Budget 2021: Rishi’s economic placebo | Joseph Robertson

“Political Economy means everyone except politicians must be economical.” ~ G.K. Chesterton

Rishi Sunak’s latest innovation with planned debt has led even the most hardline Tory adherents to question certain elements of what is, to all intents and purposes, a last line of defence to save many people from short term personal ruin. The old adage runs that “a house divided against itself cannot stand.” So where does that leave thinkers involved in the debate, who have to choose between having their glass half full or a glass that is totally empty?

Should we give credence to the good in every policy, while retaining an aversion of what is impossible to justify? Or, as the opposition bench tended to do under Jeremy Corbyn, mindlessly slate any government policy with a single weakness, turning a blind eye to its positives? That is the question that poses itself more and more repetitively, as the government separates itself from the will (long-term prosperity) of its nominally self-governing people, to adhere to a new agenda.

This new agenda can be summarised best with an analogy. A young man, besotted with a fair damsel, yet possessing no charm of his own, thinks long and hard about how best to win her attention. At last he comes up with a solution; he will have his friend capture her, take her to a dark, seedy alley and threaten all manner of terrible things, after which our young hero, the self-styled saviour, will appear as if from nowhere and ‘save the day’. Having ‘reset’ her expectations, he will take the prize of her undying affection and have permanent sway over her sentiments.

For what seems like a long time, budget announcements (or for now, perhaps we should call them ‘spending announcements’) from the Chancellor of the Exchequer have seemed to be a placebo to the common man rather than an attempt to stabilise the economy. Rather like living in a comfortable house that is built over a subterraneous cavern and has no foundations, we are waiting for a collapse of our comfort. Many are beginning to see cracks in their floors appearing and see dust seep in from fissures in the walls. The government is sent to inspect the property frequently but as a solution, keeps adding new floor levels to the property, building upwards, rather than inspecting the lack of foundation underneath.

Although one feels it is in their moral fibre to look for the good in everything, it is increasingly harder to become open-minded to policies that bear all the hallmarks of long term catastrophe.

Reducing mortgages to 5% must indubitably be a good thing, as immorally soaring house prices mean that most can never look forward to the prospect of owning their own home.  Yet the new mortgage policy is in some ways a smoke and mirrors operation. At first glance seeming like a viable option for the majority of first time buyers, it simply means that those who could afford to access a mortgage in the first place get a better deal, while those who couldn’t afford it in the first place still cannot afford it, due to financial and job insecurity and (often) low credit scores. Not everyone will be approved because they don't have secure employment. After all, the United Kingdom now dwells in an economic environment that is constantly insecure, due to the repercussions of totalitarian lockdowns that have destroyed small businesses, perhaps to the tune of 250,000 being decimated.

With fewer lenders who will be able to support the new mortgage scheme, the proposal condenses new buyer mortgage lending further into a tight, elite banking circle. Forgive the cynicism but surely the Chancellor of the Exchequer would have been aware of the public perception regarding the major financial institutions. These can be presumed to not have changed with all that has happened lately.

Speaking of the financial institutions, a Labour policy from 2016 seems to be ticking along nicely in the form of Rishi Sunak’s National Infrastructure Bank, set to launch this spring. How ironic that Labour now no longer believes in the plan’s effectiveness, since it was put forward by a Tory. Under the guise of adhering to Carbon Neutral Values, skeptics will undoubtedly foresee it turning into little more than another (nationalised) hedge fund for the deep-pocketed generation of ‘Green investors’, similar to other forms of ‘Green’ strategy that demand all cooperate with their economic aggressiveness.

Let us turn back from this brush with all-encompassing globalism, to those small businesses, who were in a state of desperation just two months ago. Are they given a slice of hope to bite into when reading the budget? The budget reads, to the shopkeeper rather than the economist, ‘business as usual’, with the magnanimous extension of the business rates holiday, supplemented by various ‘restart grants’. The only problem with that is there has been virtually no business for months. ‘No business as usual’ seems more appropriate. Yes, there is an end to the lockdown in sight, to all intents and purposes, but a dog that has been kicked once by its master expects another kick. With furlough extended until September it can be reasonably assumed that despite saying otherwise, the government has little hope for a quick alleviation to the plight of these business owners (that is, those who still have a business).

Meanwhile, school level education seems to have been largely forgotten about. With some vague gestures towards higher education and vast sums of money to go towards grants for producing new vaccines (do the ones we already have not do the job, then?), school leavers and GCSE takers appear to have been beneath the government’s considerations. With exams cancelled for the second year in a row, one could have been forgiven for expecting the government to take some financial action, meaningless as it may be, into investing in new technologies and budget boosts for state sponsored schools. A missed PR opportunity there, if nothing more.

Positives?

It would be easier to give the budget a fair roll of the dice, if we did not perceive the government's sudden disregard for economic competence in the face of a virus, whose threat according to some excellent statistical analysis has been massively exaggerated, to allow for a totalitarian style of imposed rule that has been roundly condemned by several well-known journalists. Not least the indomitable Peter Hitchens who perceives the current climate as an epidemic of despair.

There have at least been some extended increases in spending towards local towns. Local pubs and clubs can be rescued by localised, government-matched bail outs. Simply put, communities have to fork out as much cash as they can afford to keep selected local clubs and boozers open and the government will match their offering out of their never-ending pockets, up to the tune of £250,000.

This creates a Hunger Games style bidding process, where locals decide who should be saved and who should get the chop. Woe betide any surly landlords who didn’t quite top up to the pint limit on their patrons’ last, socially-distanced visit.

Perhaps the only genuinely impressive, positive note in the budget is the announcement of ‘MBA style training’ for owners of small and medium sized business. This is a legitimately good-looking scheme which promises to incentivise a new generation of entrepreneurs. However, that is in part the problem. What it will do for existing business owners, who have already devoted a lifetime of sweat and graft to their present venture, is not clear. Statistically, they will probably have to start from scratch, or at best, considerably downsize. Once again, the government is looking to build ever higher, without examining the foundation. Once again, our hero, after saving his damsel from a false situation of danger that he himself created, is showering his emotionally blindsided lady with new and original compliments. God knows how such a narcissist will treat her next.

I wouldn’t expect cash to come back back into fashion anytime soon. The limit for contactless payments just quietly went quietly up to £100 with little fanfare, except a low whirring in the background from the deeply chewed nails of the financial security community. All in all, it feels almost as though the Chancellor is trying to speed up a collapse of normal economic structures, while keeping everyone in the ‘house’ happy until the last moment of ruin. Certainly, such a strategy will leave only one choice from the rubble. “Build Back Better.”

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