Reactions to the “fiscal statement” (not a Budget, apparently)

First from Ed Davey:

Sarah Olney is our spokesperson for Treasury and Business & Industrial Strategy and she spoke in the debate:

Deputy Leader Daisy Cooper tweets:

Jane Dodds, Leader of the Welsh Liberal Democrats said:

And from the Scottish Liberal Democrats:

 

The party has also commented:

Meanwhile Christine Jardine, our Cabinet Office spokesperson, has published a “debt dossier” which highlights five occasions on which Liz Truss and Kwasi Kwarteng warned against government borrowing.  She says:

Liz Truss and Kwasi Kwarteng both spent years warning about the risks to families and businesses from ballooning government debt. Now they are recklessly ignoring their own warnings, ducking scrutiny and trashing the Conservative Party’s reputation on the economy.

This latest Conservative line-up is completely out of touch with reality and with the British people. The pound is plummeting, prices in the shops are soaring while struggling families are left worried about how they will get through the winter.

* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames, where she is still very active with the local party, and is the Hon President of Kingston Lib Dems.

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28 Comments

  • Steve Trevethan 23rd Sep '22 - 2:03pm

    Might it be that H. M. G is increasing the money in circulation by means of tax cuts whilst, simultaneously, its fully owned subsidiary is removing money from the economy by means of increases in the bank rate?
    Why?
    Might a net result be a reduction of money for vital infrastructures combined with greater wealth for the already wealthy who, apart from emergencies, have little need for infrastructures until society cracks?

  • nvelope2003 23rd Sep '22 - 2:27pm

    The BBC interviewed some people in Norwich and I was surprised to hear most of them seemed to think the Chancellor’s statement was helpful. There appeared to be a feeling that people needed more incentive to work. Maybe the Government knows more about popular feelings than we do. I have had this view expressed to me by other working people. Perhaps they think that if the cost of living rises high enough we will be able to find the people to fill the millions of jobs which cannot be filled at the moment such as bus drivers, bar and restaurant staff . health care workers etc.

  • Barry Lofty 23rd Sep '22 - 2:28pm

    So pleased to read all the Lib Dem responses to this naive and damaging trickle down budget, it deserves to be exposed for what it is, a reward for the wealthy Tory backers and a kick in the teeth for those who will wait an awful long time for any rewards to make their lives a bit easier during this economic downturn.

  • Paul Barker 23rd Sep '22 - 2:58pm

    This Budget is step one, step two will be to blame The Bank of England for raising Interest Rates & making The Recession worse, its a massively dishonest strategy since The Bank has no choice.
    Labour are not attacking The Government on this aspect of The Budget but we should. If The Pound keeps falling at the present rate it would reach Parity with The Dollar in a week & with The Euro in a fortnight, that will bother many older Tory MPs. We should quote Mrs Thatcher – “You can’t buck The Markets”.

    This Budget is Economic Trumpism – the belief that Economic Reality can be changed by shouting.

  • Paul Barker 23rd Sep ’22 – 2:58pm:
    This Budget is step one, step two will be to blame The Bank of England for raising Interest Rates…

    Currently, Kwarteng is blaming them for not raising them enough…

    ‘Kwarteng warns Bank of England to get grip on inflation’ [22nd. September]:
    https://www.telegraph.co.uk/business/2022/09/22/kwarteng-warns-bank-england-blaming-ukraine-war-inflation/

    The Chancellor told Andrew Bailey that claims that near double-digit inflation was mainly driven by the war in Ukraine were less credible now that the Government had taken action to hold down energy bills, a swipe at the Bank’s record on controlling inflation. […]

    He stressed it was the Bank’s job to ensure inflation, which currently stands at 9.9pc, returns back to its 2pc target.

    “I know and expect that the MPC will continue to take the forceful action necessary to achieve this,” he said.

  • Jenny Barnes 23rd Sep '22 - 4:34pm

    trash the economy, create an enormous debt for the next government to deal with and run away. Bullingdonomics.

  • Although I understand the Stamp duty is despised by many

    The cynic in me wonders.

    Why abolish stamp duty on the first £250,000
    when stamp duty was already abolished on the first £350,000 for first-time buyers

    The only people this now benefits are 2nd homeowners and Landlords ….

    And this is now coming at a time when Interest rates are about to soar, probably affecting those who are already overstretched, in guess what, Ex local authority and council flats
    So they are either forced to sell, or repossessed…

    And who now benefits from this Tax cut on these value homes under £250k
    The Right to buy landlords.

    This Government is not even trying to hide what they are up to for the rich

  • Graham Jeffs 23rd Sep '22 - 5:31pm

    The lunatics are running the asylum. Pound to dollar 1.09. What could possibly go wrong?

  • Paul Barker 23rd Sep '22 - 5:46pm

    Just to update on my previous post, on present figures we would see Parity with The Dollar in 2 days & with The euro in 5.
    Markets are only rational if they are not afraid, this smells of Panic.

  • I feel like Jenny Barnes has hit the nail on the head. This is a lot like the Labour government in the late noughties – a government that is planning on being the opposition pretty soon and so doesn’t give a hoot for the medium or long term. It’s just cashing out as fast as it can, and once it is in opposition to someone trying to deal with the consequences of these actions they expect to pick up lots of protest votes as a reward. Playing the voters for fools.

  • @Jenny Barnes – “trash the economy” and public finances…

    By this budget and his statements in the Commons, Kwarteng has demonstrated he has zero understanding of finance and economics. Only an idiot or an addicted gambler would commit to a strategy based on massive new borrowings at rates that are significantly above previous rates and are highly likely to massively increase further.

    However, the effect of his action today is to force government to both borrow increasing amounts of money and pay an increasing proportion of tax revenues in interest payments rather than on public services. So we can expect the next step will be swingeing cuts in public services; thus delivering the “smaller state”(*) Conservative orthodoxy idolises.

    (*)Whatever that is, I’ve seen nothing of any substance behind the “low tax, small state” slogan.

  • Graham Jeffs 23rd Sep '22 - 6:43pm

    IR35 to be abolished! They don’t choose to remember why it was brought in originally. The mind boggles.

  • @ Jen I’m sorry but I’m afraid I must disagree with your comment that Labour deliberately didn’t expect to win in 2010.

    I thought Mr Brown handled the financial crisis (that was inspired in the USA) as well as anybody else could have been expected to do. History will judge him more kindly than many of his successors in that era……. and, as an elected Lib Dem Social Care Cabinet Member at the time, I can assure Jen that he certainly succeeded in bringing down levels of child poverty during his period in office.

  • Christopher Haigh 23rd Sep '22 - 8:06pm

    I can’t believe that it’s come.to pass that the government and the bank of England are pulling in completely opposite directions. The bank being concerned with stifling demand to keep inflation down and the Truss government attempting to increase demand by its tax cuts stoking up inflationary pressure !!

  • George Thomas 23rd Sep '22 - 8:15pm

    “Liz Truss and Kwasi Kwarteng both spent years warning about the risks to families and businesses from ballooning government debt.”

    I think there needs to be serious thought before using previous Tory statements as the line of attack on current plans because it risks suggesting previous Tory statements were correct or that their party is the authority we look to in order to assess how serious a political action is.

    Increasing government debt has a place – for example when interest rates near zero and the use of the money generated is worthwhile – which is what we had during early parts of 2010, but this is increasing government debt to kill off the state, kill off (literally) those reliant on public services with the super-wealthy being supported only.

    What is left from Tory manifesto in 2019? This is a brand new government without a mandate and should go back to the people to try and back up their wild ideas.

  • Peter Watson 23rd Sep '22 - 8:29pm

    @Graham Jeffs “IR35 to be abolished! They don’t choose to remember why it was brought in originally. The mind boggles.”
    Ahem! (https://www.cityam.com/lib-dem-leader-ed-davey-calls-for-government-to-scrap-ir35-tax-reforms/)

  • Graham Jeffs 23rd Sep '22 - 8:49pm

    @ Peter Watson. Fair comment – but still a stupid idea!

  • @Graham Jeffs – IR35 to be abolished!

    Err no, the government are simply removing the reforms; one of which, rightly, transferred liability to the business buying in contractors. To Truss, Kwarteng et al this removal of liability from business buying in contractors will be seen as a reduction in “red tape”.

  • Peter Watson 23rd Sep '22 - 11:38pm

    @Graham Jeffs “but still a stupid idea!”
    Totally agree (though Roland is correct, in that the reform looks more like a rolling back to the situation where IR35 was ignored for 20 years rather than scrapping it).
    Though the Lib Dem line on this seems to be much closer to Truss and Kwarteng than me and recent Tory governments! 🙁 (https://www.libdemvoice.org/the-tories-decision-on-ir35-reform-will-impact-more-people-than-you-think-65335.html)

  • David Raw 23rd Sep ’22 – 7:29pm…David, Agreed…

    I’m old enbough to remember the ‘Barber Bubble’ of the early 1970’s..Kwartang’s slogan mirrors Barber’s “spend for growth” budget..All of the results ( (rapidly increasing inflation, oil crisis, public spending deficit, the falling pound) are here already.. The world is staring at a recession so this is the worst possible time to try this ‘experiment’..
    Just like Brexit (and Mateus Rose’) this ‘fiscal statement’ is a triumph of hope over experience..

  • William Townsend 24th Sep '22 - 10:51am

    Trickle Down monetary policy.

    Here you are wealthy business and Tory donors here is 10’s of thousands for you. Oh and by the way if you can manage it can you spend some of it so as to give a few quid extra the other 99% of the population? Don’t worry if you can’t we won’t force you too.

    At some point the people will wake up and realise that this is the default monetary policy of the Conservative Party and it has failed every time.

    And if I hear one more Tory MP say “Well we have only been in Government for about two and a half weeks” I will go stark raving mad. They have been in power for 12 years not 2.5 weeks!

  • David Irving 24th Sep '22 - 12:57pm

    Its normal, but all this focus on tax cuts for the rich has obscured the biggest message from the mini-budget. The Tories can no longer claim to be the party of sound fiscal management. Regardless of whether or not the richest 1% will get a bigger slice of the pie, this budget will shrink the size of the pie, so that EVERYBODY loses. Kwasi Kwarteng’s reasons for his actions may be sound (that’s another discussion), but his actions now are not. Pumping money into an economy with full employment and 10% inflation will not create growth. It will only create more inflation. The BoE has been told to bring inflation down, so it will pump up interest rates, to try to reduce the money supply, at the same time that the Gov’t is pumping more money into the economy, thus increasing it. A crazy cycle. The only way out now will be a full-blown recession

  • Jenny Barnes 24th Sep '22 - 3:34pm

    ” Kwarteng has demonstrated he has zero understanding of finance and economics.”
    According to wikipedia he has a PhD from Cambridge in economic history. So one would assume that he knows perfectly well that his policies will not produce growth – indeed, as they are very similar to George Osborne’s policies in the 2010 government you don’t need to look back far to see that they don’t. So I remain convinced that they are deliberately trashing the economy to make life difficult for the next government. It’s very similar to their behaviour in the couple of years before 1997 when Labour took over last time.

  • Nonconformistradical 24th Sep '22 - 6:48pm

    A quick search on https://ethos.bl.uk/ shows Kwarteng’s PhD thesis subject as
    “The political thought of the recoinage crisis of 1695-7”

    And then I found https://www.repository.cam.ac.uk/handle/1810/251742 – which states:
    “This thesis is not available on this repository until the author agrees to make it public.”

    Couldn’t even find an accessible abstract.

    https://en.wikipedia.org/wiki/Great_Recoinage_of_1696 suggests it isn’t exactly relevant to our current problems

  • @Jenny Barnes – Thanks for the clarity of your point, confirming I’m not the only one who thinks there are ulterior motives behind this car crash of a budget.

    However, I suspect “economic history” might not actually have involved an understanding of economic principles but only a history of the evolution of economic thought…
    I also note wikepedia says he was a “financial analyst”, given the speed of his career move into politics, I suspect he wasn’t particularly good at it – unlike Rishi – who I suspect is currently biting his tongue…

  • I think it says it all when you see the wealthy woman coming out of Selfridges and says that she thinks the Tax cuts for the wealthiest are good as it allows her to donate more to food banks, and she hopes others like her and now in a position to donate more

    Like Oh my god, did you really just say that……

    So Tax cuts for the wealthy worth thousands of pounds, and as long as you donate a bit more to food banks, then this is ok .

    Is this what the rich mean by trickle-down economics?

    What has this country become when a wealthy person comes out of Selfridges with their little yellow bag can say with great pride that these tax cuts allow them to donate more to foodbanks

  • Peter Davies 25th Sep '22 - 8:15am

    “https://en.wikipedia.org/wiki/Great_Recoinage_of_1696 suggests it isn’t exactly relevant to our current problems”
    With Jacob Rees Mogg in government, I wouldn’t rule out their trying to reverse it.

  • Jenny Barnes 25th Sep '22 - 8:47am

    “Great recoinage.” The Tories are known for their dislike of “useless degrees”. I doubt whether MrKK’s PhD added anything to useful human knowledge. Oxford PPE degrees also seem to be very weak in the economic section if the performance of Tory MPs with such degrees is anything to go by.

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