IT has been another rollercoaster quarter as the Conservative Government has chopped and changed things in a most discombobulating manner.

In many ways, it seems as if we have gone, in short order, from the frying pan into the fire.

Kwasi Kwarteng’s mini-Budget on September 23 triggered a financial markets crisis, sending the pound plummeting to an all-time low against the dollar, amid fears over the sustainability of the UK public finances.

Then Jeremy Hunt succeeded Mr Kwarteng in the Chancellor role and we appear to be back to Tory austerity of the type which choked off growth so badly in the wake of the global financial crisis.

It seems as if this is not a UK Government which can find any kind of balance or middle way, and it is households and businesses which are paying the price.

Of course, there were things in the Kwarteng mini-Budget which were entirely unnecessary. There was absolutely no need to reverse the planned rise in UK corporation tax from 19 per cent to 25% from next April, announced by Rishi Sunak when he was chancellor in the March 2021 Budget.

Mr Hunt has now reinstated the plans for this increase, which will raise about £18 billion a year, and that seems sensible.

However, some other major moves by Mr Hunt are very far indeed from sensible, and look certain to endanger severely any lingering chances of decent economic growth in the near term.

Mr Hunt’s dramatic reduction from next spring of support for households faced with soaring energy bills is of course utterly lamentable from a societal perspective, with millions of consumers already struggling terribly with the cost-of-living crisis. And this volte-face on the previously promised two-year support on energy bills is clearly also extremely damaging to growth prospects.

Aside from confidence levels, which are likely to be under severe pressure as this winter progresses, millions of households will see their disposable income wiped out or reduced dramatically by the surge in energy bills.

We should remember that the bill for a typical dual-fuel household, at around £2,500 per annum, is now around double what it was last year, even with the current level of support from the UK Government to limit the price increases. There is also £400 per household support, being paid in instalments, but that will run out early next year.

And then, with the UK Government reducing what it is doing to help in the face of soaring electricity and gas costs which are in large part down to the country’s pathetic lack of energy security, the annual bill for a typical household from next spring will be around £3,000.

Mr Hunt has not given any indication of the level of support, if any, from spring 2024.

Under Mr Kwarteng’s plan, the albeit historically very high £2,500 typical annual dual-fuel bill would have lasted until autumn 2024.

It is not, of course, only households which will be hammered by Mr Hunt’s seeming instinct to return to ill-judged austerity of the type pursued by former prime minister David Cameron and erstwhile chancellor George Osborne from 2010.

Businesses are facing a huge extra burden as the UK Government rakes in billions of pounds more a year in national insurance contributions with Mr Hunt’s freezing of the employer threshold at a time of rampant inflation.

And the protracted freezing of the turnover threshold at which businesses are dragged into the value-added tax system is a huge blow for small firms.

Colin Borland, director of devolved nations for the Federation of Small Businesses, observed in a recent column in The Herald: “This means many more of the smallest operators will be dragged into the system against their will, or, perhaps worse, will scale back their operations and growth plans as they try to remain below the threshold.

“Neither is an outcome conducive to rekindling economic growth.”

He is not wrong. However, it appears this point has either been lost on Mr Hunt or that the Chancellor thinks it is just part of the price worth paying for an austerity programme which looks, from an external perspective, doomed to failure.

All the while, we have had the Conservatives’ foolish and shambolic hard Brexit weighing heavily on the economy, damaging exports, disrupting supply chains and fuelling inflation, while also exacerbating labour and skills shortages with the end of free movement of people between the UK and European Union countries.

Just one example of the damage came in a survey last month from S&P Global and the Chartered Institute of Procurement & Supply (CIPS) showing UK companies had experienced their sharpest fall in new orders for nearly two years in November.

Analysing the decline in new orders, S&P Global and CIPS said: “Lower volumes of new business from abroad contributed to the deterioration in order books during November, especially in the manufacturing sector. Latest data pointed to the steepest fall in export sales among manufacturing companies since May 2020. Many survey respondents commented on Brexit-related constraints on export demand in November, in [addition] to the unfavourable global economic backdrop.”

George Eustice – now a back-bench Tory MP who was Secretary of State for Environment, Food and Rural Affairs a Cabinet member when the UK agreed a free trade deal with Australia in 2021 – meanwhile told the House of Commons last month: “The first step is to recognise that the Australia trade deal is not actually a very good deal for the UK.”

It is a farcical state of affairs.

And it is difficult to imagine a more challenging set of circumstances for households and businesses as we face another tough winter.

The lack of stability in policymaking by the Conservative Government is pathetic.

And so is Mr Hunt’s failure to realise that the Tories’ fiscal black hole, which the austerity Chancellor seemed determined to portray as ever bigger in the run-up to his Autumn Statement last month, will need growth to help fill it.

The Chancellor seems to think that his eye-watering clampdown on public spending and huge tax hikes constitute the best plan to get the UK out of its latest economic crisis. In this regard, he seems like a desperate and unimaginative company chief who cannot work out how a business might grow revenues so just perpetually takes the axe to costs and particularly headcount instead.

We now seem to have the opposite of Mr Kwarteng’s “Growth Plan”. The September 23 plan obviously had huge faults but at least it was formed on the basis of a view that boosting economic output must be a priority, even if former prime minister Liz Truss and Mr Kwarteng’s proposals for how this should be done were largely but not entirely wide of the mark. For example, history has shown that rock-bottom corporation tax rates in the UK do not fuel investment and boost growth.

Households and businesses deserve great credit for the resilience they continue to show in the face of weak leadership from the UK Government and the attendant instability.

And there are many positive things happening on the Scottish business scene, as many major companies, family firms and entrepreneurs continue to create wealth and employment by doing inspiring things.

We must bear this in mind as we head into the depths of a difficult winter.

This article was first published in The Herald BusinessHQ magazine

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