Today's Budget Revealed A Trussworthy Government

Ben Habib gives his thoughts on today's big announcement.

What a relief it was to hear Kwasi Kwarteng deliver his mini, but seismic, budget this morning. Not only did it prove Truss’s oft repeated declaration that she delivers. Out of the window, in 30 minutes, was thrown the apparent inexorable march towards higher taxation and more regulations.

At last there can be hope we will escape the causes of anaemic economic growth that have dogged us. It would also appear that we may Trust Truss – she does what she says. That alone is cause for cheer.

Ironically, the biggest potential impact was Kwarteng’s first announcement, the capping of fuel bills for households and businesses. I say ironic because this was more of the same we have had from previous governments. Big spending to fix a problem the previous administration had created through another massive spending supported mistake: lockdowns.

But there was no alternative. Without it people literally would have starved and frozen over winter. As it happens it should not cost as much as first forecast. Gas and oil prices have reduced significantly from their highs and are likely to reduce further as the global economy slows.

She reversed Johnson’s manifesto breaking increase in employer’s National Insurance. To be fair to Johnson, he had already mitigated that increase by increasing the threshold at which National Insurance is levied – so her reduction was a genuine benefit for businesses and their employees. Putting money into the pockets of those that work.

It made sense then for Kwarteng to tighten the requirements to claim benefits. It is possible at the moment to collect very close to the net average wage simply by maximising claims under Universal Credit. To get people to work, there has to be an incentive to do so. Another tick on Truss’s scoresheet.

And quite right to reduce stamp duty. This is a tax on the activity of buying. It constrains liquidity in the market. Reducing it will help considerably in getting first time owners on to the property ladder.

And thank goodness she scrapped Sunak’s drive towards higher corporate tax rates. We need businesses investing in the UK. You do not achieve that by kicking the private sector in the shins for two years with lockdowns and then taxing them on the way out.

Finally, there was something tangible on levelling up: new investment zones. Detail was missing in the announcement but the principle of tax breaks to set up business in designated deprived areas is a significant step in the right direction.

The press is full of the reduction in the highest rate of personal tax from 45% to 40% and the removal of caps on banker’s bonuses. But critics of these policies are just indulging in the politics of envy. The fact remains we need wealthy entrepreneurial driven people settling in the UK. They will only do so if the environment is favourable. We need personal tax rates below those on the Continent and in the USA.

The basic rate of tax was also reduced by 1%. This will materially help lower earners. Together with the cap on energy bills no one can legitimately accuse the government of looking after the rich at the expense of the poor.

There is a heck of a lot more required to be done before the UK will be out of the woods of its current economic difficulties. Top of the list is to become energy independent. But the announcements this morning at last signal a sensible and Trussworthy government.