Liz Truss’s Mini-Budget Excuses

In September 2022, Liz Truss and Kwasi Kwarteng gave the British people a “fiscal event.” It was definitely not a budget, but a “fiscal event,” or as the media put it, a ‘mini-budget.’ Both of these terms were euphemisms to cover the fact that the Chancellor of the Exchequer did not want to admit officially to presenting a budget.

This is because Chancellors of the Exchequer are required by law to ask the Office for Budget Responsibility (OBR) to conduct an independent analysis of the policies proposed. If the OBR had read the proposals before they were presented to parliament, it would have had some serious questions to put to Kwarteng.

In what has been described as “a high-risk strategy,” the Chancellor planned to borrow £400 billion in order to give a big tax cut to the very rich. To borrow money to boost the economy, depending on how the money was to be used, would have been a questionable strategy. But to borrow money in order to make the very rich even richer was little more than stupidity. Or to put it another way, it was an act of unnecessary generosity to a group within society that has no need of extra money. Indeed, some wealthy people got in touch with the media in order to make the point that they did not want tax cuts, they did not want more money and they did not need more money.

Kwarteng was also borrowing money at a time when Britain's economy was known to be somewhat fragile, and some economists regarded the economy as being on the edge of a recession. To borrow money at such a time would be open to question, depending on what it was to be used for. But to borrow a huge amount of money when it was to be used for an act of generosity to those who had no need of such largesse verged on corruption. At least some of that money would be going straight into the pockets of people that the top Tories were friendly with.

Indeed, it has been said that that aspect of Kwarteng’s ‘event’ was nothing more than a redistribution of wealth. Since 2010 Tory chancellors have used almost every opportunity to cut taxes for the rich, or to offer lucrative contracts, without any need for competitive tendering, and often with the bids going to companies headed by friends of the MPs.

Some Conservatives have justified their generosity to the rich and big business by citing trickle-down economics, claiming that the rich will invest the money they had been given, and thus create jobs, and therefore wealth. But no-one has ever shown any evidence for this, and no government has ever boosted the economy by giving tax cuts to the rich. But people on low incomes tend to spend every penny of any additional income they get, thus adding to the economy. The rich, however, are more likely to put their money into fun, personal investments, such as a motorcycle, a barrel of fine whisky, or a Picasso. This does virtually nothing for the economy.

Summing up the impact of his budget, Kwarteng said, “That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth.” It is a pity he didn’t make note of the irony, that “the vicious cycle of stagnation” had been created entirely by the previous governments’ policies. And that Kwarteng was doing little more than following basically the same policies, but with different phrasing and emphasis.

His policy was, in essence, trickle-down economics. That is, make the rich richer, and their greater affluence will, by reinvigorating the economy, cause much of that greater wealth to trickle down to the ordinary person.

But one has to ask, why take money away from the ordinary person, who probably needs every cent or centime that they have, and give it to someone who probably has no need whatsoever for any additional money.