Rishi Sunak’s meteoric ascent from rising star of the Conservative Party to the hotly-tipped frontrunner to eventually replace Boris Johnson as Prime Minister has been much commented on since he took on the role of Chancellor.
His opening remarks in his latest Budget to the House of Commons were delivered with the gusto of a pre-election Budget.
He took his place at the despatch box against the backdrop of a barrage of issues and controversies demanding his attention, encompassing soaring energy bills, the £20-a-week cut in Universal Credit, rising fuel prices (and shortages), increasing inflation, recovery from the pandemic and the imminent arrival of COP26.
And before he even began, he and his Treasury colleagues were chastised by the Deputy Speaker for their perceived transgressions in unveiling large swathes of his Budget announcements in the media rather than presenting them, as is traditional, to his fellow MPs in the House of Commons first.
Despite these possibly less than promising circumstances, Mr Sunak delivered his speech with his customary polish, weaving references to the benefits of Brexit and the suggestion of the shackles of the EU being cast off as well as to the ‘collective culture’ and one family of the Union.
The question is, did he really do enough to address the multiple challenges facing the economy or was there a sense of ‘jam tomorrow’ about his announcements?
On the UK’s new capabilities following Brexit, for example, his plan for an adjustment to the tonnage tax for the shipping industry could be described as a mere drop in the ocean. For those in the industry not within the tonnage tax regime there are a multitude of anomalies, such as the useful life of vessels for tax purposes, that are left untouched.
Equally, while the air passenger duty cut will be welcomed by local communities and Scottish airports alike, it seemed slightly odd to introduce a measure which could increase the number of short-haul flights in this country as we prepare to welcome delegates to COP26. Other than increased APD on ultra-long-haul flights there were no additional announcements of substance to assist the drive to net zero.
Turning to the high street, the extent of the challenge facing the retail sector post-pandemic has been well-documented. While a reserved matter for the devolved institutions, the decision to introduce a short-term business rates’ discount for retail, hospitality and leisure is unlikely to go far enough for these sectors in England. Could he have gone further and provided more long-term UK-wide support which would have helped revitalise what is very much an ailing, but very important, part of our economy? The Chancellor also made a number of references to helping ‘working families’. The decision to cut Universal Credit by £20 a week from early October – a cut worth more than £5 billion – after its temporary uplift during the pandemic attracted much controversy – his response has been to cut the taper rate in Universal Credit from 63p to 55p, a move he said would be worth more than £2bn. His critics will say those numbers do not provide the support which many of the lower paid really need.
At the same time the decision to freeze fuel duty will help the haulage industry to some extent but with increasing fuel prices, a cut would have had a more significant impact, especially for individuals at the pump.
Politicians can often, rightly or wrongly, be accused of short-termism. Mr Sunak delivered his Budget facing a host of challenges and with the economy emerging from the catastrophic impact of the pandemic. It was scant on new initiatives, taking into account what had already been revealed in advance. Whether he has done enough to tackle the challenges currently facing our economy in 2021, only time will tell.
John McAuslin is a partner of Johnston Carmichael
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