In this week’s newsletter:
- How is the mini-Budget affecting the economy?
- Can investment zones energise the economy?
- How can agricultural reforms benefit the health system?
- Find out more about Onward’s Conservative Party events.
Nuggets of the week
Levelling down the labour market. The Government is reportedly considering loosening migration rules for low-skilled migrants as part of their plan for growth. But, as Will Tanner argues on ConservativeHome, low-skilled migration doesn’t boost growth because it discourages investment in productive technology. Economic evidence shows that, while high-skilled migrants tend to raise incomes and productivity, low-skilled migration does the opposite, holding down wages for those in the lowest paid jobs, industries and places.
Back to the future? Government borrowing costs have soared following the Chancellor’s “Mini-Budget” on Friday, with the interest rate on UK 2-year gilts reaching levels not seen since October 2008 on Monday morning. All eyes now turn to the Bank of England, which is expected to continue raising interest rates sharply. The implications of rising interest rates are considerable. As Sky’s Ed Conway has shown, when interest rates are adjusted for affordability, interest rates of 6% (now predicted by the market) are similar to those seen in the early 1990s.
Devil in the details. The Government is in talks with 38 authorities across England to set up “Investment Zones” where businesses benefit from lower taxes and simplified planning rules. Building on Freeports and enterprise zones, it is hoped that these zones will drive up investment, deliver agglomeration benefits, and support local growth. Sebastain Payne and Peter Foster from the Financial Times report that responses have been “cautiously optimistic,” and Onward’s Adam Hawksbee lists on Twitter the policies needed to make them a success.
Cap confusion. A new survey from Uswitch found last week that two-in-five households wrongly believe that their energy bill cannot exceed £2,500 under the Government’s Energy Price Guarantee. A number of media outlets have misreported the guarantee, including ITV News who reported that “no British household will pay more than £2,500 per year for their energy bills”. This is untrue – the £2,500 is simply indicative of an average use household. Money Saving Expert founder Martin Lewis was forced to intervene, warning last week that “there is nothing stopping you paying £3,000, £4,000, £5,000, £6,000 for energy”.
Wake up and smell the Coffey. New Health Secretary Dr Thérèse Coffey launched a new “national endeavour” to get our NHS back on track. In a statement to the Commons, Coffey pledged to draw on “the energy and enthusiasm of the million people who volunteered to help during the pandemic by opening up opportunities for them to help in different ways”. This follows Onward’s recent call to give employees the right to request time off work to volunteer for the NHS and St John’s Ambulance.
News and media
Going for Growth? Deputy Director Adam Hawksbee warned in Times Red Box that the tax cutting measures announced on Friday will disproportionately benefit London and the South East.
Going Green. A broad coalition of centre-right organisations including Onward have written to The Times calling for big reforms to agricultural subsidies. Will Tanner, co authored the letter.
More in common. Conservative MP Danny Kruger joined Lisa Nandy at an Onward event at Labour Party Conference, telling delegates that the two parties share a belief in levelling up. BBC News write up here.
From panel events to drinks receptions and policy roundtables, we are running a busy events programme at the Conservative Party Conference.
This year we are thrilled to be joined by leading politicians including Michael Gove, Tom Tugendhat, Ben Wallace, Kemi Bachenoch, Chloe Smith, Anne Marie-Trevelyan, Robert Buckland and more.
Click here to see our full line up.
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