View from Chancery Lane: Michael Moore on the new chancellor's 'mini-budget'

Politics fell respectfully silent in the UK following the death of the Queen and in the period of reflection and mourning that followed. It is now back with a vengeance. And if politics is about tough choices, and electoral contests about dividing lines, then we are entering a very lively period from now until a general election in 2024.
The new Prime Minister entered Downing Street looking at a big in-tray (Ukraine, energy, industrial disputes and inflation, for starters), contemplating some big numbers (to tackle the energy and cost of living crises, for example) and determined to highlight big philosophical differences with what went before (from her own party) and what is on offer from the Opposition parties (on tax cuts vs re-distribution, for instance).
Ahead of Friday’s ‘fiscal event’ (the prosaic term of art used in government for anything from a modest statement to a full Budget), there was some uncertainty about just how big the announcements would be. That doubt has gone. Indeed, the statement delivered by the new chancellor, Kwasi Kwarteng, made a mockery of the term ‘mini budget’, which most commentators had settled on in advance.
We will have more considered analysis following in the days ahead, but from a narrow industry perspective there are three quick ways to look at it: the specific measures supporting the industry’s development, the wider investment climate and the political impact.
For the industry, the single minded focus on growth, and the overall tone about the role of the private sector and private capital, are very strong signals. Importantly on specifics, our efforts to access greater pools of capital are making further progress (with strong commitments on the DC pension charge cap, extra funding for scale ups and support for extending EIS/VCT arrangements). This is a very positive outcome, although there remains much work to do in each of these areas.
On the investment climate, the impact on short term inflation is helped by the gargantuan intervention on energy costs. But the focus on stimulating growth immediately (including through tax cuts, outside Scotland) will provide a clear agenda for the (now twice weekly) conversations between the chancellor and the Bank of England governor. And the responses of the currency and other markets will play into the calculus about the opportunities in and attractiveness of the UK economy, which will of course remain strategy and sector specific.
And on politics? We now have the clearest dividing lines between the main UK political parties in a generation. There’s a lot to digest on the Opposition benches, but within the Conservative party, too. The early opinion polls after the statement will be studied carefully, not least since public sentiment will shape the ‘tax and spend’ and ‘fairness’ debates in the run up to the election. The party conferences over the next fortnight will be energised to new levels by the boldness of what has been announced. We will be there in numbers to observe and engage, before reporting back.
On Friday the chancellor declared that we had entered a new era. He may be right – he has offered a lot of encouragement on some long standing industry objectives, and in terms of politics, we have certainly moved well beyond the familiar parameters of recent debate and orthodoxy. An interesting autumn lies in prospect.
Michael Moore
Director General, BVCA