This week's opinion: 11 March 2021

I have shared some thoughts on the Budget on page 8 so, on the basis of what comes around goes around, I thought that I would look back 100 years to the 1921 Budget to see how things have changed. I was astonished to find how much resonated though the century. I can do no better than quote the standard book on the subject (British Budgets third series by Mallet and George): ‘The year 1921 was not a happy one for the Chancellor of the Exchequer. The war had left a heritage of hate and suspicion, confusion and ferment, which two years of peace had aggravated rather than diminished. What the future held none could foretell. At home and abroad socially and morally, in commerce, industry and finance everything was in the melting pot. The financial problems were endless.’

If we substitute coronavirus for the war the picture is familiar. Of course the figures are different. The national debt in 1921 was £7,000m which is less than 2% of the current figure, but the personal allowance was £135 so comparisons are almost impossible. 

Some things remain the same though. The Budget included a clause to ‘remove all doubts’ about the operation of a rule which required the averaging of profits over three years, which was being exploited. This was attacked as retrospective taxation but the government defended it: ‘It would in no wise [sic] alter the law but would merely prevent confusion and expensive litigation.’ Where have we heard similar words recently? 

There were also problems with a new corporate profits tax. It had yielded only £650,000 rather than the expected £3m, but this was put down to ‘difficulties experienced by an overworked revenue department in starting a new tax’. No comment is necessary.