The Curious Incident of the Spring Statement
March 27, 2022
“Is there any point to which you would wish to draw my attention?” asked Inspector Gregory of Scotland Yard.
“To the curious incident of the dog in the night-time” replied Sherlock Holmes.
The Chancellor’s Spring Statement contained five notable omissions.
Firstly, he opened by blaming the cost of living crisis on the invasion of Ukraine. But omitted to say wholesale energy prices had spiked before Christmas. Mr Sunak is not to blame for the rise in global energy prices. But his Government has stood by and watched companies rake in profits by the £10s of billions. And they have form in keeping us hooked on fossil fuels. A decade of on-off investment in renewables, dodgy ties with even dodgier oligarchs, and a keystone-cops approach to insulating homes has left Britain’s vulnerable, vulnerable. Food prices are up, too. Durum wheat, which makes pasta, has shot up 90% as a result of freak heatwaves and failed harvests in Canada.
Which takes us to the second omission, the curious absence of COP. Back in November, decarbonising was our no 1 priority. Today’s announcement that VAT on home insulation materials would be reduced from 5% to 0% is weak by any standards. Where is the retrofit programme? David Cameron’s 2013 decision to “cut the green crap” saw domestic insulation retrofits plummet from 1.5 million homes per year to near zero. Insulating buildings will reduce bills, NHS admissions, and create jobs.
It’s so financially viable that my Combined Authority has launched a Green New Deal fund where we make capital available on a commercial basis and consumers pay for it with energy savings. Britain is crying out for a national version of this.
Then there’s the curious omission of levelling up. For the PM’s flagship policy and favourite catchphrase to be missing is curious indeed. Mr Sunak might claim that equalising the NICs threshold with income tax is a form of levelling up. Equalising the rates is obviously sensible. But the numbers don’t lie. The 1.25% NICs increase will still happen, and raise £14 billion. This equalisation will cost £6bn. So he’s taking a net £8bn increase in taxes from employment. While incomes from rent, dividends and capital gains all remain lower than working for a living.
He was almost honest, though, in saying why. He has a plan, he said, to bribe us with our own money in 2024, cutting income tax from 20p to 19p. So that’s nice.
The fourth omission is a lack of any stimulus. He acknowledged that Britain’s R&D has been poor since the financial crash, along with the weakest OECD private sector investment. A frank mea culpa, given his party has been in power for 12 years. Add in the loss of disposable income from household bills rising £1700 a year, and we’re flirting with recession.
So where is the solution? There was talk of tinkering with tax credits. But why not turbocharge offshore investment? At £40 per MWh, offshore electricity is a fifth of the price of gas. Cheap clean energy would make Britain an industrial powerhouse. And let’s change the local content rules so the turbines get manufactured here, in Britain.
Mr Sunak’s fifth and final omission was his failure to make eye contact, shake hands or even acknowledge the presence of the Prime Minister sitting next to him. No levelling up. No climate action. No plans to fix anything, in fact. It’s almost as if he doesn’t want to rescue an unpopular PM.
“The Chancellor did nothing in the spring time,” said the detective. “That was the curious incident.”