Sunak v the Sturgeon show

Who to watch? The seemingly Teflon-coated Nicola Sturgeon giving her testimony to Holyrood or Rishi Sunak presenting his “whatever it takes” Budget to repair Britain’s Covid-struck economy?

Both politicians, in their own way, had to come up with the goods to keep up their reputations while the results of both their TV outings are intrinsic for the future prosperity of the United Kingdom.

Unable to switch off Sturgeon, I found myself for the first time in about 20 years not watching a Chancellor giving his Budget live but listening via the radio.

Maybe there were some crossed wires because some of Sunak’s policies came across as deeply perplexing, contradicting some of the Tory Party’s dearly held beliefs on fiscal policy.

You can see just how perplexing when Frank Field, a Labour MP for twenty years, described the Budget as the best in his 42 years in politics. Field went on to tweet: “Rishi has done a Budget for the hour and made the possibility of long-term prosperity to fight the next election.”

Yes, that was Frank Field, now Lord Field, a maverick within his own party as well as an admirer of Margaret Thatcher, and of course a rogue Brexiteer.

So is Field right, is this the best Budget in four decades?

It was certainly generous, one that spread some cake across all income groups, and also relatively fair. Indeed, some would say the Chancellor has been too generous with taxpayers’ money by shelling out another £53 billion to extend the furlough scheme for an extra five months. Yet it was the right thing to do, giving certainty to many businesses which may have decided to up sticks or fire workers.

He was also right to finally provide grants for many of the self-employed who have missed out until now, extend the £20-a-week boost to Universal Credit and – more importantly – announce that the Treasury will no longer deduct past debt from UC which many believe was one of the drivers for food bank demand.

This brought more praise from Field but also a stinging rebuke: “Trots can put that in their pipe and smoke it.”

As expected, Sunak has also gone out on a limb to help the hospitality, leisure and tourism industries which have been so devastated by lockdown and for which he has such affinity.

VAT and business rate breaks are to continue, and there will be “Restart” grants for small businesses. More congenially, Sunak has kept the manifesto promise of not putting up personal taxes, and went further by promising to freeze allowances for four years. This was a clever ruse because freezing allowances is in effect a tax rise as people get hit at a higher tax rate as they earn more, but won’t notice it as much. It’s estimated about a million people will be affected.

Despite the waterfall of leaks from No 11 which would have filled the Thames, Sunak did not put up capital gains or any other so-called wealth taxes as had been rumoured. This was eminently sensible as it is the animal spirits of investors and entrepreneurs that will lead the way to recovery.

Now comes the trickier bit to decipher: why would a Tory chancellor overturn the philosophy of predecessors to raise corporation tax from its present 19 per cent to 25 per cent by 2023?

What message does this send out to business owners and foreign companies wanting to invest at such a fragile moment in our recovery?

Perhaps businesses will be enticed instead by his new “super” investment allowance, which means they can deduct £1.30 for every £1 invested in the business. Sounds like a recipe for some pretty dodgy investments to me. Equally problematic is the decision to allow 1.5 million smaller companies with profits of less than £50,000 to stay at the 19 per cent tax rate. The danger here is that this will drive many companies to find ways to minimise their profits.

It’s difficult to know what motivated Sunak to fiddle like this with corporation tax. Is it the result of No 10’s non-stop polling of focus groups which always conclude that people want taxes raised for nasty capitalists? Don’t know. But one can only deduce that Sunak reckons that most people will soon forget these tax hikes. Four years is a long time.

And if the economy bounces back quicker than expected as many economists now forecast, whoever the Chancellor is by then, he or she can always drop the tax rise.

Even the OBR sounds chirpy. With the speed of the vaccination roll-out, it predicts the economy will return to its pre-pandemic level by mid-2022 – six months earlier than previously thought.

Growth this year is now forecast at a rather good four per cent, and unemployment should now peak at 6.5 per cent – some say it will be lower – instead of earlier forecasts of 11.9 per cent. It means 1.8 million fewer people will lose their jobs.

I won’t go as far as Field to say this was a great Budget. But on balance, it was sensible, one that gives certainty to those in work and greater help to those without as we emerge from this extraordinary period. And it didn’t scare the markets.

More details below.

St Sturgeon  

Scotland’s First Minister is made of steel, and so it seems is her hair. After eight hours of gruelling questioning there was neither a hair out of place on her well-coiffed and perfectly coloured helmet (are hairdressers open in Scotland?) nor even the hint of butterflies.

The First Minister just kept on going and going, as relentless in her response as was her tormentor, the former first minister, Alex Salmond, when he gave evidence last week at the Holyrood inquiry.

By far the best line of today’s inquisition – which her sister likens to the tormenting of Princess Diana or Mary Queen of Scots – was when she rather coyly explained that, as Salmond’s “bezzie” for so many years, she knew best of all how he would react.

While she stands accused of breaking more codes than Bletchley Park, Sturgeon continued to double down on her claims that she had not broken any ministerial code.

She also continued to deny any wrongdoing and repeated that suggestions of a malicious plot against Salmond were “absurd” and “not based in any fact”.

There was one crack in St Joan’s armour: one teary second when she told the MSPs questioning her that the fall-out with Salmond was “a matter of deep personal pain and regret for me”, and insisted that she was not out to “get” her predecessor.

On the more controversial issue of when they met, she also insisted that it was not until the meeting with Salmond at her home on 2 April that she had “detailed and actual knowledge” of complaints being investigated by the civil service, and that she had acted in accordance with the views of the law officers when deciding to continue the government’s court battle with Salmond.

The saga continues. Gerald Warner has a blistering account of her testimony. His view was that she struggled and has become a liability for the SNP. Read it below.

New scientists at the Mail 

Whatever you think about DMGT, owner of the Daily Mail, it has the nose for a story. Word has it that DMGT spent only three weeks negotiating to buy the New Scientist magazine, in a £70m cash deal, one which has brought juicy profits to investors and staff alike.

You can see why DMGT would go for the New Scientist: brilliant science writing has never been more at a premium than in these Covid times. Employing 80 staff, the 65-year-old magazine is also rather successful, forecasting £7m profit this year on revenues of £20 million.

Predictably, some NS contributors and readers have let it be known they are rather sniffy about the provenance of their new owners.

They shouldn’t be. Like it or not, the DMGT invests in its journalism and has actually done rather better than much of the media in covering the science – and complexities – of the pandemic.

Maggie Pagano,
Executive Editor