More evidence that the Tories are getting their act together or at least their leadership is. This was a solid, sometimes compassionate budget with well trailed measures on devolution, pensions, energy costs, and childcare.
In particular, it is a laudable aim to get more people into the workforce as the over 50s go awol. There are many deeply unhelpful longer-term consequences of the Covid pandemic, and this is one of them. It undermines productivity, tax revenues and creates labour shortages, which ultimately are inflationary. Let alone the consideration of the health benefits of staying active…
Tories back on form…
However, longer-term problems remain unaddressed as a General Election looms, and a now competent Tory administration runs out of time. There was an interesting article in this weekend’s Sunday Times about the lamentable management by Whitehall of the nation’s major infrastructure projects. Examples of poor stewardship, notably HS2 and an NHS IT system unfit for purpose, are manifest. Apparently, there are 235 major projects costing £678 billion underway, and only 24 are on time and on budget. Yet there are no solutions to improving any of this, which is a major additional barrier to sorting our productivity problem.
And then there is the issue of dealing with the UK’s finances for the long-term. We failed to invest when interest rates were low and now have no money. Conventional Treasury orthodoxy (Truss actually had a fair point here) dominates. We also still hand too many tax breaks to the rich.
It is hugely sensible to lift the cap on pensions saving to encourage more older participants into the workforce, but why hand out tax breaks at the highest marginal tax rates? Even George Osborne wanted to do something on this. Then, the triple lock on old age pensions, which, generationally, deflects an efficient allocation of scarce capital.
Meanwhile, a 6 per cent rise in corporation tax will damage small businesses, particularly service sector ones with little need for capital expenditure.
Tory voter bias continues to rule but this country requires radical, more centrist solutions to fully rejuvenate the economy after the self-inflicted wounds of Brexit and an erratic fiscal policy. It will be the next government’s job, and today, unfortunately for Sunak, it probably won’t be Tory.
Inside Right Politics 