Make no mistake, the contents of this financial statement are hitting the ‘just about managing’ middle classes devastatingly hard. No jam in sight anywhere for the JAMs… By freezing the basic and higher rate income tax thresholds until 2028, the Treasury hopes to raise £6 billion, as this stealth tax continues to drag millions into higher tax rates as inflation runs rife. If you are a dual-earning family with children, it is easy to see why this will truly hit your spending power. Earnings hammered on both sides while childcare costs soar and mortgages rise to five per cent, unlikely to fall again. Inflation hitting every bill and the energy cap rising by £500.
With all of us feeling a lot poorer over the next 18 months, a win in the next general election for the Tories still feels unlikely, as voters will be looking for someone to blame. Their big hope — and ours, economically — is that yesterday they finally began restoring fiscal credibility, economic stability and controlling inflation. There were few other places Rishi Sunak could raid, other than Britain’s largest cohort of taxpayers. At least the majority of spending cuts were shunted to be announced after the next election in the hope that if our economy recovers, they will never be enacted.
The Chancellor played a bad hand as well as he could, and he should be applauded for it. He had to dig us out of a very big hole, protect society’s most vulnerable, aim to politically box Labour in to sticking to its tax and cut plans, and shoot down a few opposition foxes — namely increasing spending on the NHS and education with a £9.4 billion funding surge.
Many Britons last night, nevertheless, needed a stiff drink. Overall, the news was dismal: the highest tax levels since the war and living standards falling by seven per cent over the next two years. I’m not going to continue to focus on the financial pain, as that will have been analysed heavily by the time you read this, and it is Friday — we need some good cheer.
Instead, let’s consider the slithers of hope on the horizon. As I argued in this column last week, once Hunt and Sunak delivered the fiscal body blows, they had to set out a path for Britain to climb out of a decade of decline. Labour’s strongest attack line, as icily pinpointed by Rachel Reeves yesterday, remains “12 years of Tory rule, and look at the state we are in”.
Growth has been anaemic for a decade. We are the only G7 country to have not recovered from Covid. And the elephant in the room on that front is Brexit, because years of political and economic instability has hit investment from private-sector business and trading is down. Everyone suffered from the war in Ukraine and the pandemic, but noticeably we are the European outlier on recovery. It’s no surprise that Hunt only made one mention of the B word — and it was 45 minutes into his speech; Reeves didn’t mention it at all. Yesterday buried Trussonomics, it also demonstrated Brexit is no longer a Tory vote winner — 56 per cent of Britons now wish we hadn’t gone there.
What we did see was a renewed drive on productivity and supply side reforms. With an emphasis on education and skills training, investment in R&D, continued infrastructure spending, and levelling-up back on the agenda with the core of the Northern Powerhouse Rail project maintained, and HS2 going ahead. There was also further money for increased devolution for Scotland, Wales and Northern Ireland, and the unwise manifesto pledge to set immigration to mere tens of thousands was also dropped. And Hunt rightly described their ambition to make us the next iteration of Silicon Valley, with an emphasis on boosting our science and technology sectors.
Within these lay threads of Sunak’s core thinking. Search out his February 2022 Mais lecture if you want to understand his vision for a future economy built on a “culture of enterprise”. It is detailed, smart, compassionate and sensible. And he whittles it down to three tentpoles: investing in and supporting people, encouraging capital investment and focusing on innovation and ideas. He eloquently describes the benefits and drawbacks of relying too much on the power of markets and how Government must create the right conditions for us to flourish.
We will hear more on these themes over the coming months. But will it be enough to win over a poorer electorate? Who knows. We already gave them 12 years.
I fear a new poll will boost Matt Hancock’s ego even further
Among the measures announced yesterday, Hunt also handed devolution to Suffolk, Norfolk and Cornwall. Matt Hancock for Suffolk’s new mayor, anyone? He won’t have seen that opportunity as he swung off into the Australian jungle, but then I didn’t consider I would ever read that Hancock is considered by almost half of Daily Mail readers as “an unlikely heartthrob” after his “manly” endeavours. Dear God. The title of Suffolk mayor won’t be enough once Matt reads that — we might see him on billboards foisting who knows how many household appliances upon us if he is middle England’s new pin-up.
We should honour Iran’s bold protesters
England’s World Cup campaign begins on Monday against Iran. This match is one we really should boycott.
There have been protests across Iran over these past few weeks after Mahsa Amini, a 22-year-old Kurdish woman, fell into a coma after being detained and beaten by the morality police in Tehran and then died.
The uprisings have come at huge personal risk to these women, with 15,000 protesters detained, after agitating around the slogan “Women, life, freedom”. This week Iran passed a law enabling these female protesters to be sentenced to death. It is unlikely that 15,000 will be executed but any number is too high when they have only fought for their basic freedoms.
So don’t cheer if England win on Monday, or even watch — just remember those brave women.
