OPINION: Why Liz ‘Thatcher’ needs to hold her nerve

Russell Quirk

The new prime minister has been in power for just a matter of days and she’s already being trashed by the left, the Twitterati and the mainstream media. Why? Because she and her chancellor Kwasi Kwarteng have dared to initiate a plan for growth based upon tax cuts for everyone in order to motivate prosperity.

When I say ‘everyone’ it is indeed everyone that saw a leg-up last Friday yet it’s the apparent audacity of loosening the boot from the throat of the high-paid that has grabbed the headlines and indeed the red pens of the City’s short-sellers. ‘Greedy earners’ will now benefit from not having to pay a 45% penal tax rate anymore, a policy that was all very Denis Healey in its ideology and was presumably imposed upon the successful as some sort of punishment for doing well. It’s an utterly bizarre and counterproductive ethos to tax success more highly than mediocrity, don’t you think?

I ask you, since when did we become such a bitter, green-eyed society of monsters that on the one hand hates the well-off, but ironically will also rush out to buy a lottery ticket every Saturday or apply to X-Factor to be the next mega-wealthy Harry Styles? It’s bonkers logic.

The reality is that despite the sensationalist distractions of the past few days, us humble folk are also better off by i) seeing the rate of National Insurance cut, ii) income tax cut, iii) duty on booze and fags frozen and, of course, iv) stamp duty reduced by way of price thresholds raised for all buyers, especially the so-called beleaguered first time buyer – those that in spite of their penchant for avocado consumption have never had it so good as property buyers, statistically speaking. Yes, this was a mini-budget that sought to put money back in all our pockets.

So we now have an actual Conservative government for the first time in years.

However, at about this juncture in these venomous news cycles, if this were a Boris Johnson administration he would have u-turned by now. Pressure from advisors, party donors, civil servants and no doubt his female friends, his dad, his Eton chums, Dylan and so on would have rapidly sent him into the 180 degree flip that he became so famous for. His political ideology driving his decisions yet constantly being ambushed by his own lack of courage and conviction in the end.

Liz Truss
Liz Truss

Fortunately, in Liz Truss we have someone that is trying to be Margaret Thatcher and I mean this in a good way. Thatcher was a low tax, free market type as Truss seems set on being and that Thatcherite philosophy led Britain to great prosperity and de-regulation and formed the essence of the modern entrepreneur that some of us are today. Mrs T faced many a moment where she could have veered off course and been persuaded to give in on her principles by experts and those with other agendas. Yet famously, the lady was not for turning and Liz Truss needs to muster her own Iron Lady credentials too.

She must hold her nerve and stay the course to ensure growth and if she does she will ultimately enjoy her own Falklands moment and the electoral bounce that accompanies it.

“If you set out to be liked you will compromise on anything at any time – and you will achieve nothing” the great lady once said. Never has there been a truer sentence than that right now.

The markets and Sterling particularly initially responded badly to last week’s give-away bonanza and the official line as to why is because they are worried about the resulting debt mountain and the cost of servicing it – but we all realise, don’t we, that the real reason is closer to mere profit taking by casino-banker short-sellers. Incredibly, the very ones that Truss and Kwarteng have just released from the preposterous edict of bonus caps. These guys need to learn some gratitude, clearly.

Still, a weak pound is great for overseas property buyers and so expect to see the London market do rather well in 2023. Every cloud and all that.

You’ll be thinking that this is all a bit political for Property Industry Eye and your keyboard may well be poised to post a smart and oh-so-amusing comment as such below. But I hate to break it to you that everything is political, especially the UK housing market.

Kwasi’s stamp duty changes will help lift 200,000 people out of paying the levy and the saving of between £2500 and £11,250 per purchase will go significantly toward mitigating the effects of temporarily higher mortgage rates. All this should not be forgotten as you navigate the hyperbole of a ravenous national media that one could be forgiven for thinking is intent on assisting the self-fulfilling prophecy of scary headlines becoming fact, just like they did in 2008.

There are plans for a further set of budget type announcements in a few months. More tax cuts and likely further stamp duty amendments. Why? Because despite the noisy protests from the cheap seats, you have to grow your way out of a fiscal tough spot, not tax everyone, and it’s often the housing market that chancellors quickly turn to with intervention given that higher house prices and increasing equity fuel positive economic sentiment and consumer spending.

Therefore, be assured that the housing sector will be protected from significant harm in these turbulent times and this will be particularly true as we near the 2024 general election, one which Truss & Co will be determined not to lose to Keir Starmer. Whatever the cost.

Russell Quirk is co-founder of ProperPR. 

 

Kwasi Kwarteng tries to calm the markets by pledging to outline in November how he plans to cut debt

 

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22 Comments

  1. davidjabbari

    Russell is quite right. The media reaction has been hysterical. What is being attempted here is a fundamental re-positioning of the fiscal and regulatory stance of the UK economy, against a BofE and Treasury orthodoxy which had the UK clearly on the road to recession and international non-competitveness. As Russell says there are also many in the international financial markets who have made bets against the UK economy and therefore do no want this experiment to succeed. The government needs to keep its nerve and persist with this course of action. The SDLT impact will come through and boost the market and, as long as we can ride out the hysteria, the impact on interest rates should prove to be grossly exaggerated.

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  2. Gromit

    The BoE alsoneed to hold its nerve. Knee jerk interst rate rises or even just hinting at them is unnerving the markets & Lenders.

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  3. #ImpressiveConveyancing

    Call a general election, urgently.

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  4. Mrlondon52

    I disagree. Its about the right policies at the right time. Trying to stimulate growth via unfunded tax cuts is first going against the work of the BofE to reduce inflation. Second, it has led to a once-in-a-lifetime drop in trust from global investors. Why does that matter? As the govt has to sell bonds to investors to fund all of its spending plans. When they go ‘Er, dude, we don’t trust you’ then yields shoot up and, directly, so does resi debt finance.

    Why should you care, assuming you’re an agent? Well, mortgages rates are up 50% in a week. Do you think you’re going to do more transactions or less transactions at a 4 / 5/ 6% base rate? Yesterday, BTL rates were 5-6% and company mortgages 6%. How many properties do you think you’re goiing to sell to btl investors.

    I’ve always voted Tory (apart from one dalliance with the lib dems, bless them) but I think in Truss and Kwartend we have the triump of he naive idealist over competence, over pragmatism, over common sense. She may prove to be even worse than Boris which I never thought was possible.

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  5. SouthWestAgent

    I think I’ll be listening to the International Monetary Fund rather than a a failed estate agent thank you very much.

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  6. willh

    This article is full of bias as is the so called toxic media. This is exactly the problem. Media, including Eye (slammed in the comments for it yesterday) are here to generate income leading to sensationalist headlines and controversial one sided articles. I want to see a balanced fact based report, not some dinosaur Tory fanboy who feels that these steps are not far enough. I am embarrassed for Eye this article is nothing but conjecture and a rant expressing the opinions of the author.

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    1. RussellQ

      Yes. It’s an opinion piece you muppet. The slow of learning really must try to pay more attention

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      1. willh

        This opinion piece outs you, your editor and Eye as a Toryphiles. This level of one sided article does nothing but alienate the areas of your audience who aren’t stuck in your right-wing echo chamber. I understand the need for reporting but the Eye is meant to be for the industry to get relevant industry news and reporting. I would expect this in a mainstream Daily Mail or BuzzFeed but I expected better from the Property Industry Eye.

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        1. Otro

          Given that Russell’s positioning of the situation in this article is the polar opposite of Eye’s yesterday it seems a bit silly to try and lump them both in the same boat, whether you beleive in the context of the article or not. It seems like this is a sensationalist reaction, complaining about sensationalist media, that is sensationally ill considered.

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  7. davidjabbari

    The point being made above is not that there are no implications for things like guilt yields and potential base rate rises but simply whether the knee jerk reaction to a few days of data is hysterical. The fallacy in the last post is to talk of ‘face based reports’.  There are no facts here: you could line up economists for either positon. Good journalism is all about opinionated commentary so I applaud the Eye for stimulating a debate on this issue. That is much more interesting than reading press releases.

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  8. B6RKY

    I do enjoy your deluded rantings. On the other hand they can be quite scary. Are you perhaps looking to be parachuted into a Tory ‘safe’ seat? Or considering renaming your company ProperToryPR?

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  9. Vanessa Warwick

    Why should booze and fags have cuts or freezes?

    I’ve never understood this.

    These are addictive substances that cause illness and put a higher burden on the NHS and therefore the tax payer.

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  10. Charlie Lamdin

    2024 election? Your’e having a laugh! She’ll be gone before Christmas. Never mind the leftwingerati, her own party have realised their huge mistake. And where is our new strong leader in the midst of this crisis? Not a word. She’s out of her depth and panicking. It’s bad news for all of us, because until political and economic stability return and uncertainty reduces, no one knows what’s going to happen.

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  11. Not Surprised

    Yes let her hold her nerve in the Conservative Gov we ‘finally’ have (lol). These measures only help those not already in dire straits.

    What was needed was a package of measures that would help people remain healthy (for the sake of our already overwhelmed and underfunded NHS) and not starve, and maybe give them a bit in their back pocket which they could invest back into the economy.

    Today I read about a child pretending to eat from an empty lunchbox because they didn’t qualify for free school meals and were embarrassed they had no food. These children are our future.

    They’ve missed the mark spectacularly and we all know it. Unless of course, you don’t care about anyone struggling (because you’re alright mate) in which case I expect you’re pretty happy with the money you’ll save…..

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  12. GreenBay

    What no one ever seems to report on, is that the various tax cuts that the Tories always bring in, always help the rich more than the poor.

    Take the cut in basic rate tax. You only see the full benefit of this if you are above the threshold for higher rate tax. So anyone earning less than £51,270 is getting less benefit than someone earning more. This is not a re distributive policy to the poor, only to the rich. Especially if these tax cuts are going to end up being funded by increases in taxes in the future!!

    If the Tories truly believed in a ‘fair’ tax system, with cuts that benefited everyone to the same extent, then they would have raised the threshold at which we all start paying tax;currently £12,570. That way, anyone working full time would receive the SAME benefit in their reduced tax bill, not just the high earners.

    Please someone tell me if I have missed something?

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    1. Not Surprised

      Spot on

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  13. KByfield04

    Ah Rusty, rolling out all the tired cliches and yesteryear rose-tinted nostalgia of the bygone good old days. What a refreshing and original view.

    SDLT have proven, time and time again, not to deliver real savings but to deliver higher property prices. That expectation by vendors, is already skewing expectations as this is not possible for many as mortgage rates soar. So a huge giveaway to achieve…..well, most likely, ****** all.

    Higher taxes for higher-earners is not about taxing or limiting success, but about the more fortunate giving more back to society to help those more in need and facing scary and uncertain times. I for one, and I know many others, would gladly pay this additional tax to help fund our ‘great nation’.

    In pointing the finger at everyone else (and I’m truly shocked you didn’t use woke once in this article- are you feeling ok?)- you conveniently omitted that several Conservative MPs have already submitted letters of No Confidence in Truss. A mistake or an omission that goes against much of your optimistic claims in this piece?

    Bankers, ah yes- those poor soles- so unfairly blamed for the FC of 2008 and bailed out by taxpayers with no recriminations made to any of them outside of Iceland. I’m so glad to see those poor souls released from their bonus-capped shackles which also wont face extra tax on those hard-earned and truly well-deserved, eye-watering sums. You say many, who knew the policies intended and what their consequences would be, bet against our own economy for their personal gain? This shocks me and is so out of the norm for their sector. I won’t even bother addressing the valid queries of insider trading for the many briefed in advance by our own government.

    Oh, and the benefits of a weak pound and an influx of foreign investors- buying up UK assets (property & business) whilst usually paying little to no tax here. How we all long for the boom of this. Why ensure our own citizens can make money here, paying a chunk of that back into our tax system, when we can allow foreign interests to make huge profits whilst paying little to no tax. But, hey, at least we get a few extra % SDLT from them right? That’s practically the same as 20%+ income/corporation taxes.

    So we have, you celebrate, a wannabe Thatcherite government- the only sad thing being is that the World has moved on somewhat in the 32 years since she lost her seat- sadly it appears you have not. The problem with wanting to bring back ‘successes’ of the past is that we no longer live there. We need a government with foresight, understand, aptitude, competency and innovation- not relying on policies that are 30 years old to ‘save the day’.

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    1. GreenBay

         Well said, it will be interesting to see if Russel replies to any of these opposite views to the one he has made today

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    2. RussellQ

      Ah, Kristjan. I know you yearn for the halcyon days of the mid-70’s and the ‘solid economics’ of the Wilson era. Or even the fiscal equivalent of post-revolution Lenin and his ‘everyone is equal but some of us are more equal than others’ approach. Socialism has worked so well in history after all. Oh, wait… On the basis that your left-leaning ideology favours an ‘all property is theft’ attitude, your comments are of little surprise nor is your insistence on ‘punishing the successful’ and ‘subsidising the lazy and the feckless’. Karl would be proud of you as will your mate in a Donkey Jacket, Jeremy (another failed lefty). The politics of envy…. Anyway, back to the grindstone. Those Bentleys don’t buy themselves you know 🙂

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      1. Chip Wiffler

        Depends on what you consider ‘successful’ to mean.  I guess your definition would align with the idea of repeatedly going back to people to ask for more money until there isn’t any left.  As in, “I successfully raised millions”.  Talk us through the outcome.

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    3. londoneye

      While making some valid points, why are bankers blamed for everything, they ply their trade and are rewarded with being paid the going rate. It’s a job, get over it. It’s not all red socks and braces.

      There are many people earning huge sums of money who will also benefit from the tax cuts, the average Premier League footballer is earning £3m a year and some a lot more, strange how no-one every seems to mention them.

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  14. HMB

    So many Qu’ irksome parts to this article… but he really couldn’t resist an avo toast jibe…so banal. (ps. I’m not a Millennial)

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