Sunak confirms that he has no plan

The introduction of a windfall tax may offer some short-term relief for those hardest hit by energy price hikes – but it is no substitute for an economic strategy. Frank McKenna argues that Rishi Sunak and the government has no clue as how to manage the economy – and is the first Conservative administration to have an aversion to tax cuts.

Frank McKenna

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In the biggest political surprise since Boris Johnson was found to have breached lockdown rules by Sue Gray, the chancellor Rishi Sunak has announced (another) government U-turn and has introduced a windfall tax on energy companies – less than a fortnight after instructing Conservative MPs to oppose Labour’s calls for a Windfall tax.

I have mixed feelings about the move. In the short term, it will provide some limited support to those who are facing genuine hardship this winter. But, in the long term, the help they receive now will be wiped out by future price increases, and the introduction of yet another tax makes the UK look like one of the last places to look if you are an international investor.

In terms of Sunak’s short- term future and the Tories poll ratings, I’m not convinced this will help much either. Just as his cut to fuel duty to help with petrol prices was soon forgotten, this gimmick will be too.

It’s all so unnecessary. Something that would have helped individuals, business, and the wider economy would have been a U-turn on the chancellor’s baffling decision to go ahead with a National Insurance hike last month. This takes money out of people’s pockets, and from the bottom line of businesses, making it more challenging for them to meet higher wage demands from their staff.   

Similarly, a suspension of the ‘green levy’ on fuel bills, and cuts in VAT ought to have been implemented long ago.

What is surprising is the fact that a Conservative government appears to have a deep aversion to tax cuts – favouring short-term handouts instead.

Indeed, in what must be one of the more bizarre role-reversals to be witnessed in the history of parliament, at PMQs on Wednesday, a Tory prime minister criticised the leader of the Labour opposition of wanting to cut taxes!

This is what happens when a government is elected to do just one thing (Brexit), governs on the basis of populism and focus groups, and has no strategy. If someone, somehow, doesn’t get a grip soon, it will not only be a disaster for the Conservative Party – but more importantly the country too. 

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