On Wednesday 15 March Jeremy Hunt will deliver his first Budget. He will throw out a few titbits (such as no further increase to domestic fuel bills) to win a cheap cheer or two from the braying Tory donkeys on the backbenches of the House of Commons chamber, but the truth is that under this Conservative government – and particularly under the stupid and treacherous Sunak and Hunt duo - Britain is fast becoming an economic basket case. Having two people in control is called a 'duumvirate', but in the case of Sunak and Hunt I think 'dumbvirate' is far more appropriate! Over the next few days I will therefore set out in detail what a patriotic government would do to save Britain's economy. I'll start today by looking at what the budget should do for businesses. A strong economy is dependent on a thriving business sector. Without profitable companies you don't get employment, or tax revenues that can be spent on infrastructure and services, and we become a poor, third-world country. The business side of the budget might not be sexy but it is absolutely crucial.
Britain's investment crisis
St Augustine is famous for his youthful prayer: “Lord, give me chastity and continence, but not yet!” It seems that our Sunak and Hunt dumbvirate take the same approach: they both claim to want to cut taxes, but not yet! Tax revenue as a share of GDP is already at a 70-year high under their leadership and the national tax burden is about to hit its highest level since the Second World War. The tragic irony is that they are basing their economic policies on the old, outdated and criminally cretinous forecasts of the OBR (Office for Budget Responsibility) which have already been proven to be completely wrong. The truth is that borrowing in the current financial year now running £31 billion below forecast – meaning that the government has much more money available to it than we have been told and could therefore cut taxes if it wanted to.
But sadly, the other truth that needs to be understood is that Sunak is not and has never been, a tax-cutting politician. When he was chancellor, behind his desk in 11 Downing Street he had a portrait of Hugh Gaitskell – the former Labour chancellor! Ironically, Gaitskell was succeeded as chancellor by the Conservative Rab Butler, whose policies were so similar to his Labour predecessor's that in 1954 The Economist magazine described the chancellor as “Mr Butskell” and the Conservative/Labour economic consensus as “Butskellism”. Recently the same magazine blended Hunt with his Labour shadow, Rachel Reeves, claiming that “Ms Heeves” is now the chancellor. This is meant to be a joke but frankly the fact that Conservative and Labour economic policies are virtually indistinguishable is not at all funny – it's a disaster for Britain.
Sunak and Hunt have both repeatedly stated that they will increase corporation tax, from the current rate of 19% (already higher than some of our main competitors) to an unsustainable 25% - an increase of 31.5%! Even if they have been blatantly lying, and actually bring in a lower increase, the damage has already been done, with Britain losing untold billions of pounds of business investment. Increasing the corporation tax rate is completely self-defeating. Stupid Sunak does not seem to understand that he will not raise more money: 25% of nothing is nothing (as John Redwood, the only Conservative politician who actually understands economics, has himself said). When businesses move abroad so do the jobs, and the taxes, and the exports, and all the other benefits that a thriving business brings. And yes, loads of businesses have been lost to Britain. Sunak the socialist has been helping our foreign enemies become richer and stronger, while we become progressively poorer and weaker.
Take AstraZeneca, for instance, one of Britain's top pharmaceutical companies. They intend to build a new, £300 million, state-of-the-art, manufacturing facility. The plan was to build this in England, but the company explained that “because the tax rate was discouraging” they have instead moved this huge investment to Ireland. So we have lost a major new manufacturing plant (which is intended to expand even further in future), hundreds of jobs, many highly skilled and very well paid, and the production of important medicines and high-value exports. All because Sunak the Traitor plans to increase the UK's corporation tax rate to double that of Ireland. And don't imagine this is just a one-off. AstraZenecxa has recently been investing in Ireland, the US, Spain and the Middle East, rather than in Britain. What makes this despairingly ironic is that Hunt recently identified life sciences as among the UK’s five most important sectors and said he wanted more investment in this. Instead government policies have resulted in exactly the opposite!
And it's not just AstraZeneca either. The British chemicals company, Ineos, is investing £3.1 billion to build a chemical plant in … Belgium. As the company says, this will be the “largest investment in the European chemicals sector for a generation” - and because of the Tory traitors in government it's not in the UK. Shell, Britain's biggest company, also seem to be fed up with this country, saying there are “more attractive locations right now”, such as the US. Or take DS Smith, the giant British packaging company, which has admitted it has cut back investment in the UK in favour of Europe and America because of a lack of government support. DS Smith has recently invested in new facilities in Germany, France and Portugal because those countries have a clear idea of how to develop their economy and offered financial support. If even British companies are now shunning the UK for new investment, you can be sure foreign companies are too. KPMG, the multinational professional services company, confirms this, saying that US companies are shunning Britain “because of the high tax burden”, with “dozens” deciding not to invest here in just the last year alone.
As far as the world's businessmen are concerned, Britain is now a third-world pariah state. The UK is forecast to be the only major economy to shrink this year. If you don't understand that this is a crisis with our national survival at stake then you simply aren't paying attention. So what's the solution? It is this:
Cut corporation tax
With a corporation tax rate of just 12.5%, Ireland is stealing our lunch - and dinner too. International companies have moved there, invested there, paid taxes there and grown Ireland's economy so that now the small island next door – which has become our main economic rival – gets four times as much business tax per head as we do (despite having a lower tax rate) and has a GDP per head more than double ours. And yet the mentally retarded Sunak and Hunt dumbvirate still don't appreciate that cutting business taxes brings in more income while increasing taxes brings in less. So the first thing Hunt should do is cancel the proposed corporation tax increase and indeed reduce this to 12.5% - the same level as in Ireland. The cost of doing this has been estimate at £13 billion in the first year, but the cost would then fall sharply as more businesses were attracted here.
If you don't understand, or believe, how great a threat Ireland's lower tax rate is then consider pharmaceuticals, once one of our leading export industries. With both a lower corporation tax rate, and higher claimable expenses (allowing companies to reduce their tax bills even further), Irish exports of pharmaceutical products have more than doubled since 2015, while UK exports have fallen by almost 30%. The UK still has an important research sector, but once new drugs are developed here the manufacturing goes abroad as do the jobs, the corporation taxes and the export revenues.
Cutting the rate of corporation tax to 12.5% is not outlandish or extreme – it is, ironically, exactly what Jeremy Hunt suggested he would do when he contested the Conservative Party leadership election in 2019! And in last year's Conservative leadership election he opposed Sunak's plan to increase business taxes, saying he was worried that his economic policies would “lead us into a recession”. And yet, here he is now, putting into practice precisely the policies he so vigorously opposed in the past. What a wonderful politician he is: a treacherous, unprincipled liar who can't be trusted!
Promote business investment
Cutting the headline rate of corporation tax would be a good start but would not, on its own, be enough. Believe it or not in 2021, when Sunak was chancellor, he did do one good thing. Only one thing, mind, and he now intends to reverse it, which makes it seem as if this was actually a complete accident. What was this? It was the so-called 'super-deduction': a 130% tax deduction on spending on new machinery. This was a huge incentive to companies to invest in new equipment, as they could claim this off their tax bill, and recent research suggests that it increased investment by around 25%. It would have been much more effective if it had included buildings (and not just equipment) and if Sunak hadn't also stupidly announced that corporation tax was going to increase, which – as we have seen – drove businesses abroad. The other problem was that this 'super-deduction' was for only two years and expires this April. With corporation tax rising to 25% and the super-deduction expiring, businesses will be hit by a double-whammy and the UK will fall to 33rd in the corporate tax competitiveness rankings of the 38 OECD countries. So much for Hunt’s claim that he wants Britain to have “the most competitive tax regime of any major country”. This is just another of his LIES.
So the next policy that is now required is a generous incentive for companies to invest in new factories and equipment: full expensing - a 100% tax rebate - for all capital spending on new buildings and machinery. And this needs to be made permanent. One of the major problems with British economic policy is the constant chopping and changing. For businesses, stability is essential in order to allow them to make long-term plans with confidence. Instead, each new chancellor introduces new gimmicks and reverses his predecessor's policies, which just drives companies away. A generous, long-term, tax policy is essential. Industry has been pleading for full expensing, but Hunt will probably refuse. He might offer the crumb of some lower rate of tax deduction (50% has been mooted), as a sop to his business critics, but this will be too little and completely useless. It's all or nothing. For decades, UK business investment in new machinery as a proportion of GDP has lagged well behind that of other G7 nations. Low capital spending has led to stagnant productivity, holding back growth, wages and tax revenues.
A policy of full expensing would be easily affordable. In the first year it would cost £7.7 billion but then, just as with the reduction in corporation tax, it would soon pay for itself and indeed raise much more revenue, as it attracted new investment. Remember that a new factory brings new jobs, with those employees paying income tax, and VAT on the purchases they can now afford, and not claiming benefits, and spreading their new wealth in the local community. So encouraging new investment by offering full expensing is actually a very cost-effective way of boosting the economy, and especially in areas of low employment which the government pretends it wants to 'level up'. Full expensing would create jobs and would allow businesses to invest in more modern machinery in order to become more profitable.
Take robotics, for instance. It is obvious that more industrial robots equals more productivity, which equals more growth, which equals more success and all of which equals more wealth for the whole country. But while the global adoption of workplace robots is increasing, in the UK the rate of growth is actually slowing down! In 2021 (the most recent year for which figures are available) fewer than 0.4% of the new robots globally installed were in the UK! With an average manufacturing robot density of only 111 robots for every 10,000 employees, Britain lags far behind the global average of 141 and way below the top nation of South Korea, which has nine times more industrial robots than us. In fact, the UK has fallen to 24th in the world robot density rankings, making us the only G7 country outside the top 20. It's no coincidence that the average worker in Germany, which has 397 robots per 100,000 employees, is around 30% more productive than a British worker. So German companies are more profitable, their workers are better paid and their economy is more successful. So what are the Sunak and Hunt cretins and traitors doing to increase the number of industrial robots in the UK? Nothing.
TL;DR
A pro-business policy of cutting corporation tax to 12.5% (to match that of our main competitor, Ireland) and offering 100% tax rebates on all new capital investment in factory buildings and machinery, would turbocharge business investment in Britain, promoting growth, jobs and government revenues. In the first year the cost would be around £21 billion – which is well below the £31 billion which the government has available due to lower borrowing than forecast. In the longer term (and even the medium term) the cost of helping businesses would very quickly raise much more money as new businesses were attracted here and invested in growth. Unfortunately, if you want sensible and patriotic policies you need to vote for sensible and patriotic politicians, and instead we have the vile Sunak and Hunt. Never mind St Augustine's prayer – I'm praying for a general election so we can vote these traitors OUT!