Saturday 25 November 2023

The Autumn Statement



Readers longer in the tooth may remember the question with which the Liberals taunted the two major parties way back in the 1950s:  “Which twin is the Tory and which as the expensive perm?”*  This came to mind after hearing Jeremy Hunt's presentation of his proposals for the UK's economic future and Rachel Reeves's response.

 The Chancellor, Jeremy Hunt, certainly has the nicer smile, and the better jokes.  In his introduction to his Autumn Statement he painted a bright and optimistic picture of a growing economy with falling public debt, inflation well under control and absolutely the place to be for ambitious, innovative and enterprising go-getters of all ages. 

After a deluge of tempting possibilities unleashed over the weekend to whet our appetites: income and inheritance tax cuts, just maybe lower than justified increases in pension and social security payments, his changes were quite modest and eminently sensible.

 Pensioners and those receiving Universal Credit are to get the full whack, 8.7% and 6.7% respectively, and the Minimum Wage is to rise by 9.8%. The Super Deduction (a 25% exemption for taxation for every £1m invested) is to become permanent, which will encourage investment,  and National Insurance Contributions (NICs) are to be abolished or reduced for the Self-employed, and reduced by not one but two percentage points for the bulk of the workforce. These are sensible proposals because NICs are a tax on employment which is a “good” and should be encouraged.

With similar skill  but a grimmer face the Shadow Chancellor Rachel Reeves painted a picture of a very different economy,  with a sky-high tax take, the slowest growth in the G7, out-performed by two-thirds of the OECD members and with the level of employment not yet back to pre-pandemic levels.  She had only one joke: that the world looked different at ground level  than it appeared to do from a helicopter.

 Presumably the comfortable among us will believe the Hunt version and the not- quite-managing the Reeves.

 Many of the most desperate will ignore both.

They have a point. 

Frankly this parliamentary pantomime is depressingly irrelevant to the real needs of the country.  With crumbling schools, a Health Service on its knees, a totally inadequate Care Service, local councils on the brink of bankruptcy, prisons overcrowded beyond the level of decency, outrageous rents for inadequate housing, an unprecedented backlog in our courts, pothole-pitted roads, and worst of all, according to the Institute of Government and Public Policy,   4.5m of our population, 22%, of which 4.3m are children,  enduring poverty or destitution.  

It beggars belief that our Government dares to talk in terms of tax cuts rather than rises to remedy the situation, and the only rise the Opposition dare mention is the taxation of non-Doms, presumably because it’s a convenient jibe  in the direction of the Sunak family.

The two largest parties are frightened that currently the proportion of the National Income or GDP the government takes in tax, the “tax take” (a phrase I prefer to  “tax burden” – I’d like to see a society in which paying taxes is regarded as a privilege, but maybe that’s over-optimistic) is the highest for 70 years. 

That is undoubtedly true. But it does not mean that the UK is over-taxed. Figures from the impartial OBR for 2021 (the most recent year available) show the UK’s percentage of GDP taken in tax is 33.5%.  This is 3.3% BELOW the G7 average, and 6.4% BELOW the average for the EU14 (similarly advanced developed countries).

There is therefore an urgent need for our politicians to have the courage to grasp the nettle and tell us that repairing our broken society and making it fit for the 21st Century will cost money and we need to be prepared to pay the taxes to pay for it.

 Two days ago on Yorkshire Bylines John Cole spelt out “An autumn statement that would actually transform Britain.“ His proposals  included a  genuinely progressive Income Tax right up to the highest levels, Wealth Taxes and Land Value Taxation.

 It is too much to expect that, in the fervour of the next 12 to 18 months of electioneering, such radical proposals will gain any traction, but the progressives among the parties could suggest  the setting up of a Royal Commission to study taxation and ways to make the present system, which, like Topsy, has “just growed” and is full of anomalies, could be made fairer, less distorting , and more effective.

 In the meantime, opposition Treasury Spokespersons could be looking carefully at the 30 or so measures identified  by Prof Richard Murphy by which the tax take could be increased without "rocking the boat" (see previous post on 3rd October) but be careful not to mention them before the election so as not to give the Tory press chance to pour their  poison on them.

*  A "Toni" was a home perm which, according to the advert, produced the same results as the  expensive perms obtainable in ladies' hairdressing salons.

This is an edited version of an article which appeared in Yorkshire Bylines on 23rd November



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