Published 3 March 2021
£2.1 trillion is a very large number. And so Rishi Sunak needed to do something to reduce debt. This has accumulated over a long period.
The UK added about £550 billion to its national debt in the 192 years leading up to 2007. In three years after 2007, it added another £550 billion. Since then, we have doubled the debt again.
To put that £2.1 trillion in perspective, if it were paid off at a rate of £1,000 a second, it would take roughly 65 years to pay it off. Not dissimilar to how long it took to pay off our WWII debt. This will need to be ooked at in the 2021 Budget.
So, I agree that tax need to go up.
Some senior Conservatives had in advance of today suggested that tax rates need to go up. William (Lord) Hague is one and has the view that to think otherwise you should believe in one or all of the following: -
Personally, I disagree with the last two.
In 2010, UK corporation tax, charged at 28 per cent, raised just over £43 billion. Since then, the rate has been cut to 19 per cent. In 2018-19, corporation tax raised £57 billion.
And these numbers do not include the ancillary taxes on labour and consumption as British companies expand and as foreign groups are drawn to the UK.
I also disagree that interest rates are due to rise any time soon: the direction of travel seems to be towards negative rates not increases.
We have generous capital allowances and a new Super deduction. will offset the rise in corporation tax. Yet this would amount to a subsidy for capital-intensive industry, whereas many of the businesses are people heavy and capital light.