I’ve heard reports that the Chancellor of the Exchequer’s statement on Friday received robust responses from pulpits around the country on Sunday. It seems that the responses themselves didn’t go down too well with one old man being heard to take their preacher to task and announce to them that they were a life-long Tory.
As a rule, Party politics doesn’t belong in the pulpit. If the offence caused to that man meant that he didn’t hear the offence of the Gospel, then the preacher I responsible. However, nor should we be able to use our party affiliation as a barrier to protect our consciences when God is speaking to us.
The argument used by some for addressing the fiscal statement head on was that it was so immoral that it transcended party politics. Specifically, the argument goes that the decision to axe the 45p tax rate was immoral.
Now, to be clear about my own position. I think that the measures announced by Kwasi Kwarteng on Friday were very badly thought out. I thought they were both economically illiterate and politically stupid. In political terms, they belong under Sir Humphrey Appleby’s definition of courageous as in: “Courageous means ‘this will lose you the election.’”
In economic terms, I think that the measures will do long term damage but that’s primarily because they are only the latest in a long-term failure to get a grip on the nation’s finances. They demonstrate a continuing addiction to borrowing. Indeed, the Government will end up needing to borrow more at just the point when the banks are putting interest rates up making repayments more expensive. I think that part of the Government’s gamble is that this current bout of inflation will be short lived and with its demise, interest rates will return to their previous ultra-low rates. The problem is that the approach is just that “a gamble”. What if it doesn’t come off. Indeed, the sharp loss of value by the pound is likely to stoke inflation further.
And that’s the problem with the removal of the top rate of income tax, not that it’s a terribly immoral thing to do but that it’s a massive gamble that very few people think will pay off. The reason that some people have described it as immoral is that they believe it is only intended to help the rich and therefore shows a callous hatred of the poor. However, that suggests that we have the ability to see into the minds and hearts of politicians and determine their motives. It is possible that Kwasi Karteng’s first and only concern is to help his wealthy friends. However, there is a strong economic argument that the top rate of income tax was not the most effective way of bringing in tax revenues and that with it removed, wealthier people are less likely to use tax avoidance measures so that this combined with economic growth will generate more revenue for the Exchequer.
The assumption then is that removing the top rate of income tax will encourage greater spending and investment and so contribute to an economic boom that will stave off recession. The argument then is that whilst the measure is targeted at the rich, all benefit. Note, that this is not the same as “trickle down economic theory” as some are assuming. Very few people believe in that particular approach. Trickle down theory argues that you only need to focus economic measures on helping the rich get richer because as they get richer, they will lift everyone else with them. The Government’s approach seems to be that you do need to remove economic constraints on businesses and the wealthy but they don’t seem to be assuming that the benefits will land in the laps of everyone else.** Hence, there were tax cuts across the spectrum – indeed, the National Insurance reversal and the 1p cut to basic tax may well cost more than the scrapping of the 45p rate. Other measures including economic investment areas and the price freeze suggest that the Government do believe that measures need to cover everyone directly.
My problem with the Government’s approach to tax cuts is not that they are making tax cuts but that these tax cuts are not the most effective way of delivering help to people at this specific time. As I’ve said previously, my approach to the current situation would be first to ensure that those on benefits see an increase in welfare payments to cover the fuel crisis, second that banks and building societies should be encouraged to act to cancel mortgage debt enabling homeowners to reduce repayments, third that tax cuts should be targeted to give most help to those on lower incomes. There are two options here. Either the Government cuts things like VAT and fuel duty to reduce costs or it takes the approach I argued the other day of introducing a new lower rate tax band which would deliver greater financial benefit to more people.
My concern is that the measures announced will be expensive, will not deliver help where most needed and may trigger a short term, inflationary boom which will postpone but will not prevent a recession. Now I suppose there is an argument that economic recklessness is potentially immoral but I don’t think that was the argument made from pulpits. It’s a more complex argument to make than preaching rhetoric tends to give space for.
Furthermore, to declare this particular budget (in all but name) immoral and worthy of comment in our preaching begs the question “Why this one?” Was a 45p tax rate uniquely moral? If so, then was Gordon Brown immoral as Chancellor of the Exchequer given that he went through his entire time in the role without bringing in the top rate?
Where come to think of it were the moral prophets in the pulpits when other budgets made changes to taxes such as, again with Gordon Brown, the decision to axe the 10p lower rate of tax (a rate he had previously introduced)? What about when Governments allowed borrowing to go up heaping a burden on future generations? What about when they allowed inflation to spiral out of control?
We cannot denounce one Government for its questionable economic failures as “immoral” if we have not prepared to speak up about the foolish and reckless decisions of others in the past. We should especially not be quick to speak out if we fail to do so when the Government of the day aligns most with our own political sympathies.
It is good and right for Christians to engage in the debate about what should be done about this current crisis. I have said a few times that the blogs, journals and magazines have been far too silent on this. There is also, in my opinion helpful Biblical wisdom. But we should be very careful about allowing our own political leanings drive moral outrage and of confusing economic debate with the ability to read hearts.
Most of all, we should make the best use of the pulpit. My job when preaching is to clearly proclaim God’s Word. I may have all kinds of opinions about everything from taxes to taxidermy but people are not there to hear my opinions. People are gathered to hear God speak through his Word. Their most urgent need is to hear the Gospel. If my preaching distracts from or obscures the Gospel, then that is immoral.
After writing this, I discovered that Government ministers are explicitly stating that they are not pursuing trickle down economics.