He seems a sensible chap, and a committed tax-cutter. He was given the worst job in government and chose to stick with it, and now has the most thankless. Jeremy Hunt has prayers riding on his shoulders.
Ours is an age of instant myths. It is commonly understood that the financial markets fell when tax cuts were announced, but that is untrue: the stock market rose. Then however the bond markets factored in that no spending cuts were announced, that the OBR had been muzzled, and interest rates were high, leaving government finance unaffordable – that was the crash.
A constant theme of Conservative campaigning is that the nation must live within its means – which is a euphemism: they mean the government must leave within its means. (‘The nation’ is us, poor mugs, our earnings hollowed out by taxes from before and behind, and we know we have to live within our means or the family starves.) Yet as soon as a PM gets into office, the gold before their eyes sends sober pronouncement out of the window and cash is scattered like a drunk man with a stolen wallet. This last fortnight has been a shock back to reality in Downing Street.
Not in the country though: here unreality is boosted. The myth of the tax-cut crash has been born, and careful management is needed to convince voters that their pockets need not be fleeced. At the moment the topsy-turvy understanding has spread that low taxes make you poorer.
The market rose though, for a while. Tax cuts are indeed a necessity for growth, and growth is necessary to get out of the mess caused by the lockdown and deepened by the Ukrainian War.
Deep cuts are needed. Government spending cannot be on an upward ratchet. Liz Truss would not admit it: she thought growth would replace the loss from the tax cuts; and it will eventually, but the high interest rates and higher debt will swallow it first. The collective minds of the bond markets were right: government borrowing is unaffordable and so the debt must come down – not just the deficit month by month but the capital amount of debt. That needs such deep cuts that the deficit is eliminated.
A first discipline should be accepted: capital sales go to capital repayment. When Channel 4 is sold, those proceeds cannot just disappear into the Treasury to be splurged on a pet project, and when redundant public land is sold, likewise, to repay national debt, and reduce the beggaring interest payments.
Every government promises to ‘cut waste’ and efforts are petty, possibly because of the way budgets are worded. More granular examination is required. There is political capital in spending on ‘health’ and on ‘defence’, but how much actual goes on healthcare or soldiery? When over a billion pounds is sent to a few local authorities to do research on ‘health inequalities’, that is accounted as health spending, but it does no good, beyond justifying a budget.
It is not enough to set a budget and throw money without looking at every item. It is better for billions to be cut from a nominal health budget or a nominal defence budget if the cuts are to waste and the actual, effective spending remains. Let MPs then earn their keep by cross-questioning all this spending and deleting the nonsense, the unnecessary and the postponable.
Liz Truss would not admit it, but Jeremy Hunt has done. The word “cuts” is toxic in political debate according to television journalists. It should not be. If spending has gone too high, it can come down, and should do. The growth agenda must continue.