Ministers ditched plans to scrap the £50 note this weekend and revealed that a brand new shiny redesigned £50 note will be introduced in 2020. There are plans to hold a competition to design the new note, and with only one woman apart from the Queen featured on any of the new polymer notes so far, Guido has made a helpful suggestion in the interests of gender equality. Add your voice to the calls to put the UK’s greatest Prime Minister on the new note by signing the petition here…
This line in Henry Newman’s piece for ConHome this morning should be setting off alarm bells among Tory MPs:
“Recent interventions by companies including Airbus and BMW no doubt reflect serious concerns. They should not be glibly dismissed. But at the same time it’s shocking to hear from a City contact that the Treasury itself – including Government advisers – is actively persuading businesses to go public with their concerns. It’s truly topsy-turvy politics when 11 Downing Street is trying to ramp up criticism of Government policy rather than assuage concerns. All of this has consequences: for economic confidence but also for the strength of the Government in negotiations.”
If Treasury advisers are actively encouraging companies like Airbus to come out against no deal, that is clearly in breach of government policy – which still argues no deal is better than a bad deal. It also undermines the UK’s negotiating position, which relies on the ability to walk away. Who in the Treasury is working against the government’s public position? Has Hammond sanctioned it? Brexiteer Tory MPs should be kicking off about this…
The range of forecasts from HM Treasury before the referendum was that in the fiscal year 2017-18 unemployment following a vote to leave the EU would rise between 520,000 and 820,000. Remember also George Osborne claimed, because business investment would dry up, “the effect of this would start to be felt immediately”. The CBI got PriceWaterhouse to calculate a million job losses…
It hasn’t quite worked out like that. In fact the exact opposite has happened. According to figures from the Labour Force Survey, the largest household survey in the UK released today:
- For the 3 months to January 2018, there were 32.25 million people working in the UK – that is 402,000 more than for a year earlier. Looking in more detail, there were 377,000 more people working full-time and 25,000 more people working part-time.
- For the 3 months to January 2018, 21.2% of people aged from 16 to 64 were neither in paid work nor looking for paid work. This is known as the “economic inactivity rate” and the latest figure is the equal lowest since records began in 1971.
- UK wages are rising at the fastest rate since 2015.
Remainers who predicted doom and gloom have been so comprehensively proved wrong it is astounding that people think they have any credibility left. Foreign direct investment is strong, the stock market is strong, manufacturing is stronger, exports are booming, employment is booming, wages are rising and we’re importing Europe’s unemployed youth to fill vacancies. More people in work than ever before with the lowest youth unemployment since 1971. This is exactly the opposite of what the Treasury forecast. Astounding.
The new Treasury-led Brexit forecasts have to be read in the context of their record at predicting what would happen in the immediate aftermath of a Leave vote.
The HMT prediction for GDP 3 months after the referendum was that “the UK economy would fall into recession” and contract up to -1%. It grew +0.5% in this period.
The Treasury told us: “The analysis shows that immediately following a vote to leave the EU, the economy would be pushed into a recession, with four quarters of negative growth.” The reality has been positive growth every single quarter since.
HMT forecast that in the two years following a Leave vote GDP would fall between -3% and -6%. GDP grew by 1.9% in 2016 and 1.8% in 2017, with better than expected growth in the final quarter. There is now no recession forecast.
On unemployment, they infamously said it would rise by between 500,000 and 820,000 in the immediate aftermath of the referendum. Unemployment fell again last week to a four-decade low.
And the Treasury said government borrowing would rise by up to £39 billion immediately after the vote. Instead borrowing for the financial year to date is down 12% on the same period last year. That’s the lowest year-to-date total since 2007.
Why would anyone believe the people who predicted this nonsense ever again?
The Treasury swiftly deleted a tweet appealing for ideas about how to make business “more productive” when it didn’t like Guido’s answer: to simplify national insurance and income tax into a single unified income tax. Social media mandarins acted when they realised Guido’s reply was on its way to going viral. Tweeters were quick to welcome it:
Absolutely. Would slash accountants bills for sole traders and small firms.
My #1 reform.
— Charles Orton-Jones (@CharlesOJ) 1 August 2017
It’ll never happen, NI is the Govt con that lets them return to the trough a second time
— Phil Stevenson (@onlyonestevo) August 1, 2017
This is what @PhilipHammondUK should be doing instead of meddling in Brexit. Payroll & corporate tax simplification to boost competitiveness
— Adhaereo Virtuti (@ChristianCkb21) August 1, 2017
Incidentally on an average £27,000 salary your payslip would show a pay rise to some £31,000, with £9,000 deducted in merged tax, a marginal rate of some 45% on taxed income. Government is all for hearing ideas for increased productivity, except when they show how overtaxed you are…
Philip Hammond’s brutal Budget attack on Britain’s army of hardworking self-employed is going down like a cup of cold sick in the wonk world.
Centre for Policy Studies:
“Changes around national insurance and the tax-free dividend allowance will have an impact on UK competitiveness.”
Institute of Economic Affairs:
“It is right that the self-employed and employed should pay similar National Insurance Contributions – the Government should not set tax rates that artificially favour one form of employment over another. However, it would have been better to level the playing field by cutting NICs for the employed rather than raising those for self-employed. NICs are a tax on jobs and wages and reducing their burden would help many lower-income households.”
“This should be done by cutting rates rather than hiking taxes on entrepreneurs.”
The Association of Independent Professionals and the Self-Employed:
“If you are one of the hardworking self-employed people who face a significant increase on your tax bill, you might feel that the Chancellor has it in for you. When you look at the additional support offered for business rates it appears as if the Chancellor is supporting SMEs by hitting entrepreneurs and the smallest of businesses.
“Adding in the reduction in Dividend Tax allowance, whether you work as a sole trader or through limited company you will be facing higher bills. The Chancellor shouldn’t forget that growth in self-employment has driven our labour market in recent years and punitive rises in tax will make many people have second thoughts about striking out on their own.”
Centre for Economics and Business Research:
“People who work for themselves and who set up and run companies should be encouraged. Instead the Chancellor has singled this group out for a £1,425m tax hike on the misleading ground that they pay less tax, ignoring the risks they take. Disdain to this group is a typical Treasury attitude. Many of the self employed are IT consultants and are especially critical to the economy.”
Institute of Directors:
“The ‘nothing to see here’ approach adopted by the Chancellor will only fly for so long. The Chancellor’s jokes may have been funnier than anybody expected, but it’ll be business leaders’ resilience that’ll be needed to ensure we’re still smiling in November.”
And just wait until you see tomorrow’s papers…
A White Van Tax, a tax on strivers – safe to say that was not a pre-election Budget…