, rich and poor alike. The basic rate of Income Tax is to be reduced from twenty per cent to nineteen per cent in 2024, seemingly designed to pepper that year’s general election campaign rather than alleviating financial hardship faced by individuals and families. The most striking element of this measure was in the millionaire Chancellor’s sheer hubris – ‘fully costed and fully paid for in the plans announced today’ he declared as the nation’s budget deficit sits above £165 billion in the year to February, yet costs are mounting now – not in the next two years. Servicing Britain’s national debt now costs every individual more than £1,200 with annual interest payments soaring to an eye-watering £84 billion. Five pennies off fuel duty won’t substantially cut the cost of motoring when prices at the pumps have never been higher.
The Chancellor claimed the increase in the National Insurance threshold from £9,568 to £12,570 this July represented a £6 billion tax cut for 30 million people, yet the British taxpayer is staring down the gun barrel of the highest tax burden since the 1940s and the worst reduction in real living standards since records first began in the 1950s. All this to finance a grossly inefficient, ineffective, over-regulated, and over-legislated public sector now costing over £1 trillion each year. This same public sector has over the past two years of COVID denied healthcare to scores of patients many of whom with serious conditions, left children for months without an education they’re only now catching up on, and unduly politicised the police and criminal justice system in a way that made McCarthyism look comparatively sane and rational. Where did our money go? What was it spent on? The time is certainly ripe for a swinging of the axe.
In the worst recession in three hundred years and with the biggest peacetime budget deficit in British history, Rishi Sunak’s economic plan won’t be a recipe for the Conservative’s aim of ‘Building Back Better’ – instead it is the next instalment in a pro-state, pro-government borrowing binge that started three decades ago under the Major administration and which continues to this day. Under authoritarian governments of all political colours, the notion of all pain and no gain rings very true indeed.