AS I SEE IT: TERRY MURDEN says the country demands an end to deceit and fantasy in Downing Street
We should have been focused on a weekend of warm-up stories preparing us for the fiscal plan that was due on Monday. Rishi Sunak is certainly in need of some quick headlines that will switch attention away from his controversial decision to re-appoint Suella Braverman as Home Secretary. Even so, he probably made the correct call by postponing the Halloween statement in light of revelations about the bigger-than-expected size of the hole in the public finances.
What will now be a full Autumn Statement on 17 November is not going to be a win-win moment to secure instant glory, but it will present an opportunity for the new Prime Minister to be honest with the voters, the markets and his backbenchers about the reality of the economic pressures facing the country rather than playing the sort of fantasy financial games characterised by Trussonomics.
If there are two themes that need to dominate Mr Sunak’s tenure in Downing Street they must be honesty and competence. The voters and the markets, as well as a significant number of Tory MPs and party members fell out with Boris Johnson over the first, and quickly lost faith in his successor Liz Truss over the second. Restoring both will go a long way to defining Mr Sunak’s time in office and giving his party a fighting chance at the next election.
While he may be suffering some early political fall-out from the Home Office appointment, he has at least managed to keep the markets on board and, as I’ve said in recent columns, the markets are the true check on government behaviour. As both a former hedge fund manager and Chancellor he is better-placed than many of his predecessors to know how he must feed the market’s demand for stability.
He must also win back the confidence of the business community which largely supported his response to the Covid pandemic. The Autumn Statement will take place just a week earlier than the date set by Kwasi Kwarteng which was criticised for being too distant from his ill-fated mini-budget on 23 September. The difference this time is that it will also have the benefit of the Office for Budget Responsibility’s assessment on how the numbers stack up and it now seems the hole in the budget is higher than previously anticipated.
We’ve all been warmed up to expect the worst and hope for something better. Deep spending cuts and even tax rises, rather than Mr Kwarteng’s cuts, are being priced in, so won’t come as any surprise. It also means that anything resembling a giveaway will be seen as a bonus.
Mr Sunak shares his predecessor’s goal of low taxes, though with a more realistic timetable. The over-enthusiasm to boost the pound in people’s pockets proved to be the downfall of the short-lived Truss-Kwarteng partnership. Even so, time and circumstances are not on Mr Sunak’s side and he needs some early hits, not only to get the Braverman controversy out of the headlines, but also to show he is in control. His quest to unite his party by embracing a range of opinion must not translate into weak leadership or he will pay a heavy price at the next election.
While he doesn’t want to risk another Truss-Kwarteng backlash, a few titbits to help businesses and households over the winter would go along way to getting a few cheers. He could start by reinstating one of Mr Kwarteng’s better ideas – scrapping the reforms to the IR35 off-payroll reforms. This would be a boost for freelancers and contractors who form a key strand of the small business community.
More help for SMEs generally should include a fundamental reform of the business rates system, which must also apply to the devolved governments. Both these measures come at little cost in the overall scheme of things but would earn the Prime Minister a few brownie points.
Another windfall tax on big businesses? Mr Sunak is instinctively against the idea, but he did surrender to pressure in the dying days of his time at the Treasury. Since then energy bills have risen significantly higher and would be an acceptable excuse for another raid on the enormous profits being made by the energy firms. While the oil and gas sector would squeal at such a move, there would be much to be gained politically.
These are, of course, early days in Mr Sunak’s premiership but with an election just two years away and a recession threatening to cast a gloom over at least half of that time, he needs to establish that he has a firm hand on the wheel to steer the country to better times.
Van der Kuyl’s star tarnished
Chris van der Kuyl has enjoyed a starring role in the Scottish business community and media for many years. As one of Scotland’s more entertaining and exuberant advocates for enterprise his views have been sought as a panelist, speaker and government adviser.
His star, however, has been somewhat tarnished following the collapse in value at meals delivery company Parsley Box which he chairs and in which he invested almost £2m in an issue of shares in the summer.
As we reported this week shareholders in the company, who bought in at 200p when it floated in March 2021 valued at £84m, have seen their investments wiped out as the appetite among new customers dried up and the share price plummeted to around 2p, leaving the company worth about £1.6m.
Despite a statement through the stock market, the story failed to get even a mention in most of our (award-winning) business press. As for Mr van der Kuyl, he’s a subscriber to the mantra about the virtue of failing before you succeed. Maybe he’ll give his Parsley Box experience a mention when he next offers his advice on how to scale up a business.
tmurden@dailybusinessgroup.co.uk
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
Totally agree with your call for action on business rates. The Scottish Government’s recent Spending Review mooted a further escalation in the business rate, which is already at a 23-year high. This is at a time when shopper footfall and retail sales growth is weak at best and with the shop vacancy rate still elevated. An inflation-matching hike in the business rate come April would add circa £65 million to retailers’ rates bills in Scotland alone, be difficult for Scotland’s 22,000 stores to absorb; and make rejuvenating our high streets and retail destinations even harder.