Last Wednesday, the Chancellor of the Exchequer, Rishi Sunak, celebrated 28 days in Number 11, following Sajid Javid's resignation, by presenting his budget to the House. This budget delivered by the Richmond MP is arguably the most favourable budget since the days of Nigel Lawson standing at the dispatch box outlining his financial forecasts and spending plans. This budget sets out a clear Conservative agenda which is blue collar and proves why "the Conservative Party is the party of the workers" to quote the Second Lord of the Treasury.
What Does it Include?
One of the biggest announcements in the budget was the raise of the National Insurance threshold from £8,632 per annum to £9,500 p/a, meaning more people keep more of their money, and according to official Treasury figures, that's over £100 for the typical family, with the overall tax cut benefitting over 31 million people. This is a policy which has been advocated for years by groups like ourselves and our friends at the Adam Smith Institute and the Institute for Economic Affairs, it is crucial that free market policies are implemented by a Conservative Government. After all, the evidence is there that tax cuts and the raising of NI thresholds is beneficial to all with a positive multiplier effect in play; it was in 1986 when Mrs Thatcher, with her Chancellor Nigel Lawson, announced some of the most radical tax and benefit reforms, including that to National Insurance, these free market policies were a huge contributing factor to the 'Lawson Boom' in Britain. I'm personally thrilled that Mr Sunak has followed in the footsteps of his 1980s predecessors with market based policies and tax cuts which carry substance rather than the cautious tax policy of both George Osborne and Philip Hammond. The tax cuts that the Chancellor announced on Wednesday are cuts which benefit the everyday working man, the Conservative Party are really proving to be the Party of the people as Labour turn ever further to the metropolitan elite and fall further out of touch from the heartlands in the North East and Wales especially.
Now that we have finally left the European Union, as from 1st January 2021, the much criticised 'tampon tax' on all women's sanitary products will have VAT scrapped on them. This unfair and, to be rather blunt, stupid tax was imposed by the Commission as part of the EU's collective taxation policy on imports and exports of member states. Chancellor Sunak was very keen to get this in his Budget and will prove to not only be a popular policy, but also a sensible one; furthermore, the scrapping of VAT on these products is a progressive policy which has the interests of the lowest earners at heart.
The third point I would like to raise about the Budget is how, despite pressure from environmental groups to increase it, Rishi Sunak announced the continued freeze on fuel duty, this is a hugely important decision and one that we fully support and endorse. This day and age has seem to have produced a significant amount of climate alarmism and fake news, to quote President Trump, and yes we do have a problem but what is the point of introducing anti-market, regressive policies in Britain when 40pc of the world's population in India and China haven't signed up to such legislation and when we consider that they are the two greatest polluters in the world, it rather dwarfs the measures introduced by us. That's not to say that we cannot do our part in all of this, but raising fuel duty would be folly, as found out by President Macron with the gilet jaunts all across France. Carbon neutrality targets is, if I may say, a rather difficult and nonsensical measure, why put our economy under pressure and essentially punish the worse off by having extortionate fuel prices to the point they cannot heat their home efficiently or run a car which may be crucial to their everyday business.
Moving back on topic after that slight, but relevant, side track, the Government did announce plans to increase funding for greener public transport, including a significant investment into improving buses by investing in less polluting vehicles; an enormous investment in carbon capture technology, something I have been an advocate for, for a while now and touched on this in an earlier article with Alice Grant. Not only will investment in carbon capture techniques create a more sustainable environment but it will create thousands of jobs, an investment we truly support, as furthermore this will make Britain more competitive on an international scale for fuel and innovative technology. It has been said by myself as well as countless other that Brexit provides the opportunity to become a world leader in innovation and have a technological revolution, similar to the industrial revolution in the Victorian era, with green technology, which is a market based solution rather than pointless protectionist and interventionist one, artificial intelligence and innovative production methods to become a world leader in not just financial services but also green technology, manufacturing and much more.
And now as the Coronavirus situation develops, the Chancellor announced a package of over £330bn of government secured loans to businesses of all sizes, in hope that we can avoid such a recession like we saw in 2008. This follows Mr Sunak's announcement of a £30bn 'all they need' pledge to the NHS whilst dealing with this crisis, a crisis never seen in modern times on such a global scale. The aforementioned loans will be part of a bailout package for all industries, covering small/medium sized businesses and large firms, such as Virgin Atlantic, and it is paramount we take cautious but bold moves to prop up industries in this difficult time. Now this may not sound very free market, and you'd be right to think this policy is interventionist, however, we need to balance freedoms and liberty with safety and long run security; if we let the tourism industry, the airlines, the travel industry, the leisure industry and several more industries then we could see a scale of unemployment not seen since the Great Depression of the 1920s and 1930s. The Chancellor's policy of quantitative easing is a sensible measure in these uncertain times, it is a temporary short term financial blow to HM Treasury but in the long term, will be massively important in saving jobs and ensuring that businesses in the private sector can continue to operate effectively and efficiently.
As the PM outlined in his daily COVID-19 press conference on Thursday 19th March, this government is one that protects the interests of the workers and of business, Mr Johnson quoted "we urge firms to retain staff, stand by staff as we will stand by you". It is crucial that the private sector survives and it is up to the Government to ensure that the private sector can function after this unprecedented circumstance ends; otherwise, we will end up going back to the 1970s with nationalised industries and state run monopolies, as well as a few private monopolies which completely defies the point of a private sector. It is fortunate that we have a Conservative Government to deal with this crisis and a competent PM and Chancellor of the Exchequer who remain statesmanlike and continue following the advice of Sir Patrick Vallance and Prof. Chris Whitty.
In addition to the Budget, the independent Bank of England have announced on Thursday that interest rates will be cut to 0.1pc base rate, to match the Chancellor's quantitative easing package which will not only save jobs but keep the economy stable. It is of utmost importance that the British economy is prepared for this economic shock and the possible implications of one, this may include the administration of a large employer, especially considering global travel bans will affect the already volatile travel and tourism sector. This is why it is more than necessary to proceed with slashed base rates to cushion the blow of this major global pandemic, by doing this the Governor of the Bank of England, Andrew Bailey, has been proactive in reassuring investors in the British economy.
However, the Budget isn't all full of joys, there is still a huge, HS2 sized spending hole in the Chancellor's Spring statement – it is now essential that the Government proceed no further with this absolute disastrous and grossly unpopular policy. At a time where spending is on the rise and bailouts are needed, it feels rather foolish to proceed with such an over budget and ineffective project dreamt up by previous governments to combat the last financial crisis. It was a plan cooked up to create jobs and connect the North and London, yet over a decade on from when plans were put forward, we haven't even seen HS2 come anywhere near it's time scale but we have seen it spiral out of control in terms of cost. Big infrastructure projects are great when done by the private sector and quality and budgeting are at the heart of the assignment, especially when that project is completed on time, in budget and is needed and can be beneficial to millions. HS2 is neither of those, as for starters, it terminates at Manchester and Leeds, even then we won't see that until the autumn years of the next decade; furthermore, it shaves off minutes from journeys between London and Birmingham, this will only create a benefit for those who either live or work in London and subsequently runs the risk of making Birmingham a giant suburb of the capital.
In summary, I believe that it was a good Budget with some necessary spending such as that to prop up the NHS during these uncertain and unprecedented times, although I do believe our health service is in major need of reform, I believe the infrastructure upgrades such as the reopening of Beeching Cuts lines is a fantastic leap in the right direction for improving labour mobility and connectivity (something which HS2 fails to do) and I believe, in these remarkable and extraordinary times, that the Chancellor's further announcement of secured loans to SMBs and large corporations, who employ millions of British workers, are measured and necessary. I wouldn't usually advocate the sale of government bonds and we all know how badly QE can go if not carried out properly but the British Government has never defaulted on debt repayments and why not make use of the internationally low interest rates to invest in Britain ready for when we leave the EU? Why not supercharge our economy with unmatchable infrastructure and why not allow Britain to become the innovation capital of the world? Once we deal with COVID-19, which we will if the Government advice is taken seriously by all of us, then a prosperous, post Brexit Britain awaits for us. Our prosperity depends on how we get to grips with COVID-19, and I, for one, believe that this government is going to do us just fine.
