I cannot remember a budget which has cheered me. All that promise that tax cuts are on the way, so that we can keep more of what we earn to feed and clothe our families, and each year it is a promise of next year.
We had such hopes of Rishi Sunak as a sound money man, but money still flows from the Treasury, from our pockets, like water. A wise young MP once observed that however high taxes rise, the actual income does not, and so the better course is to reduce spending to 35% of GDP (which is still too much in my opinion) so the economy is not stifled. That was Rishi Sunak.
At the moment the trillions of incontinent spending and the promises of fiscal responsibility are very hard to reconcile. There is a hole through this budget.
Hang on though: the promise of fiscal responsibility is still there somewhere, and borrowing is promised to increase one year only to fall back in futures years, if we can trust to that. The biggest largesse looks to be linked to the current Wuhan virus epidemic, and if that subsides, as it must at some point, will that mean less spent? Or will it mean more temptation to spend the money somewhere else?
It is easy to see a saving and spend the money twice. If there is a windfall, it is best to spend it redeeming capital debt.
After the disease, the next project is “infrastructure”. That makes more sense than spaffing it up the wall on things that come and go, because connections by road, rail or wire can save money for business and enable a nudge upward in profits, and hence tax receipts. However it pushes the expectation of spending up for future years – if it is done, there must be a way to ensure it is not repeated. The ratchet must be broken.
Very well then: roads and rail. A plea here: spend it in the North. The South-East is so packed with roads and railways that travel is hindered only by its very popularity. The overpopularity of the Home Counties, which leads to the swallowing up of precious Green Belt, is encouraged by the excellent transport infrastructure. Put it in the North then, and let those cities thrive too. Then when it is done, stop spending.
It could work, if the splurge is balanced by a withdrawal of spending elsewhere.
Maybe Dominic Cummings is right that there are streets with trillion pound notes lying all over the pavement. (If he can say where they are, I will gladly go and clear the litter up for him.) Certainly it would be hard for government to be done any less efficiently than it is at present, but can the waste be tackled, the pointless bureaucrats hurled out on their ears and money saved? No one has achieved it so far though every PM says he will. If it could be done, how do we stop Whitehall taking the savings and spending all the money again?
Tax is at a crippling level: no wonder the economy is not predicted to do as well as it should. (In Africa there is double-digit growth.) Fiscally damaging taxes like inheritance tax should be removed at once: it only steals capital that should be moving in the economy and generating profit which will bring more tax revenue in than the dead tax does, but Whitehall fears the short-term hit.
Big spending budgets are ultimately a dead-end. Keeping taxes high retards the economy and reduces the actual tax-take, and the Opposition will never accept that it is enough. If these new roads were paved in silver, Labour would demand that they be paved in gold. There is no way to win a spending competition, but the taxpayer always loses.
Maybe the Autumn will see a change as new figures are published and China’s latest gift the to the world subsides. For now though the budget is met with weary resignation. Maybe next year.