The Budget

Reading the Times online and this article by the Economics Editor Patrick Hosking hit me between the eyes.

In it he discusses the last Chancellor to try and cut taxes to boost growth. in a recessionary period. Anthony Barber, Heath's Chancellor in 1972. The consequences were devastating.

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Anthony Barber, the man whose ‘dash for growth’ predated Kwarteng by 50 years — The Times and The Sunday Times

Paul Johnson, head of the independent Institute for Fiscal Studies, has called Kwasi Kwarteng’s fiscal statement “the biggest taxation event since 1972”. That was a reference to the widely disparaged period in British economic policymaking history that came to be known as the Barber Boom, after...
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An economic crash across the board will benefits rich Tories too - as well as the £ tanking.
Interest rate hikes along with the cost of living increases will tip a lot of people over the edge. First thing to go will be houses, with a crash seeing prices dropping considerably. The rich - fresh from their new found budget wealth - will be able to buy properties en masse for their portfolios, and what were once privately owned houses will now become rental properties at unaffordable prices for the poor. So instead of averagely well off people owning their house, have a few quid tied up come retirement, instead the £1k mortgage will become a £1500 rent......given straight to already wealthy landlords.
It's a scam of epic proportions whichever way you look. Genuinely fear for what the future holds for my kids - expect them to be living at home until they are 39, or be stuck renting a house with 3-4 mates forever.
 
Policies like this show just how little political acumen and understanding Truss has, this makes no cohesive sense, it rips up the manifesto on which her Party was elected, it reverses whole policies that where cornerstones of the much talked about mandate which has given her the position she is in.

In 2016 David Cameron used the words that the Conservative's offered 'strong and stable leadership' we are now on the 4th Prime Minister and our 6th Chancellor of the Exchequer before Cameron if you go back 4 PM's it takes you to 1979 and Thatcher if you go back 6 Chancellor's you get Nigel Lawson in 1983, it has been the polar opposite of strength and stability and all brought on by political infighting, incompetence and corruption.

I can't imagine a situation in any other country where the Prime Minister could appoint a Chancellor who they'd previously had an extramarital affair with and it go without comment, have we really fallen so low ?
 
There has been a class war waged in this country, since the day I was born and I know which side has been winning it for the vast majority of my life. This Budget is just a continuation of it. I've said this before, to my parents and grandparents the phrase "never trust a Tory" was not an empty slogan, it was a life lesson. I hope people start learning it pretty damn quick.
 
There seems a move to Thatcherite policies, but Thatcher raised cash from selling off a big chunk of Public assets, she had North Sea Oil and Gas at their peak production, we still had a manufacturing sector. This all helped finance tax cuts. She also increased VAT from 8% to 15% and used some of that for cuts to income tax. From 1979 to 1988 the top rate of income tax was 60%, she only reduced it to 40% in 1988.

The current tax cuts appear to be financed from taking on yet more debt just as interst rates are rising to service that debt. Its pretty obvious some public expenditure will have to be reduced in real terms.

I can understand on very selective tax incentives so to help an economically struggling areas where there is under employment of the local population and tax cuts can increase the tax take and reduce welfare payments, but not tax cuts that leave the Government with lost revenue, when the demands on health spending and pension payments is increasing substantially.
 
Redwurzel said:
The current tax cuts appear to be financed from taking on yet more debt just as interst rates are rising to service that debt. Its pretty obvious some public expenditure will have to be reduced in real terms.
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Red
there is no ‘appear to be’ about this.
They have admitted they will need to take on more debt (magic money tree)
And yes, interest rates on that debt are at the highest rate ever.

Remember when the made a fuss of the ‘there is no money left’ note when the last labour government left office.?
Well, we significantly less now and (before anyone plays the covid card) we had significantly less in 2020 too.

It’s simple - their objective is to feather the nests of their paymasters. They do a great job of that.
 
Abel Tasman said:
Reading the Times online and this article by the Economics Editor Patrick Hosking hit me between the eyes.

In it he discusses the last Chancellor to try and cut taxes to boost growth. in a recessionary period. Anthony Barber, Heath's Chancellor in 1972. The consequences were devastating.

stocks.apple.com

Anthony Barber, the man whose ‘dash for growth’ predated Kwarteng by 50 years — The Times and The Sunday Times

Paul Johnson, head of the independent Institute for Fiscal Studies, has called Kwasi Kwarteng’s fiscal statement “the biggest taxation event since 1972”. That was a reference to the widely disparaged period in British economic policymaking history that came to be known as the Barber Boom, after...
stocks.apple.com stocks.apple.com
Click to expand...
Devastating consequences indeed and I have a strong feeling of deja vu. I fear for the country in the next 3-5 years.

This radical change in their economic strategy was never in their 2019 manifesto - it has come about because less than half the Tory membership decided they wanted big tax cuts and were able to effect it by putting a puppet into Downing St. The meaning of democracy and will of the people is severely challenged in this respect.
 
Barber boom of 1972/3 - repeated?

The then Chancellor (Barber) cut losts of taxes to increase popularity of Ted Heath's Government. as World inflation was taking off. The Conservatives still lost two elections in 1974 and we ended up with 25% inflation by Q4 of 1975. The UK Labour Government had to go to the IMF for a loan and public expenditure was cut back. I remember my comprehensive school started issuing sheets of paper instead of exercise books.

Weird - CDaffs just posted while I was writing on Barber boom too.
 
I was not expecting the top rate tax cuts or the stamp duty cuts.

As a generalisation - The economy in the UK is not struggling, because we have 45% tax for the top 1%, nor that we have stamp duty starting at £125k or £250k for first time buyers.

If you want better value houses - increase the supply of new housing, by giving more incentives to build (such as stopping housebuilders sitting on land with planning permission) or giving loans for social housing developers.

Better using tax cuts to raise the income tax threshold from £12,570 to £15,000 to help people on low incomes and encourage more people to work or work more hours. This would increase the labour supply to many employers who say they are struggling to recruit. Employers as far as I know are not struggling to fill the £200,000 a year jobs (except MFC ;) )
 
Redwurzel said:
Barber boom of 1972/3 - repeated?

The then Chancellor (Barber) cut losts of taxes to increase popularity of Ted Heath's Government. as World inflation was taking off. The Conservatives still lost two elections in 1974 and we ended up with 25% inflation by Q4 of 1975. The UK Labour Government had to go to the IMF for a loan and public expenditure was cut back. I remember my comprehensive school started issuing sheets of paper instead of exercise books.

Weird - CDaffs just posted while I was writing on Barber boom too.
Click to expand...
To be fair Abel brought up Barber two hours previously.
 
I’m generally a very positive person but I’ve lost all faith in any government to help the working classes. I’ll vote Labour in the next election, but even with the best intentions, they will never be able to undo the damage that’s been done since these Cons took over. They will have to smash the system to pieces and start again. They will be forced to go after the wealthy because the rest of us have nothing more to give.

I’d start by closing as many tax loopholes as possible both personal and corporate. Tax offshore assets and trusts in the same way as domestic ones. Simplify the tax system so the tax free allowance is as high as possible with one rate of tax above that threshold combining both Income tax and National Insurance. £30k tax free and 60% above that would really make work pay for the majority of people.

Even this may not be enough. I truly believe universal basic income will be necessary as more jobs are filled with autonomous machines and self driving vehicles. We’re not as far away as people think from robots doing all manner of entry level jobs in factories or the service industry. Why pay someone £20k a year plus costs and benefits to serve tables if you can buy or lease a robot that will work 100 hour weeks day and night with minimal downtime or maintenance?
 
From Private Eye this week

KAMI-KWASI..


No surprise that, having got their woman into No.10, the hedge fund managers and financiers behind the Truss campaign, including brokers Howard Shore ($50,000) and Michael Spencer (£25,000), can look forward to a heavily trailed "Big Bang 2.0" that will deregulate their businesses yet further.


While scrapping the bankers' bonus cap (to entice more free-wheeling traders of the sort that performed such a service in the lead-up to the 2008 financial crash), new chancellor Kwasi Kwarteng is this week set to announce a series of inflationary tax cuts. At the same time, he'll pour cash into the economy through energy support payments.


Having sacked well-regarded Treasury permanent secretary Tom Scholar pour encourager les autres, Kwarteng should be able to push his plans through with less sense-checking from experienced officials. Even better, there'll be no troublesome red-inked analysis from the Office for Budget Responsibility, which is sidelined as this is merely a "fiscal event" rather than a budget.


When it all goes even more pear-shaped in due course, friends of former (and, if the record of recent former chancellors is anything to go by, future) banker Kwarteng can step in. On becoming an MP in 2010, he kept up his financial interests with a £20,000 side number for providing "political advice" to Odey Asset Management. The same hedge fund, run by fellow Brexiteer Crispin Odey, is an avid short-seller, including of government securities.


However resounding the next crash, the sound for friends of Kwasi will still be "ker-ching"
 
SilentProf said:
’d start by closing as many tax loopholes as possible both personal and corporate. Tax offshore assets and trusts in the same way as domestic ones. Simplify the tax system so the tax free allowance is as high as possible with one rate of tax above that threshold combining both Income tax and National Insurance. £30k tax free and 60% above that would really make work pay for the majority of people.
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Totally agree
But - any party who even hints at doing something like this would be slaughtered by the media - it's not in their owners interestrs.
That's politics
 
And just underneath that there is this

FISHY TALE

A CURIOUS new entry by Liz Truss in the MPs' register of interests: "Name of donor:

Smoked Salmon." Truss says that the Salmon gave «£10,000 to support my Conservative Party leadership campaign", which seems remarkably generous for a dead fish.

But a check on the address - Fish Island, London E3 2NT - reveals it to be the HO of salmon-monger and climate change-denier Lance Forman (real name: Lance Anisfield), formerly an MEP for Nigel Farage's Brexit Party but now a throbbingly over-excited fanboy of the new PM.

"Did you know," he tweeted earlier this month,

"that Elizabeth Truss also spells Sizeable Thrust?"
 
I agree with SP on tax loop holes, tax loop holes seems to increase under Tories and Labour. For many wealthy mainly London based residents (of foreign origin), the UK was seen as a tax haven, they just said they were non-dom for tax purposes.

Automation is taking jobs, but new jobs are being created e.g. barbers, nail bars, that robots can't do at present. There is desperate shortage of staff in social care and overall there are nearly as many vacancies as unemployed, unheard of in the last 45 years in the UK.

I think you have to go back to the Sixties before a Government could be said to be helping working class people (Wilsons 1964-70).
 
One point worth noting on the beneficiaries of the higher rate of tax being reduced to 40% from 45%

Every cabinet minister benefits
I’m sure they will trickle the benefit down to their poorer constituents.
 
I thought these details and analysis might interest posters

Interactive Investor was/is part of the Observer Media Group. Its pro-capitalist, share buying etc and used by investors who will be above average income and wealth owners, however connected with the Guardian, so comes from liberal/left background too.

Kwasi Kwarteng’s explosive mini-budget 2022: winners and losers

We round up the huge changes announced in Kwasi Kwarteng's mini-budget, explain the winners and losers and how measures will impact your wallet.
www.ii.co.uk www.ii.co.uk
 
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