There’s a new word doing the rounds to describe the Tories following Jeremy Hunt’s £55bn tax and spending autumn statement and it’s not very pleasant to read. ‘Consocialists’ was a term first coined by Reform leader Richard Tice to encapsulate the left-wing movement of the once Thatcherian party, but following Thursday’s unprecedented tax grab, it has now entered the general Westminster lexicon.
I say “unprecedented”. While it’s been a long time since we witnessed such a gruesome series of centre-left proposals from a Conservative government, Hunt’s package was eerily reminiscent of the Labor budgets of old.
Economists have labeled the “top-heavy tax hikes and overdue cuts” Brownite, but I thought it had more of a Gaitskellesque vibe.
In 1951, the Chancellor of Labor raised income tax, profit tax, purchase tax, and petrol prices. Sounds familiar? Yet even he was able to see the need for NHS restriction and called for patients to be charged 50 per cent of the cost of spectacles and dentures, a move that led to the high-profile dismissal of Aneurin Bevan and Harold Wilson.
Fast forward 70 years, and we’re left with the same eye-watering tax burden that we had when rationing was still in effect – from the party supposedly associated with low taxes.
But even more questionable than the oxymoronic nature of this offer from Tino (the Tory in name only) is the Chancellor’s insistence that it’s all a model demonstration of “good money.”
Did anyone else see the irony of repeating Arthur Laffer’s quote that ‘sound money’ is the ‘sine qua non of a prosperous society”?
When Hunt paraphrased it as “good money is the rock on which long-term prosperity rests,” he must have been aware that he was channeling the man who invented the curve that shows that, above a certain point, taxing people more results in less revenue. .
Yet Hunt’s taxes and spending are not just off the curve, they’re off scale.
Not only will the tax burden rise to 37.1 percent of GDP in 2027-2028, but government spending will rise to a whopping 47 percent of GDP this year, before falling to 43 percent within five years, according to the Office for Budget Responsibility (OBR). That is still four percentage points higher than pre-pandemic spending of 39 percent of GDP.
In what possible world is such a bloated state, greedily gobbling up nearly half of the UK’s GDP, representative of “sound” money?
There is nothing remotely “healthy” about Britain’s welfare bill rising by nearly £90bn, financed by a sneaky wage heist and higher corporate taxes.
Nor is it “healthy” to pump an extra £6.6bn into the NHS over the next two years without any reform.
What good is hiring more doctors and nurses and rebuilding hospitals when patients still can’t get a GP or ambulance and have to wait months for surgery? This country quickly resembles a health service with a loose government.
It is, of course, undeniable that high inflation is affecting living standards. The OBR has warned that household disposable income could be cut by 7 percent over the next two years, effectively wiping out a decade of improvements in living standards.
Inflation leads to instability. Whether you’re an employer, employee, or both, you can’t plan for the future if you don’t know what prices will look like next year. One of the reasons why it’s so toxic that inflation is now at 11 percent, compared to the 2 percent target, is that it could lead to more societal conflict. Just look at the recent strikes that are crippling parts of the economy.
But since when has socialism been the “healthy” solution to any of these problems, when history proves it has only made them a hundred times worse? Romanian dictator Nicolae Ceaușescu famously tried to pay off all of the communist country’s debts in the 1980s, leading not only to its complete economic stagnation, but also to his trial and execution a decade later.
Again, there is nothing “sound” about taxing people twice or sometimes three times over the same money by freezing income tax, national insurance and sales tax thresholds while raiding capital gains and dividends.
What on earth was “proper” about Hunt unfairly describing dividends as “unearned income”? Dividends are often how the owners of small and medium-sized enterprises (SMEs) — which, by the way, make up 99.9 percent of the private sector — pay themselves.
In most cases, the people who run these businesses will have made huge sacrifices to build that business. They will have taken risks that kept them up at night. They will have gone through extraordinary periods of hardship during which they moved heaven and earth to avoid having to be fired to stay afloat.
These SMEs are the backbone of Britain, employing 16.3 million people and accounting for half of the UK economy. There is nothing “unearned” about the income they can provide their owners. But under this administration they are now discovering that all the so-called corporate party wants to do with their successful venture is tax it until the pips squeak.
Inexcusably, Hunt made only three casual references to SMEs in his statement on Thursday, all of which related to “concerning reports of abuse and fraud in R&D tax deductions.” Barely “sane” from the head of a treasury who squandered billions of hard-earned taxpayer cash by handing out dodgy Covid loans – and then reportedly refused to even let the National Crime Agency investigate.
And certainly only economic vice would think there’s something “unearned” about making a capital gain out of an investment you’ve taken a risk with, an asset you’ve cherished for years, or a company you’ve sold after selling it your given all the work. to live.
And it’s not just a matter of scrapping these fees – the direction of travel seems to be that they will cease to exist altogether at some point in the future. Those negatively affected by these changes might wonder why the government is not doing more to deal with the real “low earners”.
Since the coronavirus, working-age wealth has increased significantly, with millions of working-age people now claiming benefits.
While there is no doubt that a good portion are truly unable to work due to long-term health issues or caring for others, I am not sure that “an additional 600,000 people on universal credit are asking to meet with a work coach” is the most correct. way to deal with some of the shirkers.
And there are those who take advantage of our generous social security system, whatever the left would have you believe. Last week, a couple claiming £84,000 a year in benefits while woefully neglecting their seven children were sentenced to 12 years in prison.
Hunt may be eager to balance the books. But by doing it on the backs of this great nation’s strivers, risk takers and savers, he does not promote prosperity, but manages decline.
William Gladstone is often the politician most associated with “sound” finance, as he believes that in times of peace borrowing should not be relied upon to fund spending. But he balanced the books while at the same time remaining committed to a small state.
That’s why Hunt’s offering sounds hollow by comparison.