HAMISH MCRAE has five tips for the Chancellor Jeremy Hunt

The Chancellor, Jeremy Hunt, is right to dismiss the economic gloom we so often hear from commentators, but there are real forces holding back the economy. Let’s see what he’s going to do about it.

On Friday, Hunt had an interview with Bloomberg attacking “declinism”; said Brexit freedoms would boost productivity and growth; called for older people who had left the labor market to be reinstated; and said HS2 would terminate in Euston and not, as rumor had it, stop in the London suburbs to save money.

But he announced nothing positive, dashing any hopes of significant tax cuts in the budget in just over six weeks.

There are two areas where he was perfect. One is his point about unwarranted gloom. There is a long tradition in Britain that it is considered smart to bring down the country’s achievements and achievements. Those of us who remember the 1970s and 1980s will recall the fashionable notion that the country faced not only relative decline, but absolute decline.

Go further back and there was George Orwell’s famous essay, England Your England, in which he wrote, “England is perhaps the only great country whose intellectuals are ashamed of their own nationality … institution.” That was in 1941, when the prospects looked really bad.

The other sensible point is that the country wastes a lot of talent. About one-fifth of people of working age are economically inactive. Excluding students, that is 6.6 million people.

Of course there are many people who cannot take a job, but 1.4 million of those adults want to go back to work and doing so would transform the labor market. The latest figures show that there are 1.16 million unfilled vacancies. Hunt said this was “a huge and shocking waste of talent and potential” and he’s right. So what to do?

There is enormous political pressure not to go through with the previously announced tax increases and it looks like the deficit for this fiscal year will turn out slightly better than the Office for Budget Responsibility had predicted.

This is mainly because the support for energy costs is lower than feared. But the shortfall will still be huge, perhaps £160bn instead of the £177bn OBR estimate, and after last fall’s market turmoil, Jeremy Hunt needs credibility. I think there will be room for big tax cuts, or rather a rollback of the planned tax increases, but that will have to wait until 2024.

Meanwhile, there are things he can do. Here’s my top five.

First he has to free up the labor market. There is no point in saying that talent is wasted and doing nothing about it. It’s obvious to have a National Insurance holiday for anyone who is unemployed and going back to work. That could take a year and would apply to anyone over the age of 55.

Subsequently, he must encourage the self-employed. You can’t tell people who have decided or been forced to close their businesses to reopen. So a sensible policy would be to look at all the burdens on smaller businesses and ask what might encourage them to grow.

Meanwhile, there’s a quick fix: raise the VAT threshold from £85,000 to £100,000. There is evidence that some companies keep their turnover low to avoid registration. Given what’s happened with inflation, that’s crazy.

Third, fiscal simplification. The Tax Simplification Bureau was established in 2010 and its closure was announced by Kwasi Kwarteng during his chancellor brief last September. Okay, let’s not have a separate body to simplify taxes, but please just let’s do it.

Four, government spending. The government’s performance has been uneven at best and catastrophic at worst. This is not a call to slash and burn. It is for the government to remember the words of William Gladstone, Chancellor in the 1850s and 1860s before he became Prime Minister.

He was known for his view that public finances should be based on the principle of ‘saving candles’. Pay close attention to the details of government spending because that leaves room for areas where the government really needs to spend money.

Finally, it’s okay to say that there is a Brexit dividend and there are long-term strategic benefits from focusing on the rest of the world rather than Europe.

But we need to be smarter about identifying and exploiting those benefits. Again, it’s attention to detail. We can do better, so much better.

Hunt is right to dismiss the gloom about the economy.