Not only did it prove Truss’ oft-repeated statement she delivers. Out the window, in 30 minutes, was thrown the seemingly inexorable march towards higher taxation and more regulation. We can finally hope that we will escape the causes of anemic economic growth that have dogged us. It also looks like we can trust Truss – she does what she says. That alone is cause for celebration.
Ironically, the biggest potential impact was Kwarteng’s first announcement capping household and business fuel bills.
I say ironic because it was more or less the same as we had from previous governments. Big spending to fix a problem the previous administration created through another big spending mistake: lockdowns. But there was no alternative. Without it, people would literally starve and freeze during the winter.
In this case, it should not cost as much as the first forecast. Gas and oil prices have fallen significantly from their highs and are expected to decline further as the global economy slows.
She overturned Boris Johnson’s manifesto smashing the employer’s National Insurance increase. To be fair to Mr Johnson, he had already mitigated that increase by raising the threshold at which National Insurance is levied – so his reduction was a real benefit to businesses and their employees. Put money in the pockets of those who work.
It made sense then for Kwarteng to tighten the conditions for claiming benefits.
There is a record 5.6 million people receiving benefits right now. It is currently possible to earn very close to the net average wage simply by maximizing claims under the universal credit system. For people to actually work, there has to be an incentive to do so. Another tick on Truss’ score sheet.
And absolutely right to reduce stamp duty. This is a tax on purchasing activity. This limits market liquidity.
When the stamp duty was increased, fewer properties were sold and paradoxically the tax caused prices to rise. Reducing it will significantly help get first-time buyers onto the property ladder and create a much more efficient market.
And thank goodness she ditched Mr. Sunak’s drive to raise corporate tax rates.
We need companies investing in the UK. You don’t get there by punching the private sector in the shins for two years with lockdowns and then taxing them on the way out.
Finally, there was something tangible in the upgrade: new investment areas. Details were missing from the announcement, but the principle of tax benefits for settling in disadvantaged areas is a significant step in the right direction.
The media is full of the reduction of the highest personal tax rate from 45% to 40% and the removal of caps on bankers’ bonuses.
But critics of these policies are only indulging in the politics of envy.
The fact remains that we need wealthy, entrepreneurially motivated people to settle in the UK. They will only do this if the environment is favorable. We need lower personal tax rates than the continent and the United States.
The basic tax rate was also reduced by one percent. This will materially help all those who work.
With energy bills capped, no one can legitimately accuse the government of looking after the rich at the expense of the poor.
There is still a long way to go before the UK is out of the woods of its current economic difficulties.
At the top of the list, becoming energy independent. But Friday’s announcements finally signal a sensible and trustworthy government.