From the moment she arrived in 10 Downing Street, Theresa May has been commendably clear about her economic priorities for Britain. She wants the country to be a beacon of free trade, at a time when protectionism is on the rise the world over. She is annoyed at the way in which quantitative easing has manipulated asset prices, making property unaffordable. And while David Cameron was very successful in raising the incomes of those at the bottom, she is concerned that those in the middle have not fared as well. She wants a ‘country that works for everyone’ — that is to say, one where effort is always rewarded.
This is, alas, no cliché. Even now, those who move from welfare to work have their support withdrawn so quickly that they can end up keeping just 24p in every extra £1 they earn: an effective tax rate of 76 per cent. Iain Duncan Smith planned to change that with Universal Credit. But his ideas proved too expensive for George Osborne, and the new system ended up being almost as bad as the old. This has all added to the problem that the Prime Minister rightly identified: an economic system which many millions find to be rigged against them.
So could Mrs May succeed where Cameron failed? Philip Hammond has yet to present his first Budget; this week he delivered an Autumn Statement which is far more limited in scope. He did use it to try to repair some of the damage inflicted to Universal Credit and restore work incentives, but the effective tax rates are still hideously high. As is the national debt. For six years, George Osborne fought the deficit — and the deficit won.
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