STEPHEN GLOVER: The speech that really mattered wasn’t Boris Johnson on Peppa Pig. It was Lord Frost’s cry for the Tories to lower taxes
I’ve lost count of the number of times I’ve heard it. But the Prime Minister’s shambolic, though in parts rather amusing, address to a dumbfounded audience told us nothing about him we didn’t already know.
What obsesses the ‘Westminster bubble’ is often only of passing interest to the great majority of people.
The BBC and much of the media largely ignored a more noteworthy speech made on the same day as Boris’s performance. It was about tax, and I bet it was much closer to the preoccupations of most voters.
Delivered by Lord Frost, the Brexit Minister, it was the most outspoken contribution we have so far heard from a member of the Cabinet concerning the high taxation and high spending proclivities of this Government.
In a speech to the think-tank The Centre for Policy Studies, Brexit minister Lord David Frost took issue with the government’s approach of high taxation and high spending
His essential message was that, if we follow the ‘European social model’ of myriad employment regulations, hefty taxes and stratospheric welfare spending, we will — like most of the EU — enjoy only modest economic growth, and squander the opportunities of Brexit.
Granted, the British economy is bouncing back, with manufacturing orders at their highest point since records began 44 anni fa, as business confidence returns to pre-pandemic levels.
I’m sure Lord Frost wouldn’t dispute the strength of the recovery. This is attributable to the opening up of the economy (loudly opposed by Labour) since July, combined with a successful programme of booster jabs.
They appear to have protected us — touch wood — from the spiralling infection rates experienced by several EU countries.
In particolare, Germania, which is Europe’s largest economy, is expected to stagnate in the final quarter of this year. Se, as seems likely, the UK can avoid another lockdown, our short-term economic prospects look rosy.
però, Lord Frost’s remarks were focused on the longer term, when Covid will mostly be a bad memory, and post-Brexit Britain will be carving out a new role for itself.
His intervention was especially arresting because he isn’t a Treasury minister, and therefore is not expected to comment on economic policy.
He will be relieved that his somewhat provocative observations haven’t been rubbished by No10. ‘Frosty’, as he is affectionately known by the PM, with whom he is on friendly terms, has been allowed to get away with what other ministers might not be.
No 10 has even pointed out that in his discursive speech to the CBI, Mr Johnson stated that ‘government should make sure there is less regulation and indeed less taxation’.
In last month’s Budget, Mr Sunak declared in a similar vein that his ‘goal is to reduce taxes’. The fact remains that the direction of travel has been the opposite way. The Government appears to have ditched any hope of this country becoming a dynamic ‘Singapore-on-Thames’ now we have freed ourselves from the shackles of the EU.
When painful increases in National Insurance are introduced next April, the tax burden will be the heaviest for more than 70 anni, when the socialist prime minister Clement Attlee was about to be voted out of office. A hike in Corporation Tax, paid by companies, will follow in 2023.
What struck me most about Lord Frost’s speech was his call for a ‘free debate’. That suggests he believes economic policy is being steamrollered through Cabinet by the Prime Minister and a compliant Chancellor, Rishi Sunak, without alternatives being properly discussed.
Consider some alarming figures. According to the Tax Foundation, an American think-tank, Britain currently has the 22nd most competitive tax system among the Organisation for Economic Co-operation and Development’s 37 developed countries. That’s pretty dismal.
While the focus was on Boris Johnson’s comments to the CBI about Peppa Pig, Lord Frost was delivering an important speech about tax
Lord Frost’s call for a ‘free debate’ suggests he believes the Prime Minister and Chancellor Rishi Sunak are steamrollering economic policy through Cabinet
But the Centre for Policy Studies — the Thatcherite think-tank under whose auspices Lord Frost delivered his speech — reckons that, when all the planned tax rises have taken effect in 2023, the UK will tumble to 30th place.
This will put us further behind Germany, gli Stati Uniti. and Japan, and only just ahead of France and Italy, two economically sclerotic laggards that squeeze their wretched citizens for every cent of tax they can get.
Isn’t Britain’s prospective performance pretty shaming? The lesson Margaret Thatcher taught the British nation in the 1980s — that lower taxation leads to faster economic growth — has been largely forgotten by the present Tory Government.
Look at the rates of growth achieved in the heyday of Thatcherism. Nel 1985, growth was more than 4 per cent and more than 3 per cent in 1986, while in 1987 e 1988 it exceeded 5 per cento.
By the UK’s historical standards, these were stonking increases. Compare the forecasts produced by the independent Office for Budget Responsibility (OBR), which accompanied Mr Sunak’s Budget. Following a post-pandemic rebound this year and next, the OBR foresees measly growth of only 1.3 per cent in 2024 e 1.6 per cent in 2025.
Ovviamente, there were factors other than lower taxation which accounted for the much faster growth of the 1980s. Thatcher’s taming of disruptive trade unions, which had virtually brought the country to a halt in the 1970s, was crucial.
But the lesson nonetheless remains — that, all things being equal, lower taxation is likely to engender more robust economic growth, some of which can be used to pay for improved public services.
Crippling tax rates are apt to drive billionaires and entrepreneurs abroad, and they deprive people of the opportunity to spend more of their hard-earned income as they wish.
Can the drift towards stifling taxation be reversed? Not as long as the Government remains addicted to ever greater spending, which will never satisfy Labour, however high it rises.
Mr Sunak boasted during his Budget speech that the Government’s departmental expenditure will soar by £150billion over this Parliament. That amounts to a whopping 3.8 per cent increase in real terms every year, which he assured us with misplaced pride is the fastest increase in Government spending during the 21st century.
That includes the years when, as Chancellor, Gordon Brown was spraying cash around. Lord Frost’s outspoken intervention makes me hope that the argument is not irrevocably lost.
It comes after Leader of the Commons Jacob Rees-Mogg dared to say that Britain is taxed ‘as highly as the country can afford’.
Foreign Secretary Liz Truss also recently warned about tax rises and higher spending, which ‘ultimately leads to worse outcomes for everyone’.
She rightly said that the Tories must embrace free enterprise instead of ‘inexorably growing the size of the State’.
And yet it was reported earlier this week that Treasury officials, with either the approval or connivance of Rishi Sunak, have effectively killed off free ports, the low tax zones which the Chancellor had promised would provide an ‘unprecedented economic boost’.
Apparentemente, they offend against Treasury orthodoxy. In qualche modo, Boris Johnson must be persuaded by his colleagues of what he once knew in his heart — that the best way of creating a dynamic economy is to reduce taxation and control public spending, which includes not pouring endless billions into the maw of an insatiable NHS.
Thank God our immediate future looks brighter. With luck, we have weathered the worst of the pandemic. The challenge of capitalising on the possible blessings of Brexit has barely begun.