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Hello. Yesterday’s note attracted many stimulating emails, which I will discuss in tomorrow’s note. For now, we have gloomy charts and bad news for businesses to digest.
Develop your own
Here’s a daunting picture for you: the UK’s medium-term average growth over the past six decades.
Liz Truss has made the reversal of this map her great political project. Chris Giles and George Parker’s article on the Prime Minister’s quest for growth reminds me that Truss claimed during his Conservative leadership race that the UK could achieve 2.5% growth a year. Chancellor Kwasi Kwarteng told officials growth was their main objective.
In a very real sense, this is the metric by which the sacking of Sir Tom Scholar at the Treasury should be judged. Scholar’s forced exit, plus the voluntary departure of Sir Charles Roxburgh, the department’s second official, means Kwarteng has the opportunity to reshape the top of the Treasury. In the same room, Chris and George provide the summary of names in the box:
Among the senior officials likely to succeed Scholar are Tamara Finkelstein in the Department of the Environment, James Bowler in the Department of Commerce and Antonia Romeo in the Department of Justice.
One of the reasons I’ve refrained from commenting on Scholar’s firing is that ultimately, a firing is a two-part process: the person who does it must be judged not just on the person whom ‘she was fired from her post, but on the one she brings. as a replacement and what they do next.
The overhaul of the Treasury is one of the things that Truss and Kwarteng have put in place as a precondition for increased British growth, and the great test, therefore, of their plans for the Treasury is whether they can achieve this 2.5% target.
But one of the problems they face is that the British state is already doing a lot of things that we know contribute to growth. As Giles Wilkes of the Institute for Government told Chris and George:
We have already invested £4.5 billion of capital in this country, we are reforming skills, increasing the number of students in higher education, stimulating research and development and we are not a corrupt country.
Now, of course, we can do more. But the problem is that we decided not to do so for political and ideological reasons. Here is Paul Johnson, director of the Institute for Fiscal Studies, also to Chris and George:
Not abandoning planning reforms, not cutting spending on education, not making trade with the EU more difficult and not cutting investment would help, but [the government] decided to do these things.
Now something very much like Boris Johnson’s scrapped planning reforms will sooner or later return to the Commons, and Truss has already shown his willingness to, at least, take a step back from the rhetoric which is further increasing friction between the EU and UK. .
But the big political bet here is that it’s possible to both remain a Conservative leader and walk away from some of the most damaging positions the party has come to speak on planning reform, our relationship with the EU and even on taxes and expenses. And that what stands in the way of higher growth is the groupthink of the Treasury, not the shibboleths of the parliamentary party. One way or another, we’ll see.
Businesses will have to wait longer than UK households for help from the government’s £150billion energy package, which may not be ready until November. Here is our story:
A support scheme for Britain’s 28 million households, limiting annual gas and electricity bills to an average of £2,500, will be operational from October 1.
But a separate regime for businesses is more complicated, as there is no system for businesses comparable to the rolling price cap already operated for households by Ofgem, the energy regulator. With no existing mechanism in place, ministers and officials are still struggling to figure out how to limit companies’ energy bills.
Of course, the quickest fix here is for the government to simply hand out grants. As I write in my column this week, in general, states should try to focus on the things they can reliably achieve, and “grant-making” is well within the jurisdiction of the state. ‘State.
But because the ministers have chosen to deal with the problem of households by subsidizing energy companies and removing the price signal, it is politically difficult to have a different and less paternalistic approach for companies.
The Conservative approach seems riddled with things that governments cannot reliably achieve. First, the plan to reduce the amount of support businesses receive and then focus on businesses that the UK state declares ‘vulnerable’ (which sounds like the kind of reduction in state support that doesn’t bother me). never actually happens). Second, the plan to carefully manage UK energy supplies and use without rationing while partially removing the price signal, and so on. The downsides of this approach are already all too clear for UK businesses and they may soon become clear for households too.
Now try this
In fact, I am writing the first draft of this email very late at night rather than very early in the morning (Georgina picks it up to edit in the morning). I would therefore recommend BBC Radio 3’s excellent Night Tracks programme, which plays soft nighttime classical and instrumental music, ranging from old favorites to new tunes.
Another late night job I have done is as one of the judges for the FT Schools student competition held in association with the Association for Political Studies and the Association for the Teaching of Citizenship. Participants were asked to respond to the question: “The UK parliament is not like or unlike the rest of the country: should this change and, if so, how?”
Abim Tayo of Haberdashers’ Boys’ School was the worthy winner of a very good group of challenging submissions.
Top stories today
Inflation down in the UK | The UK’s inflation rate returned to single digits last month due to lower petrol prices, providing relief to households as winter approaches. The CPI in August was 9.9% higher than a year earlier, down from a 40-year high of 10.1% in July.
“Punitive” policy | Police arrests of anti-royal protesters across Britain have sparked a public backlash, with rights campaigners, politicians and commentators denouncing a “severe” crackdown on free speech.
Ukraine against Russia’s attack from the north | “The reconquest of this region, from Kharkiv to Izyum, eliminated the risk of encirclement of our troops in the Donbass. We have smoothed the front line,” said Serhiy Kuzan, adviser to the Ukrainian Ministry of Defense.
Stimulate the fingertips of stroke patients | Millions of stroke patients could regain the lost sense of touch on their fingers thanks to a wearable device developed at a UK university, the British Science Festival announced yesterday.
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