As an appetiser to the Spring Statement on 23 March, Rishi Sunak gave the annual Mais Lecture at Bayes Business School on 24 February, setting out his vision for the future of the UK economy. A key theme was that the Government was forced to act in an ‘extraordinary manner’ during the pandemic, and to provide support to companies and individuals as the economy stalled and lockdowns were implemented.
There are similar calls for action now, as the increase in National Insurance and frozen tax bands mean that lower paid employees are likely to pay more tax on any pay increases they receive. Coupled with the recent record-breaking rises in petrol prices and inflation increasing to rates that have not been witnessed before by the younger generation, there are calls for the extraordinary action taken to support business and individuals during the pandemic to resume.
Whilst the Chancellor has made comments in the past that government intervention will inevitably lead to increased taxes, he made it explicit in his speech that ‘corporate welfare and ill-thought through subsidies are unfair to taxpayers, who pick up the bill’. It seems that although Sunak has been lauded as action man during the pandemic, he is likely to be seen as inaction man by those hoping for more direct financial support to be announced in the Spring Statement.
Instead of a quick fix, we are likely to get the vision of a longer-term solution. The emphasis in the Chancellor’s speech was on the private sector and personal entrepreneurship delivering the levelling up agenda, and for individuals to take personal ownership and work their way out of financial challenges. The mantra for the next era of Sunak’s tenure as chancellor will be ‘Capital, People and Ideas’, and if there is any Treasury support to be provided in future, it is these areas which are most likely to benefit.
The speech set out the priorities to rebuild economic strength by encouraging private sector investment and the Chancellor’s intentions to deliver a tax strategy which will support inward investment and national productivity. This could mean enhancements to research and development incentives, tax relief for investment into new businesses and potentially targeted reliefs to encourage entrepreneurship.
For those who are continuing to struggle post-pandemic and are looking for tax reductions and further support from the government, it’s likely they will be disappointed. It is clear from the speech that the Chancellor’s preferred strategy is to focus on private sector entrepreneurship and investment to navigate the current challenges. Whether he can stick to that path and resist calls for a more short-term fix to the cost of living crisis remains to be seen.