Next PM must pick up the pieces of Boris’ woeful economic policy

Economics is not a game. It is even less of a game of bidding up the size of tax cut promises, as currently being played by the contestants to run the country. Three years of incompetent and incontinent economic management has left the UK on the brink of recession, where only the wasted spending on Test & Trace, followed by our rush to see the doctor after lockdown have kept this measure of the economy from shrinking last month.

Neither helps in the least if we are to get back even to the pedestrian growth of pre-pandemic days, let alone to finance all the urgent pleas for “more resources” to which we are treated every day on the BBC’s Today programme. With a leadership election to win, it is understandable that no candidate dare point out how the British standard of living has fallen behind much of continental Europe, or suggest that we need to slim our bloated public sector.

Business, which underpins the nation’s prosperity, is almost a banned word in this election. There’s been scarcely a mention of how to deal with inflation, a disease which needs painful medicine to cure. Nobody seems prepared to admit that “levelling up” has produced the opposite effect to that intended. Those people at the very top have prospered mightily, while the poorest quarter of the population has struggled.

If you keep making policy mistakes, the costs accumulate. The £13bn programme of installing so-called smart meters is an embarrassment, but few mistakes can compare with Test & Trace, which has wasted £37 billion for no measurable benefit. The final cost of the emergency business loan schemes set up through the banks (but in a way which left the credit risk with the taxpayer) is yet to become apparent, but will be measured in tens of billions of written-off debts. Procurement payments during the pandemic for kit that failed to work, or at prices which guaranteed suppliers’ magnificent margins, are detailed every fortnight in Private Eye. Again, fortunes for the few, and billions of pounds wasted.

Away from the cost of Covid, the Johnson administration will be remembered for its inability to carry through almost any policy. It has often seemed that once the announcement had been made, and favourable headlines secured, the business of execution was just too tedious to bother the great mind at the top. The outstanding success of the era, development and distribution of an effective Covid vaccine, owed almost nothing to the government.

It is impossible for the chief financial architect of the era to escape the blame for this. Rishi Sunak may be forever telling us of his desire to be a low-tax chancellor, but both spending and debt have ballooned on his watch. Words and figures do not agree, as they used to say on bounced cheques. His slick PR campaign has made him the front runner, conveniently forgetting the gamble he has taken, dishing out subsidies while talking of tax cuts. As Liam Fox put it this week: “Any dummy can spend tomorrow’s money today, borrow it, and call the increased level of activity growth.’’

The former chancellor has been helped in this prestidigitation by the governor of the Bank of England. This very week Andrew Bailey was pledging to get inflation back down to 2 per cent “no ifs or buts”. Unfortunately, he seems to have no idea of how to do it, beyond hinting that Bank Rate could rise by more than 1/4 per cent at next month’s MPC meeting. Golly! That would take the base cost of money to the dizzy heights of 1.75 per cent, absurd for an economy with double-digit inflation. As for the tricky, and potentially expensive task of reversing Quantitative Easing, Mr Bailey said only that they were getting round to it.

Underlying all this is the Gadarene stampede to Net Zero, a legally-binding target whose ruinous costs are only starting to become apparent. Only Kemi Badenoch among the contestants to become prime minister seems to have grasped this, calling it “unilateral economic disarmament.”

In a general election, the parties have to trim and avoid unpleasant truths to try and maximise popular support. The electorate in this leadership contest is surely more able to face up to reality now than at any other time. Judging by the appalling guff most candidates are feeding the sheep, reality is the first casualty of this election, too.

Eat, or be eaten

It’s a long time since London saw a takeover scrap that used the Pac-Man defence. For younger readers, this was named after a primitive computer game where you either ate or got eaten, and it was played to general entertainment and great effect by Wolverhampton & Dudley Breweries when the company received a hostile takeover bid from Marstons. No, said Wolves, we’ll eat you instead. And they did. Later, the victors changed the name to Marstons.

We may be promised a variation on this theme as one aggressive North Sea minnow tries to take over another. Kistos, run by North Sea dealmaker Andrew Austin, wants to pay £1bn to buy Serica. Too small to find the money, Kistos is suggesting cash and shares. It transpires that Serica had recently approached Kistos and got the brush-off. According to Energy Voice, Serica wanted the assets, but could do without Mr Austin and his board.

The approach shows that there is still life in the North Sea provided the Oil & Gas Authority stops trying to snuff it out. The combined business would be big enough for the FTSE250. Of course it may be all sweetness and light between the two managements after the initial posturing. We shall see.