I thought the Chancellor, Rishi Sunak MP, gave a Prime Ministerial-type performance in delivering his first Budget.
You can tell there’s great chemistry between the PM and the Chancellor. A company can’t function if its CEO and the FD are not in step. So, why should it be any different in politics?
From the Chancellor’s perspective, the ending of the UK’s obligation to make substantial annual payments to the EU is extremely timely, considering recent events. The spending commitments announced that followed though, are eye-watering: £30bn in response to the coronavirus outbreak; a capital budget rising to £110bn a year and an overall £600bn to be spent on broadband, roads, rail, and housing by 2025.
Reducing interest rates to virtually zero (0.25% actually) will provide a stimulus which the Chancellor and the Governor of the Bank of England hope will counteract the impact of coronavirus. And providing 100 percent business rates relief this year to the retail, leisure and hospitality sectors will no doubt lead to a wider overhaul of the business rating system, which online shopping is forcing anyway. Good!
In previous blogs, I had warned about the potential abolition of Entrepreneur’s Relief. Well, it mostly occurred, with lifetime allowances falling from £10m to £1m. I doubt that will curb entrepreneurial spirit, but this cut will receive its share of complaints from those who didn’t see it coming.
The slogan that the Tories would ‘Get Brexit Done,’ morphed into ‘A Government That Gets Things Done’ and was repeated throughout the speech. The Chancellor has also started to deliver on his party’s manifesto commitment to Level up the United Kingdom, by promising to relocate 700 people from the Treasury and the departments of Business and Trade to the north. No time to waste, it seems.
It wouldn’t surprise me, though, if many of the south east’s 22,000 civil servants who are also to be relocated out of London, refuse to move, (as apparently 90 percent of Channel Five’s employees did when told their company’s HQ was moving to Leeds). This would mean more civil service job opportunities in the rest of the UK. But a downside would be the danger of making parts of the country very dependent on the public purse.
One can which was kicked down the road yet again, which still needs grasping, is how the government will tackle the huge under-spending on social care. It’s long overdue for reform. Hopefully, we will have some answers in the Autumn Statement.
All in all, if these budget commitments really do deliver the growth levels the Office for Budget Responsibility is forecasting, (as well as an estimated 500,000 additional jobs by 2025), Rishi Sunak has more than some justification to claim that ‘This Government Is Getting Things Done.’
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