So, Liz Truss and Kwasi Kwarteng have made their first big U-Turn. After announcing with great fanfare that abolishing the 45p tax band was crucial to enabling economic growth, the chancellor has started the Conservative Party Conference by stating that this particular tax cut was in fact a distraction from the Government’s overall growth policy and so would not be going ahead. I suspect that his actions this week have probably made it harder than ever for the Government to abolish the band or simplify the tax system anytime soon.
Now, on a side point -because this isn’t the point of the article I’m writing – I personally think that the distraction was from big problems with the Chancellor’s overall strategy. In my opinion, it isn’t just the 45p band policy that needs a U-Turn, the whole Fiscal Statement and the thinking behind it needs to be scrapped.
Why do I say that? Well, first of all as people like Michael Gove were saying, you can’t just borrow more money to cut taxes. This is particularly true at a point when there is a cost of living crisis. Measures were necessary to help people through the energy crisis but at the same time, the country is moving into a period of “belt tightening”, reducing the supply of money in order to dampen down inflation. The Government’s cash splurge is at odds with the tactics being used by the Bank of England who are increasing interest rates. The Bank fully expects this to cause people to borrow less and that means demand for house purchases among other things will go down. The Bank and the Treasury are pulling in different directions.
Secondly, the 1p tax cut is the least effective way of delivering help to people on lower incomes. You have to be earning north of £50k before it starts making a difference. A better approach would have been to introduce a new lower rate at say 15p on income under £20k. This links to another point. The Chancellor has expressed the desire to simplify the tax system. That of course assumes that simple is always best and complex bad. However, some things are rightly complex. A simpler tax system would have a single flat rate of tax -and some people advocate this – but would it be fairer. Even simpler too would be to put the entire income tax burden on the wealthy but would that be effective. The reason our tax system is complex is to encourage fairness and effectiveness in collecting tax revenues. However, there is a case for some simplification. Previous Chancellors have tried to find ingenious ways to boost tax revenue without being seen to touch headline taxes such as income tax and VAT. The result has been lots of hidden or “stealth taxes.” A Government priority should be to reduce the number of times we are taxed on each pound we earn and to ensure the tax system is transparent. That’s where I personally would have put the priority.
But I wanted to talk primarily here about how we make and communicate decisions and lessons for churches. We knew that time was up on the 45p band as soon as Laura Kunesberg interviewed the Prime Minister on Sunday morning. There were two crucial signals.
First of all, the Prime Minister admitted that the Government hadn’t taken the time to communicate carefully the case for the tax change. They had not built up the argument and they’d not taken people with them including their own MPs, the City and the wider public.
Secondly, Truss stated that the decision to scrap the 45p tax rate was the Chancellor’s and his alone. The proposal hadn’t been discussed in Cabinet. It’s not even clear whether or not the Prime Minister had been consulted. You can almost imagine Kwasi smiling to himself as he tied his tie that fateful Friday morning as he thought “I can’t wait to see the surprise on their faces when I pull this rabbit out of the hat.”
And there is the deeper problem with how we do politics and how the UK Budget works. It has long been the tradition that Budget stuff is the Chancellor’s domain and his alone. The idea is that the Chancellor of the Exchequer is autonomous in a kind of political settlement with the Prime Minister, unchallenged in his domain. He is also a genius, a political and economic colossus -and that’s how Chancellors have either been seen or have liked to be seen – think of Howe, Lawson and Brown at the top of their game.
So after the period of so called “Purdah” when the Chancellor stays silent, on Budget Day he stands outside number 11 with his red box held high and then heads off to the Commons to deliver his statement and there to surprise everyone with his big, surprise announcement, the rabbit out of the hat that will have his own side cheering and the opposition stunned into silence.
I think the problems with that are fairly obvious. It means that the Chancellor doesn’t get to hear the ideas of others, nor are his proposals subject to careful scrutiny and challenge. It means that those meant to be on his side are as surprised as his opponents on the day. He’s not brought them with him.
It’s a bad way to do economic policy but it’s also a bad way to lead churches too. Think about how you make your decisions if you are a church leader. Does the pastor make the big decisions for church life on his own? What about youth and children’s work? Is there a staff member who has exclusive responsibility and control over that area. What abut your Sunday sermons? Do you prepare late on a Saturday night ready to surprise the whole church with your amazing insights on Sunday morning.
In church life, just as in public life, there’s wisdom in doing two things. First, involving others so that there’s genuine plural leadership. Second building up an argument, a case over time and bringing people with you. Even when it comes to sermon preparation, I’ve found it so helpful over the years to share my first drafts with others. This means that they can give me feedback before I preach. It also means that come Sunday, they are ready for the after sermon conversations to follow up with others, answer questions, give more personal application and pray.
When it comes to decisions about church planting, recruitment, big events, building projects etc, again, it pays off to be listening to the ideas of others, subjecting your proposals to scrutiny and giving the church time to consider the way forward and come with you on the journey.
Faithroots 