Tinkering with VAT won’t make us trust the government

Should Chancellor Rishi Sunak cut VAT as an emergency stimulus to the consumer economy? When Labour’s Alistair Darling made a 2.5 per cent £12 billion cut after the 2008 crash, I called it ‘an unconvincing and expensive gambit’, on the basis that shoppers would barely notice and that ‘far more significant will be the general level of confidence as it is affected by business failures and job losses… and the general grimness of global economic news’. The same applies today only more so, given that inflation is dormant, households’ pent-up spending power has in many cases been boosted by lockdown and the top VAT-cut winner would likely be Amazon.

By all means relax Sunday trading laws and restrictions on outdoor food and drink service. What matters most is getting millions of people swiftly and safely back to work in consumer-facing jobs. A cut in employers’ national insurance contributions might help, but what’s essential is to convince the public that this government is competently managing the balance of risks between lives and livelihoods. Right now, few of us believe that — and tinkering with the tax code won’t change our minds.

Optimistic successors

In the television drama Succession, the monstrous media patriarch Logan Roy philosophises shortly before the family-feud finale: ‘Most things don’t exist. The Ford Motor Company hardly exists. It’s just a time–saving expression for a collection of financial interests.’ The same might be said at this juncture of Intu, the debt-laden owner of UK shopping centres which has appointed administrators in case rescue talks fail.

Founded in 1980 by the South African tycoon Sir Donald Gordon, Intu after multiple restructurings is essentially a collection of loan agreements and unhappy investors on one side, matched on the other by shop leases on which, because of lockdown on top of retail turmoil, much of the rent is currently uncollectable.