Will tax cuts fix Britain?

We have to challenge the mood of fatalism surrounding the economy

Politics has returned with a vengeance this week. Liz Truss has been setting out her stall on the economy and her focus has been economic growth. When she said earlier this week that she was ‘prepared to be unpopular’, I think few of us were expecting quite how extensive the package of tax cuts unveiled by Kwasi Kwarteng would be. From abolishing the highest tax band and cutting stamp duty to abolishing the cap on bankers’ bonuses, Kwarteng’s speech is widely viewed as a radical departure from the previous administration.

The mini-budget has set off an explosion of comments. Corbynistas are insisting this is a return to Thatcherism and even many conservatives are complaining that any pretence of being a ‘one nation’ party is now long gone. While the announcements are bold - a quality often lacking in contemporary politics - we have major challenges to face and these policies do not address them head on.

From demographic trends to trade wars, concerns about climate change and increased green regulations, large debts, unproductive zombie companies weaned on cheap credit, and - perhaps above all - a widespread culture of risk aversion, there are tremendous challenges facing us. To tackle them, we’d need a serious, wide-ranging re-imaging of the British economy. Liz Truss’ tax cuts don’t solve these deeper, fundamental questions. They barely even recognise they exist. To be fair, I don’t think any of the political parties in Britain have the vision, determination and originality to really reinvent the British economy - which is what we need. Our problems run deep.

I made some of these points last night on Question Time (you can watch the short clip below or the whole episode here). But we also tackled another big, related theme: the question of energy policy and fracking. No one would pretend that fracking will solve all our ills, but I was struck by how those arguing against it always seem to adopt a risk-averse, anti-growth mindset.

Cost of living and the economy at the Battle of Ideas festival

The questions raised here - namely, what we can do to reignite productivity and build a strong economy - are going to be one of the biggest questions we’ll be asking at this year’s Battle of Ideas festival. We have full sets of debates on these economic and social questions over both days. We have a whole strand tackling the cost-of-living crisis, with discussions on challenging of the cost-of-living crisis, the renewed prominence of trade unions, whether young people are bearing the brunt of all this and if we can carry on printing more money?

While we need to be honest with the problems we face, we also won’t succumb to defeatism. We want to show that, with some vision, issues like the housing crisis can be solved - so we have a session on that. We also know that the energy crisis didn’t just land out of nowhere, and so we have a session asking what a really worthwhile energy strategy would look like. We’ll also be critically examining the environmental constraints on growth.

But most fundamentally, we know that we will not solve our economic problems by relying on experts, policy documents, politicians or the civil service. And although economic growth is absolutely vital, we will not create widespread prosperity simply by cutting taxes. It up to each and every one of us to think hard, win arguments, and collectively imagine what an economy fit for the 21st century would look like. To that end, I invite you all to get your tickets to the festival - and join us for the discussion.

Remember, if you are a paid subscriber to this newsletter you’re entitled to a big discount on your tickets. Select the reduced rate tickets for ‘AoI associate’ if you are a subscriber. Subscribe now to take advantage of the reduced rates.

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Select events and media appearances from the Academy of Ideas and our friends

• Claire Fox was a guest on BBC Question Time in Grimsby last night. Watch here

• Claire Fox was on Iain Dale All Talk, discussing her political, and personal, history. Listen here

• Austin Williams was on the Spectator podcast, discussing life in Chinese mega-cities. Watch/listen here.

• Our friends at spiked have great coverage of recent developments in the Russia-Ukraine war. Read the Academy of Ideas’ Jacob Reynolds about Ukraine’s recent successes here, and read Tim Black on Putin’s mobilisation here