Britain faces a series of truly invidious problems. In order of salience: our debt, our spending addiction (not unrelated), our totally anaemic growth (ditto), our shrinking birth rates and our weakness in the face of international threats in the form of Russia, China and Islamism.
Given these, you might think that a Chancellor with an enormous majority, and years left until an election, might seek to tackle some of these problems. Instead, they were almost all shirked in favour of party management. Taxpayers of today and tomorrow have been soaked to buy votes from the most economically illiterate corpus of MPs ever to (dis)grace Parliament.
A truly noble Budget would have cut the corpulent welfare bill and dared the Labour backbenchers to rise up. It would have addressed birth rates with more thought than lifting the cap that has ensured parents live within their means. It would have been honest with the public about the ruinous scale of our debt. It would have found ways to further increase defence and intelligence spending, because Britain has worse enemies than those the Treasury thinks we can afford to face.
But above all, and in order to deal with those other issues, a Budget that meets this moment would have been one bursting with pro-growth policies. Instead, there was a quietly devastating footnote from the Economic and Fiscal Outlook, the official economic and fiscal forecast published by the Office for Budget Responsibility.
It summed up the Budget’s pathetic lack of supply side reforms:
We will only explicitly adjust the supply side of our economy forecast for policies or packages of policies that increase or decrease potential output by at least 0.1 per cent by the fifth year. No policies in this Budget met this threshold.
This is much more damaging than any leak, however embarrassing that was. I wrote in CapX in my last column about the misunderstanding that leftists have about wealth. They have a similar misunderstanding about growth. There is an assumption that growth is a misnomer, and that any increase in wealth in one area must be extractive and zero-sum, coming at the expense of someone else.
The overused analogy of slices of a pie is a very poor one, for as the pastry is set and the baking begun, the amount of piece is literally circumscribed. One cannot therefore literally grow the size of the pie. Perhaps this is why lefties cannot understand growth.
Much better perhaps if we used an analogy of growing foods without a fixed circumference. Growing the size of the lasagne or paella (we can’t say shepherd’s pie of growth because Reeves would try to tax it) may sound absurd, but not as absurd as this Budget’s total inability to focus on anything that could encourage growth.
What would such an agenda look like? It would reduce state spending of course, and CapX readers will know that welfare, the triple lock and government headcount are some big-ticket items. It would cut taxes too, with proper dynamic modelling shared with the City bond traders and the like beforehand to show the positive effects of it. And there would be supply side reforms galore; because at this stage, with investment drying up and talent running away, why not throw the kitchen sink at it?
There has been nothing of note on the big areas, like energy or housing policy. There has been no acknowledgment of the worth of the wealth creators. There has not even yet been any costing of upcoming legislation that will make the situation even worse. Centre for Policy Studies fellow Tim Dier has spotted that the Budget has not yet made any assessment of more of the painful and damaging Employment Rights Bill. I’m not sure how easily the OBR could quantify the absurd right for trades unions to stampede over all but the most minuscule businesses; but we know that it will hurt.
All this means that there has been no strategic plan for this Budget, no understanding of how late the hour is and no plan to grow the size of the pie, I mean lasagne, which means that those who don’t flee Britain in the next 12 months will inevitably have to go through more pain when we repeat this farce again next year.
