Kenneth Clarke was made Baron Clarke of Nottingham in 2020, having served as a Conservative MP for 49 years, and in a variety of government and cabinet positions, including chancellor of the exchequer and health secretary. He also stood three times for the leadership of the party, twice narrowly failing. He has cast his vote in the current Tory leadership election, but refuses to say for whom he plumped.
We’re facing a cost of living crisis, with growing inflation and the ongoing war in Ukraine. How should these problems be dealt with?
In the short term, we’ve got to go through probably a very serious economic crisis. I’ve felt for some time that we’re bound to have a very severe recession. And if we’re not careful, it’s going to be combined with very bad inflation, which does social, as well as economic damage. Brace yourself for it, but living standards generally are going to fall for the first time for a long time, and the main short-term measures should be to protect the very poor, very vulnerable and stop us seeing any increase in the number of people becoming destitute in this country. The government shouldn’t be asking themselves, what is the Daily Mail going to be saying tomorrow but what is the economy going to look like in a couple of years’ time when we have an election?
As a former chancellor of the exchequer, what do you think of the idea, put forward by Liz Truss in the Tory leadership campaign, that tax cuts will trigger economic growth?
The simplistic idea that tax cuts will automatically produce growth is nonsense. Everybody would do it if that worked. There’s a slight touch of the Argentinian or Venezuelan government about it. This is not a time for tax cuts because we have incurred enormous public expenditure, which I supported, to stave off the worst effects of Covid-19, leading to enormous public debts. Tax cuts will stimulate growth in demand, but the problems are with the difficulties in supply, so they will push inflation further up. » | Andrew Anthony | Observer New Review Q&A | Sunday, August 21, 2022
OBSERVER EDITORIAL:
The Observer view on Liz Truss and Rishi Sunak’s tax cut promises: The Conservative leadership contenders are blind to the dire lack of investment in a crumbling UK »
