The Conservatives have embraced Britain’s decline.
If the party wanted to win the next election, it would be cutting taxes to pursue growth. It has instead chosen defeat
ROCCO FORTE9 March 2024 • 6:30pm
The Budget represented a last chance for the Conservative Party, which I used to support as a donor, to shift the dial ahead of the next general election. Sadly, we can now see that strategic vision about where we are going as a country is entirely lacking.
With the tax burden heading for a 70-year high, what we saw from the Chancellor was mere tinkering. People are not stupid and they can tell that while he may be giving a bit with one hand, he’s taking away more with the other. The tax cuts are more than cancelled out by the stealth tax raid.
GDP per capita will fall yet again this year. The ridiculous Office for Budget Responsibility forecasts that growth will pick up to 1.7 per cent by 2028, but that’s simply not good enough. We have had these levels of anaemic growth in this country now for years. For at least the past two decades, we’ve been following a failed Treasury orthodoxy that prevents any radical thinking. We need to do something dramatic to change things.
The economy faces a number of headwinds. One of these is monetary policy, which is tight as we seek to bring inflation down. But now inflation looks like returning to 2 per cent soon, it’s time for the Bank of England to start lowering rates.
The tax burden is another headwind. Millions of people are being dragged into higher rates of tax thanks to the decisions this Government had made. In the 2022 leadership content he lost to Liz Truss, Rishi Sunak pledged to reduce the basic income tax rate from 20p to 16p in the pound. This, it seems, is a long forgotten promise.
Corporation tax, which George Osborne rightly sought to slash at every Budget, has been hiked back up from 19p to 25p in the pound. And in the Budget we heard nothing about business rates, nothing that will seriously encourage investment and nothing for pensioners. The Prime Minister and the Chancellor also ignored the pleas of over 500 leading businesses representing the retail, hospitality, tourism and arts sectors, and refused to scrap the tourist tax, an issue I have been campaigning on. The case for reintroducing tax-free shopping in the UK is clear and overwhelming. As things stand, every country in the EU offers sales tax rebates to tourists while we don’t. The UK’s tourist economy has one hand tied behind its back.
Independent economic analysis shows that scrapping the tourist tax would more than pay for itself because of the tourist spending that would be stimulated in hotels, restaurants, tourist attractions, taxis and the like, with an £11 billion boost to GDP. It would also seize a Brexit opportunity, as we could offer savings to a new market of 500 million EU consumers thanks to our place outside the bloc.
Instead of cutting the tax burden, however, one of the Chancellor’s big announcements was stolen wholesale from the Labour Party – the abolition of non-dom status. The Conservatives previously attacked this policy on the basis that it attracted entrepreneurs who create jobs and tax revenue. Now they have U-turned simply to put Labour on the spot, and offered no compensating policies. Already, I know of several wealthy entrepreneurs who have left the UK, disillusioned about the state of the country. Abolishing non-dom status will only mean more to follow.
In all, the approach being taken by today’s Government is clearly alienating traditional Conservative voters, and the effect is going to be to hand the country to a Labour government eager to introduce new burdens on business.
A Conservative Party serious about winning the next election would be seizing Brexit freedoms and deregulating, reforming the welfare state to get people into work, increasing housebuilding, sorting out business rates and offering serious tax incentives for entrepreneurs.
Sadly, it is instead embracing declinism – and will reap the inevitable electoral result. ST.
