By autumn 2021, business was so central to British life that the CBI conference at the O2 Arena had a bigger audience than the Take That farewell concert the previous night.
In her keynote speech, the Chancellor of the Exchequer proudly presented a catalogue of success since government changed direction in 2010.
“We gained great benefits from the brave decisions of my predecessors,” she said. “Within a decade, the age of central control was replaced by a culture of common sense.
“We didn’t realise the campaign for less government would work so well. With 265 MPs, the House is no longer overcrowded at prime minister’s Question Time and Cabinet meetings are much quicker with only ten secretaries of state. When BIS (the Mandelson empire) was abolished, business had to fend for itself. ‘Tell me when you need help,’ said the PM. But hardly anyone did – they loved being free of red tape and official interference.
“A Quango Quashing Bill subjected publicly funded committees and working parties to a public benefit test. Among those that failed the 75 per cent cost/added value criteria were some regional development agencies and government training bodies.
“Big changes in the tax system followed a six-week campaign in the Guardian that exposed widespread abuse of benefits and tax credits. It revealed that three million people were legitimately getting £30,000 a year in benefits but most of the high earners claiming more than £75,000 were ‘working the system’. A benefits quiz revealed that 90 per cent of people thought government giveaways were ‘too complicated’.
“All benefits were replaced by a single National Subsistence Allowance of £5,000 pa for every UK citizen. From birth, everyone received £400 a month, plus £200 on their birthday. As the benefit was universal, no form needed to be filled, saving more than 200,000 civil service posts overnight.
“The pre-election fiscal joyriding in 2009 led to 12 per cent inflation. Higher prices helped. House prices rose, the real value of government debt fell, and share prices soared as investors preferred equities to cash. “With a top tax rate of 32.5 per cent, senior accountants stopped peddling avoidance schemes, tax havens were deserted and revenue rose dramatically.”
The audience waited patiently as she took a sip of malt whisky. “A dangerous part of government debt was eased when The Court of Human Rights put private and public sector pensions on a level footing. Maximum public pension benefits were reduced to half final salary, and the return of tax breaks ensured private schemes could compete.
“The bravest decision was in 2010, when government wrote off its toxic assets, gave the Bank of England overall cash control and sold its shares into the most enthusiastic market since the dotcom boom. ‘Bankers shouldn’t back irresponsible speculators,’ said that courageous chancellor, and to make the point, merchant banks had to register under his new Betting and Gaming Act.
“The fire was finally lit for free enterprise in 2012,” she continued, “when the Further Education Act cut university entry by 40 per cent and invested the money in a National Work Experience Scheme. The rules were simple: anyone under 20, not in education, had to find a full-time job. The government paid them the minimum wage – anything the employer paid on top was a bonus. Youth unemployment almost disappeared, crime figures fell and a new generation of entrepreneurs was born. ITV launched a business version of Britain’s Got Talent.
“Our prime minister prompted a two-speed Europe with his Straight Banana and Standard-Sized Strawberry speech, in which he declared: ‘I won’t be forced to eat Eurofood. If the fast lane in Europe means more silly rules and interference, I’m pulling on to the hard shoulder.”
The Chancellor finished her speech with an impromptu pre-Budget statement. “Ten years of uninterrupted growth makes me able to drop the highest tax rate to 25 per cent. But,” she warned as they cheered, “always remember 2009. You should never promise an end to boom and bust.”
John Timpson submitted this column as part of our Saving Britain’s Future campaign. Read more here.