Jonathan Eida | Opinion
As Parliament returns to its chambers, eyes will begin to turn to the Chancellor of the Exchequer and, more specifically, the Autumn Budget. There suggestions that Rishi Sunak will delay the Budget until the spring due to the coronavirus pandemic, however there is still likely to be some form of Budget in the coming weeks. This Budget is likely to be one of the most scrutinised in recent times. Following the economic downturn caused by the virus, people will be looking to the budget for reassurance and security over their economic futures.
But I, for one, am dreading the Autumn Budget. The Chancellor of the Exchequer has been in his position now since March. Granted, the period that we find ourselves in is tumultuous to say the least, however the situation has brought to light where the Government’s head is at economically.
The Government’s response to every emerging crisis the pandemic has been to cover their proverbial backsides from criticism by haphazardly throwing money at every issue, which is supposedly to avoid criticism coming their way.
In doing so, they have fallen into the classic politician’s trap of living in the present and ignoring the future consequences. “Leave that to a future administration,” they might think, “the fallout won’t come during our time in power.” This way, they will be remembered as the knights in shining armour, while in reality they are the ones poisoning the well for the future.
Perhaps the greatest example of this attitude permeating our policy-makers was the much-endeared ‘Eat Out to Help Out’ meal deal, otherwise known as the ‘Rishi Meal’.
On a personal level for Rishi, it is very obvious that he has pulled a blinder. Having a policy portrayed in a good light with your name stamped on the front on it is the sort of marketing that President Trump would be proud of!
The ‘Rishi Meal’ received roaring approval from all sides of the political spectrum. Even the supposedly fiscally conservative factions all of a sudden became wild-eyed at the prospect of free food. For example, in an article for the Daily Mail, former Chancellor Norman Lamont said of Rishi’s scheme: “He has shown boldness and creativity, adopting imaginative measures.”
Lamont was just one of many voices praising the Chancellor’s actions. In doing so, conservatives forget two of the most cardinal economic rules: firstly, there is no such thing as a free meal, quite literally in this case. Secondly, there is no such thing as ‘Government money’ – there is only taxpayers’ money.
When Rishi Sunak says he will have the Government pay for half your meal out, what he really means is that he will have the taxpayer pay for it, which includes the restaurants themselves. The bill will obviously be deferred to a later date as part of the inscrutable coronavirus care package. All that will remain from this policy is fond memories, with no identifiable trail as to its consequences.
In fact, I would go even further and suggest that Rishi could have produced similar outcomes to the ones intended from the ‘Eat Out to Help Out’ strategy by following traditional conservative thinking, but without the consequences. By cutting taxes on both the restaurants themselves and the consumers, they could have inspired increased spending from consumers, while also increasing the revenue for businesses. Tax cuts have always inspired economic growth, and they would have done so post-lockdown too. Instead the consequences of following the ‘Eat Out to Help Out’ scheme will plague us all down the lines, as we try to recover the remnants of our economy.
In the process of maxing out our credit cards, the UK, for the first time, has now passed the two-trillion-pound debt threshold. Two trillion! Under a ‘conservative’ party! The party that proclaimed fiscal responsibility, which championed austerity as a necessary measure for balancing the budget and has always advocated spending with our means, is now the one to break this major threshold.
This brings us back to the Autumn Budget. There is no doubt that something must be done about this dumpster full of debt that we have built up. I see two possible routes that we can take going forward, one of which is uninviting to say the least, and the other the Tory Party seem too lily-livered to face.
The solution to this kind of economic problem from the Left and the Labour Party has always been to increase taxes or to pursue inflationary measures, such as increasing the money supply. The economic cost of these measures is devastating, meaning we would be looking ahead to a future of recessions.
The alternative to this is to cut public spending and pay off the debt over time. However, having been called ‘mean’ for the past decade due to their ‘austerity’ measures, the Tories are in no shape for that fight. Boris’ tenure in charge of the party has been defined by his desire to overturn the image of the Tories being ‘mean’ – this much is obvious if we look at his spending. Some of his decisions, particularly the Marcus Rashford U-turn over free holiday meals for school children, seem to indicate this attempt at modifying perceptions.
It is therefore unclear which route the Government will opt for when it comes to the Autumn Budget. I fear one of them could spell disaster for our economy in the long term. Hopefully, the Tories will avoid this course of action and choose a more stable plan that will create a sustainable future.
