OPINION - Kwasi Kwarteng’s high stakes bet on growth

·3-min read
 (Christian Adams)
(Christian Adams)

FOR a “fiscal event” or even a mini-Budget, there is an extraordinary change of direction identified in the Chancellor’s speech today — enough for a couple of conventional Budgets. He told us this morning, “there are too many barriers to enterprise”. Accordingly, he has set out a dizzying range of reforms, from axeing the higher rate of income tax and (from next year) reducing the basic rate, to introducing curbs on strikes. There is also to be a focus on making the tax system simpler. A provocative element is lifting the cap on bankers’ bonuses, which, he declares, is intended to benefit London. “Our entire focus”, he said, “is on making Britain more globally competitive”.

Will it? At the heart of the project is an enormous gamble, that a combination of tax cuts and slashing regulation will be enough to end what the Chancellor calls a “vicious cycle of stagnation” and replace it with a “virtuous cycle of growth”. There is to be a reversal of the rise in national insurance — without, somehow, lessening spending on social care — and a freezing of corporation tax. There are to be investment zones which will have generous tax reliefs and fewer environmental constraints on building to stimulate investment and housebuilding. All this is in addition to the cap on energy price increases and a £400 subsidy for everyone in the country, rich and poor.

This tax-cutting gamble obviously comes at a huge cost. It favours the better off. Those who benefit may spend more, ideally on UK goods and services, but in the present uncertainty, that’s not guaranteed. It also risks a conflict with the Bank of England, which is worried that the Government’s spending will in the medium term prove inflationary. Much depends on how overseas investors look at the agenda and whether the fall in the value of sterling will be maintained over time.

The Chancellor today presents himself as a radical pro-growth reformer of a system that isn’t working — which for 12 years was presided over by successive Conservative governments. Sometimes, the rhetoric seems like that of an opposition party which has taken office rather than a continuity Conservative administration. For the Labour Party, there is much in this statement that they can challenge; unusually, the party will be in the position to take issue with unfunded spending commitments and it will naturally take issue with reforms designed to benefit the better off.

The Chancellor declares that “we promised to prioritise growth”. We hope it works. If it doesn’t, the consequences don’t bear thinking about.

Justice, in 90 seconds?

JUSTICE deferred may be justice denied, but justice in 90 seconds is hardly satisfactory either. Our report on the working of The Single Justice Procedure (SJP), which was established to allow courts to sit behind closed doors, found that it is allowing magistrates to issue convictions and fines in a matter of seconds. Just as worryingly, magistrates are no longer accompanied by a qualified lawyer; instead groups of three magistrates are given online and phone access to legal advice. It is not the same thing.

A report into a pilot scheme of the SJP suggests that in some areas magistrates have a recommended target of 90 seconds to decide cases. This will not do. Magistrates must be allowed to consider cases for as long as it takes to make a considered judgment. As it stands the SJP is further proof that the justice system isn’t working.