The National:

CIRCUMSTANCES make a Chancellor’s reputation and Rishi Sunak is having a “good” coronavirus crisis.  

A millionaire ex-hedge fund manager, Sunak arrived in Parliament in only 2015, when I did. He came across as a rather lonely, uncharismatic figure – a trifle too anxious to be noticed by the front bench, with obscure rants about the “fifth industrial revolution”.

What a difference a few years make – not to mention Brexit, the self-immolation of the previous Chancellor, a global pandemic and (not least) the arrival of a populist Prime Minister only too happy to write blank cheques to buy support. Behold Chancellor Sunak at the dispatch box reading his so-called summer statement – never call it a Budget – and echoing the cadences of a mini-Churchill.

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Most of what the Chancellor had to offer had been well trailed in the Tory press. The two big moves – designed to boost demand and fire-up the housing market – were a temporary cut in VAT for the hospitality industry and an equally temporary rise in the threshold for stamp duty.

There was a modest subsidy for employers who bring back furloughed workers – but that looks more like a sweetener to buy off public opinion when the full furlough scheme ends in October. There is also cash to make homes more energy efficient and inducements for employers to hire more young folk. Plus, a gimmicky cash subsidy to restaurants to offer £10 meal discounts in August.

Overall, this menu hardly adds up to a plan to get the battered UK economy moving again, especially against the background of a global recession and the looming prospect of a hard Brexit threatening access to our biggest market.

Take the rise in the stamp duty threshold to £500,000.  In theory this move will knock off circa £4500 from the price of an average home, so boosting overall demand in the sector.  Only one problem: all the evidence suggests that a change in stamp duty is not passed on in lower house prices. Instead, the difference is pocketed by the sellers – particularly the volume builders.

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As for the cut in VAT, there’s an obvious benefit for the hospitality business – much welcome here in Scotland. But I suspect this is only a sticking plaster job, as no-one really expects the visitor industry to recover till well after a Covid-19 vaccine has been found and widely disseminated – say the middle of the decade. Instead, we need a strategic vision to restructure the tourism industry in its entirety.

Which brings us to the demand from all three devolved administrations for the Chancellor to lift the arbitrary limits to their borrowing powers to let them plan their own economies. Such a move would have no impact on the Treasury so we must conclude that Sunak’s tin ear has to do with his own political ambitions – he is already being talked about as a replacement for Boris.

What about the Chancellor’s plans to boost job creation and apprenticeships for the young? The total cash involved is sizeable in aggregate but limited on a per job basis, which makes me think the impact will be temporary. Ditto the money for home energy conversions. Experience shows the take-up is slow because users have to put up their own cash.

I fear the Chancellor is making it up as he goes along. Which explains why he offered nothing for the self-employed and nothing for big companies under threat as Brexit arrives. Still, he is obviously enjoying the limelight so we can expect another “statement” in the autumn.  

Verdict: Sunak’s summer statement is a too limited, too unfocused and too gimmicky by half.

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