Esther McVey is a former Work and Pensions Secretary, and is MP for Tatton.
Jeremy Hunt’s Autumn Statement did nothing to carve out a new conservative era of growth, less state intervention and people holding on to their hard-earned money. Quite the reverse: it was Gordon Brown-esque in its devotion to a socialist paradise of tax and spend.
Wails of disappointment rang out across the country from people who expected a Conservative government elected with a majority of 80 to govern as Conservatives. Those who thought that, after the calamity of the covid lockdowns, we could get back to free enterprise were in for a rude awakening.
It wasn’t helped by the Chancellor’s statement being such a pendulum swing from the Liz Truss / Kwasi Kwarteng mini budget. People went from thinking they were getting their taxes cut to seeing them hiked.
The Autumn Statement was clearly an over-correction to that mini-budget. Going from one extreme to the other is hardly reassuring for people. A middle ground was needed: an acceptance of Conservative principles, with a costed plan and the accompanying narrative to reassure the markets.
Instead, Hunt delivered his statement with a doom and gloom that would have appropriate were the country on the brink of financial collapse. However, despite some serious challenges, things are not so dire that we had to have such excessive medicine.
For instance, the ten-year gilt yield – the interest rate the Government must pay on a new decade-long loan – was 3.14 per cent, whereas, even before the notorious mini-Budget in late September, that same yield was much higher at 3.49 per cent.
Britain is no more indebted than other comparable countries. Our national debt (albeit too high) stands at 97 per cent of GDP, whereas France, Canada and the US stands at 115 per cent, 116 per cent and 132 per cent respectively. Across the G7, only Germany has lower levels of government debt than the UK.
So when I stood up in the House of Commons at PMQs the day before the budget and said –
“Given that we have the highest burden of taxation in living memory, it is clear that the Government’s financial difficulties are caused by overspending and not due to undertakings. Does the Deputy Prime Minster therefore agree, if the government has got enough money to proceed with HS2 at any cost then it has sufficient money not to increase taxes, if however, it has so little money it has to increase taxes (which is the last thing for a conservative government to do) then it doesn’t have sufficient money for HS2?
“So can I gently urge the Deputy Prime Minister not to ask Conservative MPs to support any tax rises, unless and until, this unnecessary vanity project is scrapped, because I for one won’t support them.”
– it was to remind everyone there are better choices for our Conservative government than hiking up taxes.
In fact, given that unprecedented tax burden, any self-respecting Conservative would instinctively know that the answer is to spend less. Dropping HS2 – an out-of-date white elephant, costing north of £150 billion which (as Andrew Gilligan revealed on my show on GB News) the Ministers themselves know will deliver less economic benefit than the cost of it – would have been an ideal place to start. That would certainly have been more desirable than increasing taxes on hard-working families who are already feeling the severe pain of higher energy prices and increased mortgage payments.
If a Conservative government with a sizeable majority – in a time of financial pressure – won’t cut public expenditure to start living within our means, then when on earth will that ever happen?
The freezing of multiple tax thresholds – on income tax and VAT-registration – will drag millions of workers and firms into higher tax brackets. The Chancellor has kept the personal allowance at £12,570 and the 40pc higher rate threshold at £50,270 until 2028, while bringing down the additional 45pc higher tax rate threshold from £150,000 to £125,140.
The then highest rate of tax of 40 per cent was introduced in 1988 by Nigel Lawson, and was paid by only the highest earning 1.7 million workers. Now, those paying income tax at 40 per cent or more will soon number almost eight million – a fifth of the workforce. That isn’t concentrating on those with the broadest shoulders: it is simply hiking up taxes on middle earners in a way that even the most die-hard socialist would have been embarrassed to do.
If we are to grow as a nation – and pay for public services – we need to encourage entrepreneurs and support businesses not make life harder for them and kick them in the teeth.
The Government should focus on sorting out its own failings – for example, getting more people into work. There are 1.3 million job vacancies, yet we have many millions of people languishing on benefits and/or classed as ‘workless’.
On balance, it was right to raise benefits with inflation, to support those on the least who are unable to work. Yet at the same time, it is right to help others into work and expect more from people capable of working but not doing so in order to get the country moving and productive. That way, we will get more of the population paying taxes, rather than just going back to the same hard working group of grafters time after time to pay more and more.
This financial statement was a bad day for the Conservative Party and for those who believe in Conservative values. If these socialist measures are not reversed by the time of the general election then I fear those hard working Conservative voters will punish us in the same way that we have just punished them.