Today at an event hosted by the Resolution Foundation, Hunt blamed Brexit for more than half a decade of political instability, which led to economic instability. Blaming Brexit is supposedly against the government’s position and it’s unlikely Sunak would agree with his Chancellor on this. It’s a major u-turn on Hunt’s previous stance earlier this year that Brexit is “not a drag on the economy“. Shifting the blame…
Speaking at the Q&A, Hunt said:
“We had Brexit. That led to a hung parliament; that led to a politically incredibly challenging time,” he said. “British people had voted to leave the EU but parliament couldn’t agree how; and ultimately we had the fall of Theresa May’s government. And then we had the pandemic.”
He skipped the part where Boris Johnson won a massive majority in 2019, arguably creating political stability, in what many dubbed the “Brexit election” due to voters wanting to get Brexit done. Still not over being runner up in the leadership contest…?
Starmer has outlined Labour’s so-called “securonomics” at an event hosted by the Resolution Foundation today, vowing to be “ruthless when it comes to spending every pound wisely”, whilst promising to not “turn on the spending taps”. However, during his long speech about what Labour would do with the economy, there was no mention of Labour’s £28 billion a year black hole…
Until he was pushed in the Q&A, Starmer didn’t discuss the flagship policy, perhaps because multiple people on the left and right have said the “sums don’t add up“. Even when asked what the difference was between Hunt and his economic policies, he merely pointed to the past 13 years of Tory government, avoiding the obvious difference that is Labour’s plan to borrow the £28 billion a year. Squirming in his seat, Starmer told the audience that Labour will only ramp up to the figure in the second half of parliament if it is in line with their “fiscal rules“. Looks like the borrowing taps won’t be turned off if Labour enters Downing Street…
Fresh calls for the Chancellor to cut taxes in his upcoming Autumn statement have resurfaced, as according to Resolution Foundation’s analysis of new economic data, Hunt’s so-called “fiscal headroom” is twice as much as it was back in Spring. The amount of money the Treasury can spend whilst hitting the target of getting debt falling within five years was expected to be £6.5 billion. However, the new figure is estimated to be £13 billion. This means Hunt has more taxpayer money to spend on a levy cut between now and the next general election…
Tory MP David Jones called upon the Chancellor to take advantage of the new figures, saying: “The increasing headroom gives Jeremy Hunt the opportunity to realise his ambition to be a tax-cutting chancellor.” Now the Tories have a chance to actually stick to Conservative policies…
Contrary to the Twitterati narrative that a conspiracy of think tanks clustered in Tufton Street wields the most influence in wonk world, it’s actually the centre-left think tanks that have the most money and manpower. Guido’s crunched the numbers.
The Tony Blair Institute, Resolution Foundation, New Economics Foundation, Institute for Government and the Institute for Public Policy Research have a combined headcount of 497. This compares to Tufton Street’s more modest headcount of 116.
The top 5 centre-left think tanks had a combined turnover of £79,814,431 last year. In comparison, their top 5 right-of-centre rivals – the Centre for Policy Studies, Institute of Economic Affairs, Centre for Social Justice, Onward and Policy Exchange – had a combined turnover of a mere £9,032,646. The high media profile of the right-of-centre wonks is to their credit given by how much they are outnumbered and out-gunned in everything except the persuasiveness of their arguments. Nevertheless, the myth of the insidious influence of “Tufton Street” lives rent-free in the minds of conspiracy theorists.
It should be noted that the Tony Blair Institute for Global Change (TBI) alone has a whopping 337 staff, with an eye-watering turnover of £65,247,459. Arguably the TBI is a do-tank, and consulting for foreign governments is a big source of revenue which allows it to nurture the next generation of Labour SpAds and future Labour Party MPs. One senior New Labour source reckons that the TBI is about selling Larry Ellison’s Oracle databases to African developing countries – Ellison has given Blair’s institute over $80 million in recent years. Blair has known Ellison since his time in Downing Street, when Oracle became a significant supplier of software to the government.
Jeremy Hunt’s budget today received a mixed reaction from Westminster’s wonks. Unsurprisingly, it was most welcomed by centre-right voices with the free-marketeers and lefties alike less enthusiastic. As always, Guido has the lowdown on their reaction.
The Taxpayers’ Alliance was hardly full of praise to a budget “full of problems” . Despite criticising the government for rises to corporation tax and tobacco duty, they welcomed reforms to medicine approval and the abolition of the lifetime allowance for pensions. Chief Executive, John O’Connell said:
“Despite looking good on the surface, under the bonnet this Budget is full of problems for taxpayers. The chancellor has identified a number of structural weaknesses in the UK economy and has rightly focused on fixing them. But yet more spending increases in coming years will further frustrate households, whose rising tax bills are contributing to the biggest drop in living standards since records began. While forecasts are heading in the right direction, taxpayers still face funding the cost of government crisis for years to come.”
Hunt’s policy of full capital expensing gave the Adam Smith Institute cause to celebrate a win in their campaign to abolish the factory tax. Beyond this, they were similarly lukewarm to the budget – giving it an overall score of 6.5/10. They summarised their reaction on twitter:
“The Chancellor seemingly has the right ideas about what is causing our economic ailments… but came to the Budget with the wrong conclusions about how to fix them.”
The Institute of Economic Affairs agreed with the ASI’s assessment that childcare reforms were still “too demand-inducing”. Their Editorial and Research Fellow, Len Shackleton said the policy would “primarily benefit middle class families” and was unlikely to be effective. On the budget more generally, Director Mark Littlewood was similarly critical:
“The budget lacks ambition but takes some welcome steps. Introducing full expensing for plants, machinery and equipment will encourage business investment and boost productivity. Abolishing the lifetime pension allowance will encourage more people to work. Recognising foreign medicine approvals could save lives by providing earlier access to treatments… For a government claiming to be laser-focused on reaping the rewards of Brexit and promoting economic growth, this is a profound misstep.”
In a break from the free-marketeers, centre-right wonks were more receptive, with the Centre for Social Justice leading the charge. Their Chief Executive, Andy Cook, heaped praise on the “back to work budget”:
“Universal Support – the long forgotten “sister” to Universal Credit – was specifically designed to help those in this group who want to work get back into the workforce. The CSJ has long campaigned for the roll out of Universal Support, and we are delighted that the Chancellor has now taken decisive action to begin that process. Delivered properly, Universal Support will help hundreds of thousands more people reap the financial, social and health benefits of work… With CSJ calls to boost childcare support in Universal Credit also adopted, the Chancellor’s ‘back to work Budget’ certainly packs a punch.”
Policy Exchange joined in offering a ringing endorsement for the “serious budget to tackle serious challenges”. Connor McDonald added:
The Chancellor was right to deal with two big problems facing the UK: economic inactivity and business investment. The budget measures on labour market participation represent one of the largest packages of its kind in recent history. The proposals to expand childcare and tackle supply-side reform in the sector are potentially revolutionary, and we are glad that Policy Exchange proposals, such as incentivising childminder agencies and bringing ratios in line with Scotland are being implemented… While more could be done on taxes – the tax burden is still too high and rising in April – this budget identifies long-term problems for the UK economy and delivers a comprehensive plan to address them. A serious budget to tackle serious challenges.”
Onward has similarly kind words for Hunt – and in particular his childcare policy. Seb Payne responded that:
“This was a Budget to bring back trust – reassuring and optimistic, providing support now and fostering growth in the future. It balanced fiscal security and creating better conditions for prosperity. A solid start, but there’s still an electoral and delivery mountain to climb…”
Unsurprisingly, the Resolution Foundation took the opposite view. Torsten Bell summarised his response as follows:
“So, in summary; bad, but not as bad as previously feared… policy announcements will be more successful at boosting employment (make a real difference to women) than investment (today will make no real difference). The back to work package is basically: The carrots: big spending/tax bungs to keep better off parents/doctors in work; The sticks: increase conditionality on poorer parents. Anyone saying this would be a boring Budget was very wrong – big policy changes, especially on childcare and disability benefits”.
The Resolution Foundation’s less establishment-friendly comrades at the New Economics Foundation weren’t happy – Guido doubts Jeremy Hunt will be losing sleep. They provided running commentary on Twitter:
“Increasing the pension lifetime allowance is a massive giveaway to the wealthiest people in society. It won’t encourage people back into work and it won’t help most of us struggling to get by…The expansion of 30 hours free childcare is a big step forward – but it’s not enough to fix our broken childcare system. It’s not enough for providers or parents. We need free, universal, high-quality childcare. The most notable thing about this budget is what was missing. There was room for tax breaks for the rich but no mention of a pay rise for hard working nurses, teachers and other public sector workers.”
Despite the 5p cut to fuel duty being maintained, the budget was also a non-starter for the Alliance of British Drivers. Chief Executive, Brian Gregory, said:
“The Chancellor could have helped ease the cost-of-living crisis by removing the outrageous burden of paying tax twice at the fuel pumps – in the form of VAT and fuel duty… Instead, the Government will continue to spend hardworking taxpayers’ money to support electric vehicle subsidies and grants for electric vehicle infrastructure which will benefit the wealthy… This was a disappointing Budget from a disappointing Government.”
Driving the agenda…
Now the Office for Budget Responsibility isn’t even trying. This morning, less than a day after the Autumn Statement, the OBR’s Chairman Richard Hughes held a fireside chat with none other than Torsten Bell at the latter’s left-of-centre think tank, the Resolution Foundation. The same Resolution Foundation that spends its days pushing for ever-higher welfare payments and attacking every Tory chancellor since George Osborne.
Why would Hughes appear at the Resolution Foundation, flanked by Resolution Foundation employees and effectively endorsing the Resolution Foundation, when he’s running an ‘independent’ body that blesses every policy coming out of the Treasury? Maybe it has something to do with the fact that he used to work there, spending his days co-authoring reports on the horrors of Brexit and rubbing shoulders with the man who used to be Ed Miliband’s policy director. You can perhaps wonder if Kwasi Kwarteng had legitimate suspicions about the OBR/Resolution Foundation marking his homework. The Resolution Foundation has a left-leaning ideological position, plain as day. Even the BBC thinks so…