Sunak’s summer update: Don’t hold your breathby
From a taxation point of view, Rishi Sunak's summer economic update is not going to offer much for advisers to get excited about.
A few weeks ago, readers looking for a break from the relentless tide of job retention scheme announcements might have looked forward to Chancellor Rishi Sunak’s fiscal event in early July as a little light relief.
It was difficult to avoid pointing out that after waiting nearly two years for a Budget, two-and-a-half were coming in quick succession.
But in the weeks since the initial press leak, Downing Street media managers have turned down the volume on Sunak’s Commons presentation on Wednesday.
No major policy announcements
A Treasury spokesman gave our colleagues on PracticeWeb a clear steer that there would be no major tax policy announcements until the autumn Budget. Instead, this week’s presentation was referred to as a “summer economic update” focusing on coronavirus support schemes rather than a fiscal event or mini-Budget.
Even if it’s not going to be a Budget or mini-Budget, the government is bedding in its tradition of announcing planned policy initiatives ahead of any formal Commons announcement and floating new ideas with favoured journalists.
Maybe it was a slow news weekend, or perhaps the government wanted to keep the party spirit going, but for whatever reason the Department for Digital, Media, Culture and Sport announced a £1.57bn support package for the arts at teatime on Sunday.
Cultural organisations including museums, theatres, cinemas and music venues in England will be celebrating the release of £880m in grants, with another £270m available in repayable finance. A further £188m will be made available to the devolved administrations to support similar organisations in Northern Ireland (£33m), Scotland (£97m) and Wales (£59m).
Press rumours and leaks
On Saturday, meanwhile, The Mail led the pack with news of a “£500k in shot-in-the-arm for UK’s stalled housing market” in the form of a six-month stamp duty holiday for properties in the £300,000-£500,000 bracket.
The Mirror was pinning its hopes on a £500 voucher scheme proposed by the Resolution Foundation to stimulate consumer spending. At a cost of £30bn, the non-refundable payment would be made to every UK adult, along with £250 for each child, to encourage them to spend in shops and restaurants rather than with online retailers.
It was an odd diversion into universal benefits, but should it actually arrive (by helicopter, perhaps?), how the money will actually be administered will make fun spectator sport for tax and benefits experts.
Since the weekend our tax editor Rebecca Cave has been keeping us supplied with more rumours and pre-announcements:
- Reduced VAT rate for the hospitality sector:lke the stamp duty proposal, the word from Whitehall is that this will be effective immediately
- Training incentive for employers trailed on Monday night.
The presence of so many policy kites goes against the old fashioned idea that policy announcements should be presented to Parliament first, but as we have seen previously, the Johnson administration has its own idiosyncratic approach to message management.
A Machiavellian strategy?
Is it a sign of poor planning and discipline, or a deliberately chaotic strategy designed to test responses to different policy initiatives among particular focus groups? Or could there be an even more Machiavellian stratagem in play.
Since his sudden elevation to Number 11 in February, Sunak has been one of the few ministers to boost his reputation for decisive action, or as the Telegraph termed put it, “underpromising and overdelivering” during the crisis. But in a classic “build ‘em up to knock ‘em down” analysis, the Telegraph went on to quote economists warning that trimming back his summer support announcements and leaving them until the autumn would undermine chances of recovery and undo all his good work.
Maybe the neighbours were getting tired of Sunak’s growing list of admirers and decided it was time to give a couple of yanks on the leash to remind him who was boss.
The summer economic update does inject a bit of silly season fun into editorial coverage, but unless our jaded news team is mistaken, any announcements on Wednesday are unlikely to have a significant impact on how taxes are administered and collected. The arts funding is very welcome for a struggling sector, but there are so many other special cases to consider and attend to as well. Let’s hope that there will be a little more substance to the targeted support measures that the Chancellor does announce.
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AccountingWEB’s Editor at large has been with the site since 1999, rising from news editor to editor in chief, global editor and head of insight. As a roving editor, he continues to investigate the profession's use of technology around the world. He devotes his spare time to technology history and an oddball collection of stringed instruments...