When Kwasi Kwarteng said he wanted to go for growth, it appears he meant it. Some will say the tax reforms announced today are ‘unfunded’ and reckless. Others will say it’s not the time for changes to banker’s pay. But in his ambition and his vision of a competitive Britain, the Chancellor has placed the “open for business” sign on an economy that has been crying out for radicalism.
There are, obviously, risks here. The public finances are already in a miserable state and in the short-term at least the changes to tax rates will make those numbers look even more miserable.
But it remains true that Britain has become, quietly, one of the most highly-taxed countries in Europe – and in reducing the burden, Kwarteng’s laying the foundation for growth in the economy at large.
Growth is not an ideological project. It is a hope for better living standards and indeed better public services. Prime Minister Liz Truss earlier this week said it was time to grow the size of the pie before working out what to do with the slices.
She’s right. What would the critics prefer? For Britain to trundle along at 1 per cent growth whilst the state expands by more than that, catering to an ageing population with creaking and inefficient public services? That shouldn’t be an option – it can’t be an option. It’s decline, managed or otherwise.
Post-Brexit, Britain needs competitive advantages. Taxing like France and regulating like Brussels is not a competitive advantage.
Kwarteng in just one announcement has marked himself out as the most radical occupant of Number 11 since Nigel Lawson. Just as then, there will be rightly concerns about inflation, and the Bank of England will have to come hard and fast to the party. Those rate rises will hurt. The winter will be painful, not least for mortgage holders.
But we now have a Government thinking about what Britain needs to look like in five or ten years time – not just about how their announcements will play on twitter or in tomorrow’s newspapers. That, if nothing else, should be welcomed.