Budgets are overrated
Taxation and spending make little difference while Britain is unable to build
Budgets are overrated for a variety of reasons.
Firstly, Budget speeches contain too many make-work (or rather, make-talk) schemes for the next Budget or the next Autumn Statement, often in the form of temporary freezes on this or that (e.g. alcohol duty, fuel duty), which can then be extended at the next fiscal event. In this way, the government can, in effect, announce the same policy twice, getting more headlines out of a given policy.
More importantly, Budget speeches also cover too many spending announcements on what should really be local matters, not national ones: a few quid for a theatre in this town, a few quid for church repairs in that town, and a few more quid for a cultural institution somewhere else, etc. This is usually mostly an excuse for name-dropping places, and, if they are in the same party as the Chancellor, the “Right Honourable friends” representing them.
The whole piece is well worth reading, not only as a reminder of our inability to build, but also our inability to maintain, crumbling roads being a familiar example. The problem runs deep and may be as much institutional as it is political. We clearly have nowhere near enough practical experience in the House of Commons, but the permanent administration seems to have even less.
Taxation and spending make little difference while Britain is unable to build
Budgets are overrated for a variety of reasons.
Firstly, Budget speeches contain too many make-work (or rather, make-talk) schemes for the next Budget or the next Autumn Statement, often in the form of temporary freezes on this or that (e.g. alcohol duty, fuel duty), which can then be extended at the next fiscal event. In this way, the government can, in effect, announce the same policy twice, getting more headlines out of a given policy.
More importantly, Budget speeches also cover too many spending announcements on what should really be local matters, not national ones: a few quid for a theatre in this town, a few quid for church repairs in that town, and a few more quid for a cultural institution somewhere else, etc. This is usually mostly an excuse for name-dropping places, and, if they are in the same party as the Chancellor, the “Right Honourable friends” representing them.
The whole piece is well worth reading, not only as a reminder of our inability to build, but also our inability to maintain, crumbling roads being a familiar example. The problem runs deep and may be as much institutional as it is political. We clearly have nowhere near enough practical experience in the House of Commons, but the permanent administration seems to have even less.
As Niemietz says, we cannot even build new water reservoirs, which is not new technology even to a civil servant. We cannot even build a new railway from London to Manchester. Budgets won't fix that level of practical incompetence.
Some taxes really are highly distortionary, and some selected tax cuts really would have pronounced “Laffer Curve” (i.e. self-financing) effects. But on the whole, Budget-related issues are not the main reason for Britain’s economic stagnation, and no Budget is going to drag Britain out of this hole. I realised that a few years ago when, ahead of a Budget, I was asked to draw up a “wish list” of growth-boosting policies I would like to see in the Budget, and realised, half-way through, that most of those were not really Budget measures at all, at least not in the conventional sense. They had a lot more to do with Britain’s inability to build anything, be it residential housing, business premises, infrastructure, energy generation sites, or even water reservoirs.
Some taxes really are highly distortionary, and some selected tax cuts really would have pronounced “Laffer Curve” (i.e. self-financing) effects. But on the whole, Budget-related issues are not the main reason for Britain’s economic stagnation, and no Budget is going to drag Britain out of this hole. I realised that a few years ago when, ahead of a Budget, I was asked to draw up a “wish list” of growth-boosting policies I would like to see in the Budget, and realised, half-way through, that most of those were not really Budget measures at all, at least not in the conventional sense. They had a lot more to do with Britain’s inability to build anything, be it residential housing, business premises, infrastructure, energy generation sites, or even water reservoirs.
5 comments:
Government is a monopoly. Monopolies inevitably become wasteful and self serving because they suffer no spur of competition. Therefore, the Public Sector should not do anything that could be done by the Private Sector.
Many activities that are done by the Public Sector in UK are done, often better, by the Private Sector in other countries. It's time for a hard look at Health, Education and Social Services just for starters.
When else are you going to break the news of a £1m war memorial for Muslims without everybody falling about laughing? That's the sort of gaslighting nonsense you can only really present to a nation worried about the prices of booze and cigarettes.
decnine - I agree, it's time to take a hard look at the big public monopolies. I don't see it being done though, we seem to have weak voters as well as weak governments.
Sam - I bet Hunt wasn't pleased to be saddled with that one.
If modern Budgets achieved anything they wouldn't be allowed. All they are is an opportunity for the Office of Budget Responsibility to exercise its "non-departmental public body that gives independent and authoritative analysis".
And thus Parliamentary authority and democracy slip further away.
DJ - and Starmer will probably assist that slipping away as a believer in "independent and authoritative analysis".
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