Matthew Lesh, head of research at the Adam Smith Institute, warned Mr Sunak “spending like a drunken sailor” would not boost an entrepreneurial economy. Mr Sunak today unveiled his spending plans, which include setting up £5bn emergency response fund to support the NHS and other public services deal with the outbreak as part of an overall package of measures totalling £30billion. He also set out plans to spend £600billion on the nation’s roads, including £27billion for motorways and other key roads, including new tunnel for the A303 near Stonehenge.
However, Mr Lesh raised concerns about the high levels of spending, saying: “The tax burden is already at the highest it has been in 40 years.
“We spend an extraordinary five months of the year working for the state before earning for ourselves.
“It is seriously concerning that the Government is looking at ripping up the fiscal rules.
Spending like a drunken sailor will not create a thriving entrepreneurial economy
“A Conservative Government should not implement debunked Keynesian stimulus theories.”
He conceded: “Some infrastructure and public services spending, as well as supporting individuals and businesses during Covid-19, is necessary.
“But in the longer-run, spending like a drunken sailor will not create a thriving entrepreneurial economy.
“Expansive vanity projects won’t make us better off.
“Bureaucrats picking winners does not support risk-taking by entrepreneurs – the Government should be cutting red tape on innovation like limits on biotechnology, not presuming to know what is best.”
Mr Lesh welcomed the increase to the national insurance contribution threshold from £8,632 to £9,500, as well as the decision to freeze fuel and alcohol duty, and maintaining the Entrepreneurs’ Relief, albeit in a scaled-back form.
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However, he added: “It is disappointing that the Chancellor has not used this opportunity to take more radical, longer-term steps to reduce the burden of the state and reform taxes.
“The targeting of environmental bogeymen, like increasing the gas levy and tax on plastic packaging, is not the right approach to environmental concerns – we need a broader approach.
“The structures and buildings allowance increase from two percent to three percent will help stimulate investment, but we need to go further.
“The Chancellor should remove barriers to investment by fully abolishing the Factory Tax, which holds back spending on buildings and machinery.
“The business rate review is a welcome opportunity to consider moving to a system that taxes on the basis of land value.”
Addressing the Commons earlier, Mr Sunak said there would be “significant” but temporary disruption to the UK economy but added: “We will get through this together.
“We are doing everything we can to keep this country and our people healthy and financially secure.”
At a press conference this afternoon, WHO director-general Dr Tedros Ghebreyesus confirmed the Covid-19 situation had now been reclassified as a global pandemic, significantly upping the stakes.
He told a press conference: “We are deeply concerned both by the alarming levels of spread and severity and by the alarming levels of inaction.
“We have therefore made the assessment that COVID-19 can be characterised as a pandemic.”
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