ELECTION 2017: Richard’s warning on the economy:
On Thursday the country, including all those working our county’s businesses, will decide who is the next Prime Minister, the next government and Gloucestershire’s six MPs.
This is the third time in seven years that my constituents will decide if I should be their MP, and I want to share with Punchline’s readers why – as a former businessman, and shareholder in a small family business (a pub and a small hotel), I am more convinced than ever before that this election is vital not just for business but for the soul of our country.
There was a time when the basics of all main parties’ beliefs were solid. We all endorsed our monarchy, our Armed Forces and intelligence services, the NHS, the Commonwealth, NATO, the nuclear deterrent, the UN, and the importance of business, public services, charities and faith groups in the make up of civic society. And there was one other body widely endorsed – the EU.
This election is different. Most parties recognise that the Referendum means we will leave the EU, because that’s what the people determined. But one party wants us to have another vote, and get a different result: and another says no deal is a bad deal, thus taking off the table before we’ve started our negotiating clout.
But what’s also new is that one party leader, the man who would be Prime Minister, is fundamentally not a monarchist and would scrap our Armed forces, our intelligence services and our nuclear deterrent if he could.
More worrying still is an absolute distaste for business, unless it’s either very small, a co-operative or owned by the state, by Corbyn and Labour. And then there is the Magic Money tree, which is somehow going to pay for all the frenzy of spending.
The Labour manifesto is the most radical extreme left wing manifesto in our history – involving mass nationalisation (the water companies alone would cost c£70 billion) and a huge increase in taxation NOT spelt out, but just hinted at: a land tax.
Assuming that land is 55% of the value of your home, and the land tax rate is 3%, then the extra tax (ie above existing council tax) on the cost of the average house in Gloucester (worth £250,000) the would be £2,525. How many people know that this is part of how the Labour Party would finance the Magic Money Tree?
The other part is through raising the business or corporate tax rate, from 19% to 26%. In theory this sounds good: increase the tax by 7%, and you get 7% more tax receipts. Wrong. Increase the tax rate and you get less investment, less growth, fewer pay rises and less revenue to tax PLUS less investment by overseas companies, attracted both by being based in the UK with our strong rule of law, and a competitive tax rate. Business tax is a competitive advantage which if we reversed – rather than continuing to 17%, as the Conservatives plan – would fast disappear: and with it vital tax revenue. And we know that this is the case because since we lowered the business rate, business rate revenue has risen about £10 billion.
It was President Reagan and Prime Minister Thatcher who grasped that lower tax rates means more revenue, because it incentivises commercial activity and productivity. Socialists, let alone Marxists, have never understood this. And it’s also why Labour could not believe that the Conservatives would be able to reduce the annual budget deficit by two thirds (from £150 billion to £50 billion) while increasing jobs by 2.9 million, adding almost 3 million apprenticeships and increasing the wages of the lowest paid by 6% last year, as well as taking 4 million people out of income tax altogether – by almost doubling the income tax threshold from £6,500 to £11,500.
When public sector workers say they have had a tough pay freeze of 1% a year they’re right: but they forget that they are a thousand pounds better off each year because of the increased tax free amount.
We assume the basics of macro economics are agreed by all politicians. They’re not. Shadow Chancellor John McDonnell described himself as the last Communist in Parliament. For the extreme socialists nationalisation, higher tax, squeezing the rich and the big businesses, introducing a land tax and increasing the role of the state is right because the state always knows best.
For John McDonnell making people who don’t go to university pay for the university fees of those who do, and allowing the very rich to get a winter fuel allowance is all fine. The key is that the state decides who gets what: not you.
So if you vote Labour the state will expand, business will be nationalised or squeezed and your own industry and home will be heavily taxed. You’ll get policies that communist China rejected about 30 years ago and no other western country in the world has. And for a simple reason: these policies were tested to bits, mostly behind the Iron Curtain, and we know they don’t work.
This is not the Labour Party we thought we all knew – which understood there was no social justice without economic growth: it is not even the Labour Party which ended by saying ‘sorry there’s no money left’. This is the Labour Party hijacked by communist veterans and advisors around a man rejected by 170 of his own MPs in a vote of no confidence only a few months ago.
Following these policies would lead to instant economic disaster – currency and market crashes and a rapid hike of interest rates instantly hitting those on mortgages.
That doesn’t mean everything is perfect out there at the moment. When you’re still over spending by £50 billion a year, and the interest alone on the accumulated debt is more than our entire education spend, there are huge human problems as well as a balance sheet challenge.
But whatever else we could do, just spending more from a Magic Money tree is no solution. My message to all businesses and householders is to think very carefully before voting for a dash to Marxism.
Vote for me and us and you will get a sensible approach to managing the economy, delivering growth, attracting investment, affording increases to health and education – and a cautious, determined dialogue on resolving the great unresolved issue of social care.