A week is a long time in politics.
A quote attributed to Harold Wilson.
What about 12 months?
Well, its 12 months since Liz Truss bit the dust, after her disastrously received Growth Plan. She had still managed to throw Kwasi Kwarteng, one its key architects, under the bus by that time.
The Economist pointed out that, once the official mourning period for Elizabeth II was taken into account, Truss “had seven days in control. That is roughly the shelf-life of a lettuce.”
What is perhaps surprising is that there is an increasing land swell of those who think Liz might have been on to something (notwithstanding perhaps the chaos under which her proposals were announced).
It is perhaps not surprising that a degree of revisionism is being introduced here – bearing in mind the financial position of the UK over the last 12 months.
High inflation and no growth. Not a good cocktail.
But what was Mrs Truss proposing?
From a tax perspective, she criticised the existing fiscal framework, which relied on (perhaps the flawed) analysis and forecasts from the Office for Budget Responsibility (OBR).
These assessments often overlook the broader impacts of tax and spending changes, reducing policymaking to mere number-crunching.
However, because of behavioural changes, tax policy is like squeezing a giant balloon.
She warned against a vicious cycle of higher taxes, weak growth, increased welfare spending, deteriorating fiscal forecasts, and escalating taxes.
Notable specific announces included:
- Scrapping the then planned corporation tax rises
- Scrapping the additional rate of income tax
- Shifting the risk of IR35 back to the worker, rather than the engager
I don’t profess to know whether these were a good idea or not.
One thing that does occur to me, however, is the fact that these proposals unravelled as a result of “the markets”. Indeed, Truss had campaigned throughout the summer on a platform for growth.
I find it perplexing that the whole premise of Brexit was the ability to ‘take back control’ from faceless bureaucrats. However, last Sept, we find our entire government was brought down by “the Markets”.
Whoever, and wherever, they are.
Of course, the question is, if these had been introduced in a costed fashion (ironically, from the OBR!) whether the outcome would have been different?
Who knows.
Hopefully, after 12 months, Miss Truss is faring better than the lettuce.
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