Predictions today’s fiscal event could be biggest package of tax cuts since 1988
Simon Clarke, the new levelling up secretary, has been doing interviews this morning ahead of the mini-budget. Here are some of the points he has been making.
Clarke said it was “nonsense” to describe Liz Truss’s policies as trickle-down economics. He told Sky News:
This whole term trickle-down is such a nonsense and is itself a centre-left mischaracterisation of what this government is all about. We need to grow the economy because a more successful economy is good for everybody.
He said the new investment zones planned by the government would only be set up with local consent. He said:
These zones will only happen where there is local consent and we’ve been very clear about that in the discussions we’ve been having with local authorities and mayors over recent days …
They will only happen where there is a local appetite for them to occur. There will be no top-down imposition of these zones.
He insisted that the tax cuts being announced today would eventually be funded by the tax revenue produced by the growth the tax cuts would stimulate. Asked who would pay, he said:
The prescription here is that we get a better underlying growth that unleashes the tax receipts that will allow us to both grow the economy and also to get on top of that debt.
Liz Truss wants the British public to believe that she represents change. She and Kwasi Kwarteng even want you to believe they have a new plan. But what they are proposing is just another zigzag on a path of policy failure tracking across the past 12 years of the economy.
Just like Boris Johnson before her, the new prime minister and the chancellor are long-serving cabinet ministers. They are desperate to present themselves as agents of change, so must decry the growth plans they once supported — there have been six since the Conservatives took power in 2010, each announced with great fanfare but with little impact. Instead, the one constant over a decade of Tory government is low growth.
Of course we need a competitive regime, but UK levels are already below France and Germany and would remain so at the planned 25 per cent — yet UK corporate investment is still the lowest in the G7. Businesses have other priorities: in the most recent ONS survey only 2 per cent cited tax as their main concern.
Truss says she will deprioritise redistribution. But research by the IMF has shown that higher income inequality is associated with lower and more fragile growth. It is obvious why. Concentrating income among fewer people — those least likely to spend it and drive the economy forwards — undermines workers’ health and education, the crucial components of a productive workforce.
