Rishi Sunak knows his mission is to wean Britain off permanent Covid socialism

Linda J. Dodson

Instead of replacing furlough with massive public sector make-work schemes – the apocryphal example involves paying people to uselessly dig holes before filling them up again – he is trying to support the private sector by cutting the cost of employing staff, helping workers retrain and turbocharging the housing market.

His Kickstart scheme may or may not work, but it’s better to subsidise getting young people into employment or training than adding them to the public sector payroll. Ditto traineeships and apprenticeships. The danger here is that the unemployment crisis is shifted to older workers.

He outlined two major, welcome tax cuts: a closely targeted reduction in VAT aimed at a food, accommodation and attractions sector which will rebound if it survives long enough, and an excellent reduction in stamp duty (the latter will hopefully become permanent, but it suits Sunak for it to be treated as temporary by the market). Some firms will cut prices; others will keep the difference, saving many from bankruptcy.

The cut to stamp duty ensures 90 per cent of home purchases will be tax-free. It will be hugely positive for the economy and is exactly what a Tory chancellor should be doing. The £1,000 per employee bonus for firms rehiring furloughed staff should be seen as a third tax cut: the equivalent of lower employers’ national insurance. All of these interventions go with the grain of the market.

Sunak’s “eat out to help out” restaurant meal subsidy scheme is more gimmicky. It undermines the basic free market principle of Tanstaafl – “There Ain’t No Such Thing As a Free Lunch” – popularised by science fiction author Robert Heinlein in The Moon is a Harsh Mistress, and subsequently by Milton Friedman. Do we really want the state to half pay for our kebabs? Of course not, but given that Sunak is willing to end furlough, we can at least take comfort in the certainty that he will axe this scheme before we all get too used to taxpayer-subsidised meals.

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