If it wasn’t already clear, it is now: the Chancellor is in total command of economic policy. Jeremy Hunt’s television address yesterday morning followed by his statement to the House of Commons that afternoon laid bare the near-total repudiation of Liz Truss’s plan for growth.
The markets reacted positively, both to the specific announcements on tax and spend but also to the wider sense that fiscal reality had returned to Downing Street. While gilt yields remain elevated, they have fallen from their recent peak. However, finding ‘efficiencies’ — Treasury-speak for cuts — represents a mammoth task.
From the uprating of benefits and the triple lock on pensions to everyday spending on nurses and teachers, cutting public services or benefits will not be easy. Nor will explaining to the Defence Secretary, Ben Wallace, that the commitment to spend three per cent of GDP on defence may also be jettisoned.
Indeed, Hunt’s speech coincided with a report from the Institute for Government think-tank, which essentially said there is little fat left to cut in public services, which remain in a far weaker state than in 2010, before the first round of austerity.
Making public-spending reductions when it is a manifesto commitment or when the Government has plenty of political capital in the bank is challenging enough. To do so without either, as this Chancellor will attempt to do, is politics on difficult mode.
Hunt has stopped the bleeding. But the battles ahead, in Parliament and in the country, are only just beginning.
VAT blow to tourism
The decision to reverse VAT-free shopping for foreign tourists is a hammer blow for London’s retail districts in the run-up to Christmas and beyond.
The perk, which allows overseas visitors to claim back 20 per cent on purchases in the UK, was originally axed by Rishi Sunak before being reversed by Kwasi Kwarteng. Jeremy Hunt overturned that decision yesterday.
This leaves the UK as one of the only major economies not to have a VAT-free shopping scheme, rendering us globally uncompetitive. High-spending visitors — relied upon not only by retailers but also hospitality and leisure — have plenty of choice when it comes to where to spend their money. Paris is only a train journey away.
More broadly, a new policy for every chancellor is not a sensible to way to run an economy. How can businesses plan when they know the latest in a revolving door of chancellors can simply reverse the policy overnight?
Food for thought
We’ve all been there. Your food arrives and it fails to match expectations. Do you send it back? James Corden appears to have no such qualms.
The manager of Balthazar in New York has taken to Instagram to denounce Corden as “hugely gifted” but a “tiny cretin of a man” and “the most abusive customer to my Balthazar servers since the restaurant opened 25 years ago,” for multiple outbursts at his staff. Corden was subsequently barred.
