Chancellor Rishi Sunak delivered his Mais lecture 24th February 2022 to the Bayes Business School at the University of London. The Mais lecture is regarded as the City of London’s foremost event for the banking and finance community and is attended by senior practitioners and academics.
During the lecture, Sunak set out his vision for a lower tax, dynamic market economy. He discussed his economic vision and resolved to ‘create the conditions for private businesses and individuals to thrive’.
The landmark speech aims to quell concern among Tory backbenchers regarding the tax burden rising to its highest level in 70 years.
Are lower taxes on the horizon?
Sunak stressed that he ‘firmly believes in lower taxes’ and went on to say that:
‘The most powerful case for the dynamic market economy is that it brings economic freedom and prosperity. And the best expression of that freedom is for all of us to be able to make decisions about how to save, invest or use the money we earn. The marginal pound our country produces is far better spent by individuals and businesses than government.’
The Chancellor also emphasised the importance of cutting taxes responsibly and dismissed the idea that ‘tax cuts always pay for themselves’, which he described as ‘flippant’. He stated that ‘cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.’
Furthermore, Sunak defended his belief in the market economy, saying:
‘As a machine for innovation and growth, the free market is positively correlated with almost everything we imagine is desirable for humanity: higher living standards, greater wellbeing, longer lives lived in greater leisure, freedom and peace.’
‘The golden thread’
The Chancellor’s comments form part of his overall vision for a better economy which involves boosting growth and productivity. The three ideas he believes are necessary to achieve this vision are ‘capital, people and ideas.’
Sunak stated that these three priorities will deliver higher productivity and are ‘tied with one golden thread: that what government does is far less important than creating the conditions for private businesses and individuals to thrive.’
This assertion is strengthened by the fact that growth in all three of these areas is already being supported by the government, with public sector net investment reaching its highest sustained level as a proportion of GDP since the 1970s. The country has also seen a dramatically improved school and university performance in recent years, as well as improvements to access to finance through initiatives like British Patient Capital, the Future Fund and reforming Solvency II.
It remains to be seen whether Sunak’s vision will come to fruition. However, it is hopefully a sign of better days to come in an economic sense, now that we appear to be past the worst days of the Covid pandemic. The cost of this which caused untold damage to the UK economy, as well as the world at large.
As always, if you would like any further information regarding the above, please feel free to contact our offices by email firstname.lastname@example.org.