Extinction Rebellion have once again spoken truth to power and helped save the planet today… by throwing black paint over the offices of the Institute of Economic Affairs.
In a coordinated attack alongside other XR spin-off groups, ‘Writers Rebel’ – the new kids on the block, not to be confused with Just Stop Oil, Doctors for XR, or XR Cymru – declared the IEA should “cut the ties to fossil fuels”, and said the think tank had been targeted because it “has huge influence on politicians”.
They pulled the same stunt outside BEIS (again), as well as the offices of JP Morgan, BP and others. Pouring black paint on a black door. If that doesn’t change the world, nothing will…
With Hunt shredding almost the entire mini-Budget, the free marketeer wonks have released horrified statements as the Chancellor bins almost all the tax cuts Liz promised for the last four months. The only silver lining is that the energy support will now be means-tested. Other than that, it’s brutal…
The TaxPayers’ Alliance didn’t mince its words. Chief Executive John O’Connell put out a withering putdown:
“The light at the end of the economic tunnel has now been extinguished by this chancellor. Millions of hard-hit households who were desperate for an income tax cut are now facing many more months of financial misery. To get a grip on this crisis, the government needs to lay out a serious plan for necessary spending reductions, including means-testing energy support measures.”
The Institute of Economic Affairs is also critical of the scale of the U-turn, although the tweaks to the energy package were welcomed. Director-General Mark Littlewood said:
“The Energy Price Guarantee was always an unnecessarily expensive programme, representing the single biggest welfare scheme in British history. As many of us said at the time, it is absurd to subsidise wealthy households to keep heating their swimming pools. A more targeted approach from next year is warmly welcome and will save significant money… The risk of higher taxes is that they put Britain back on the path towards a high tax, low-growth economy. As Goldman Sachs warned yesterday, higher corporate tax rates could deepen any forthcoming recession and ultimately damage the government’s fiscal position.”
Likewise, the Adam Smith Institute encouraged No.11 to at least stay focused on supply-side reforms. Head of Communications Emily Fielder added:
“The Chancellor has said that there will be difficult decisions on tax and spend in the coming years as we move towards a more secure financial footing. But there is plenty this Government can do which doesn’t involve changing tax thresholds or spending pledges ––moving forward with supply-side regulatory reforms would boost economic growth and activity at a time when it is desperately needed. The decision to properly target the energy price guarantee from April is welcome…”
Hopefully Prime Minister Jeremy Hunt is listening…
Using a dynamic tax model* the Taxpayer’s Alliance (TPA) finds the fiscal measures announced by Kwasi Kwarteng today will boost output by £99 billion over the next 10 years. This would see the Treasury recuperate 75% of forgone revenue. The most effective budget bolstering measure is the scrapping of the rise in corporation tax, which accounts for over half of the prospective gains. The mini-budget’s benefits also extend to average weekly earnings, which are set to rise by £22. The Growth Plan certainly lives up to its name…
Duncan Simpson, chief economist at the TPA adds:
“The chancellor has been true to his word, providing a package that will have a significant impact on long run economic growth… The package today represents a bold first step towards the liberalising policies which will be required to meet the government’s growth aspirations.”
A great start…
*The TPA’s dynamic tax model was built in collaboration with the consultants Europe Economics, the firm where Matt Sinclair worked before moving to Downing Street to become the PM’s chief economic adviser. Full briefing note can be downloaded here.
On Saturday, Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy wrote to the Competition and Markets Authority (CMA) requesting that it
“conduct an urgent review of competition in the fuel market, and to provide advice to the UK Government on steps that might be taken to improve outcomes for consumers across the UK.”
Guido can save Kwasi and the CMA a lot of effort. No inquiry is needed. Government taxes account for more than ten times* as much of the cost of fuel than retailer margins. If you want to improve outcomes for consumers, cut fuel taxes.
Andy Mayer, Energy wonk at the Institute of Economic Affairs, predicts:
“The inquiry will also find nothing new. There are over 8,000 fuel stations in Britain. It is self-evidently a competitive market, and could be more so by removing restrictions to competition, like motorway service licensing. The answer to high prices today is lower fuel duty. The answer to local differences is to build a rival, not more regulation. And the answer to lower long-term prices is more domestic production, not windfall taxes, banning onshore drilling, and dependency on imports.”
The failure to frack, along with high fossil fuel extraction taxes, add further hidden costs to wholesale barrel prices, which are then passed on to consumers at the pump. All due to the government…
*Retail fuel profits account for between the 2-4% (RAC) of each tank. Whereas, 45%-46% are taxes and 7-10% from the biofuel mandate.
On the panel with Mark Littlewood tonight:
On the agenda:
On tonight’s episode, host and IEA Director General Mark Littlewood will be joined by GB News Presenter Tom Harwood, film director Martin Durkin, CapX Editor John Ashmore and the IEA’s Victora Hewson to discuss:
Tune in from 6 pm here or on YouTube!