‘So, have I left anyone out?’

EVEN I was taken aback at how comprehensive Darling’s stimulus package was. I didn’t stay in the chamber to listen to “Boy” George Osborne’s pre-prepared denunciation – I’ve heard it so often before.

But back to the announcement. While yesterday’s (and this morning’s) media concentrated on the VAT and top-rate income tax changes, the chancellor had much, much more to say about (and to give away to) home owners, those who don’t yet have a home, those without a job, those in work, pensioners, parents, small businesses, medium-sized businesses, large businesses… you get the picture.

A lot of politics, too: he necesarily – and rightly – repeated time and again that the current crisis is global, not British (a point lost on almost all my commenters, but I blame the ejookashun system), while reminding his audience that the only suggestion received from Her Majesty’s Loyal Opposition so far is to sit on our hands and wait for the recession to pass.

Thius gets to the heart of the matter, because today, this pre-budget announcement, the incentive package is what government should be about. Government shouldn’t be about sitting on the sidelines watching sympathetically as people lose their homes and their jobs. That’s the Tory way; in the 1980s, the mantra of the government seemed to be: “We don’t believe the government should interfere in the running of the country.”

But let’s not forget that even if the government’s incentive package works, there will still be considerable debate about whether it has worked or not. Because at best, it will make the downturn less deep and less prolonged. It’s a bit like trying to assess the success of a PR campaign based on the amount of negative publicity you managed to avert – very difficult to quantify.

So where are we? VAT has been reduced from 17.5 to 15 per cent. Let’s have a very quck history lesson on VAT, shall we? When Labour left office in 1979, VAT was at eight per cent. Thatcher, who had explicitly promised, during the election campaign, not to double VAT, then doubled VAT, setting it at 15 per cent. Then, as soon as the Tories managed to get shot of Mrs T, they tried to repair the mess left by the poll tax, offering an across-the-board cut of £140 to every voter/poll tax payer. To fund this, they increased VAT by 2.5 per cent.

So, at least we can establish that the Tories have absolutely no grounds for criticising this government for having the temerity to reduce VAT.

As to the rest of the package, it differs from the Conservatives’ proposals in one vital respect: it exists.

‘Do-nothing Dave’ wants to be prime minister – it’s not enough for him to say “We wouldn’t have been in this position in the first place.”  Of course, any government of whatever political colour woud be facing exactly the same predicament, and any decent opposition has the responsibility to come up with alternative proposals. All Dave has proposed so far is a vague package of public service cuts. Which is, like, so 1980s.

The most controversial announcement, I admit, is on proposals to raise the higher rate of tax. This is not the death of New Labour; New Labour isn’t simply about a low tax regime – it’s about a new political culture in which tax rises, where they become necessary, are only reluctantly imposed and even then, only if the wider consequences for society can justify that measure. So when National Insurance was raised to generate income for the health service, that was New Labour in practice. 

But I confess to feeling no glee at the change; taxation for its own sake is, in my book, never justified. And today’s announcement is, fortunately, certainly not that or class warfare or any of that old nonsense.

After today, one thing is certainly clearer: the choice that will be on offer at the ballot box next time round. ‘Do-nothing Dave’ and his politics of pessimism and cuts? Or Gordon Brown and the kind of politics that says it’s right to intervene in the economy to protect people’s jobs and homes?

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22 Comments

Filed under Conservative Party, David Cameron, Economy, Gordon Brown, Government, Labour, Parliament, Politics

22 responses to “‘So, have I left anyone out?’

  1. Kevin Boatang

    You left the chamber before the opposition responded?

    How amazingly democratic of you.

  2. Dave

    What kind of message does the tax rise for the wealthiest send out ? It will kill innovation and the incentive to work. Contrary to left wing rhetoric, tax increases for the rich is not fair! They have worked hard for their money rather than life off dole and why should they subsidise the NHS, when they really do not use it ?

  3. madasafish

    Sorry Tom, this is lame.

    Lets see: your Chancellor in APril forecast 2.6% growth this year and over 2% next.
    Now it’s -0.75 to -1.5% next year.

    A turnround of .. nearly -3%..
    And that’s after 7 years sorry 7 months.

    Anyone but anyone who cannot forecast for the current year and get it right – or the next .. but tells us it will be all OK in 6 years’ time – is ..

    I think the kindest phrase is “lacking in any credibility”

    What did Callghan and Brown say about recessions: “you can’t spend your way out of one”.

    Oops ..

  4. AngryVoter

    Might’ve helped if most of the budget hadn’t just been leaked the day before, gave us Tories plenty to chew over and thus formulate a rather barn-storming responce from Osbourne. All he had to do was skip paragaphs where any bits had been missed. [they weren’t]

    As it goes… I still don’t know how we’re raising the capital to pay back the debt. I really don’t.

  5. King John

    Tom, the Chancellor didn’t give anything away! As with all Labour Chancellors he gave with one hand and swiftly took away with the other. The rise in duty on alcohol, fuel and tobacco, the increase in NI for both employers and employees, the increase in top tax rate to 45% – all permanent changes.
    On the other hand a temporary reduction in VAT, a temporary postponement of some car tax rises, and the highest government borrowing of all time, with absolutely no plan of how to pay it back other than some optimistic predictions of economic growth and recovery; and we all know how successful your party has been at getting those right over the years.
    It’s a joke, it’s a mess and this PBR will certainly not do anything to sort it out.
    VAT reduction – the Government misses a major point really, if people have no money to spend to begin with, then a £10.50 saving on a £500 TV will hardly encourage anyone to buy it!

  6. Rbrto

    From what I can gather, the VAT tax cut is a wild shot to try and stimulate consumer spending. But the retailers are saying its not going to work, Labour is going to penalise high end jobs with a large Tax raise, which by their own admission will only raise a a marginal amount of extra cash.
    National Insurance is going to go up and Borrowing its going to decimate the ceiling with a whopping £118bn.

    So we are going to borrow a huge amount of cash now to cut VAT, which retailers, builders etc are saying isn’t going to do much and all funded on a bet that the economy will recover by the end of 2009….

    Does “We’re doooooomed” come to anyone’s mind??

  7. madasafish

    Broow another £500 billion in next 5 years at 4%.
    Repay over 15 years (say).
    Repayment approx £46billion a year..

    I.e roughly 2 times in one year the ENTIRE £20Billion stimulus the Chancellor has just announced for two years!

    So lets:
    Add 5% to VAT
    and 5p to Basic tax rates.

    and we might pay it off.

    And Tom thinks Darling is doing well..

    hmm.. there’s a word to describe it “deluded” , “innumerate” or something…..

  8. Andy

    Darling and Brown are nothing but economic loons .. Rule 1: if you’re in a hole stop digging – and they’re digging like a pair of demented moles.

    Question: I’m in debt, what do I do?
    Answer Of course you borrow more and reduce your income at the same time .. yeah that’ll work

    Tom, your administration will end up the same as all labour administrations – bankrupt and with nowhere toturn but to the IMF, desperately bleating for help.

    Sadly, I’m old enough to have seen this before, but on a MUCH smaller scale, and unlike your lot, I do study history – you could benefit if you did the same.

    But you’re not nterested in the economic well being of the country as a whole, only that of your client-state

  9. John

    How any of you Labour MP’s could do anything other than cringe with embarassment is beyond me. This was the longest suicide note in history. Pathetic.

    New Labour is well and truly dead, and Old Labour is back with a vengence. I hope you lot get absolutely hammered at the next election. It will be a defeat totally of your own making.

    Just what are you morons playing at? Old Labour was a shambles. The electorate hated it, and it’s policies were so good that they bankrupted the country in the 70’s. That’s why Tony Blair was such a miracle worker. He created New Labour, dragging you lot by your arse into the political centre with policies the majority wanted to see. Gone was the politics of envy and the “stick it to anyone doing better than the workforce” ethos, and in was a desire to help societies weakest while staying on the good side of societies strongest.

    Whether you agreed with him or not, (and I did both in equal measure) he was a guy you could be proud to have as your prime minister, and under him, Labour was a party you could be glad to have in power.

    So, just why the hell have you turned your backs on him, and everything he and New Labour stood for?

    I am totally disappointed in the lot of you. Where’s Tony Blair? Can we please have him back now? Both Labour and this country strongly need him.

    Rant over. Sorry 😦

    You lot are a bunch of frustrating bastards some times, and a LOT lately 😦

  10. Zorro

    “The most controversial announcement, I admit, is on proposals to raise the higher rate of tax.”

    Really? Was I the only one to notice that income tax, sorry I mean national insurance is going to rise by 1% for just about everyone?? (And yes I do mean 1%, 0.5% for us plebs and another 0.5% from the employer, where does that second part come from again?)

    “New Labour isn’t simply about a low tax regime”

    No Tom you got your words all muddled up here. What I think you meant to say was

    “New Labour simply isn’t about a low tax regime”

    And never has been…

    Z

  11. Joseph

    Tom,

    I doubt that I am the only one who finds it shockingly discourteous, arrogant and – frankly – a dereliction of your duties as a Member of Parliament that at the time of one of the most important Parliamentary events of the last decade you chose to walk out without even bothering to listen to the response of the spokesman for Her Majesty’s Opposition. Choose to disagree with him, by all means: but don’t boast about the fact that you could not even be bothered to listen to him.

    Indeed, your excuse that there was no point listening to him because you knew what he was going to say could apply with equal validity to the statement of the Chancellor of the Exchequer. Do you object to the fact that the contents of the statement were leaked to the Sunday newspapers, making a mockery of Mr Brown’s promise last year that Parliament would hear of the government’s announcements before the press?
    Mr Darling has little to smile about at the moment but he must be reassured that his colleagues take a far less strict approach to this gross discourtesy to Parliament than was the case in the days of Mr Dalton.

  12. Johnny Norfolk

    Tom.
    This is the road to disaster, can you not see it. How can you express satisfaction with this.

  13. Pendolino Warrior

    I think Labour might swing the election. The one thing I learnt in student politics is that its easier to scare people than to win by arguments.

    I think the message Tories=”Unemployment is an acceptable price” but Labour protects jobs is getting through. People are always unreasonably optimistic and will delusionally vote Labour.

    Incidentally I think a 5% tax rise for the very rich is OK. Its justified by pain sharing but I wonder why delay? If you are lucky enough to still have a job that pays £150k then why not share the pain with those that haven’t by paying tax now.

  14. Today’s Independent leader and I came to the same conclusion, independently: the poorest spend their money on exempt, zero- and reduced-rate items, like housing (rent or mortgage interest), domestic fuel, basic foodstuffs and children’s clothes, so they will only be slightly helped by this. It strikes me as odd that a Labour Chancellor should want to “stimulate” the economy by marginally cutting the cost of living for the rich.

  15. Rapunzel

    When the VAT rate is lowered by 2.5% it is seen as derisory, not likely to encourage people to buy things, no use at all.

    Had the rate been increased by 2.5%, can you imagine the screaming and ranting there would have been? It wouldn’t have been seen as derisory then but as an unfair tax increase on the population.

  16. John

    @Rapunzel

    Err, yes, and there is nothing wrong with that. I think you seem to be misunderstanding the point here.

    Tax decreases are always welcome, and increases always leave people with less money in their pockets, however small the increase, and are therefore universally hated.

    The point here is the aim of the scheme. A temporary reduction in VAT by 2.5% is designed to help kick start the economy by giving people more money in their pockets to spend. It won’t work, and is a useless tool for this, and coupled with that it’s a very expensive move, costing the country billions.

    At a time when the high street have slashed prices by 30-50%, and that still having failed to attract the shoppers due to everyone having virtually no disposable income, a 2.5% further reduction on that in a temporary VAT reduction will obviously have no effect.

    After all, what are people worried about? Fuel, food, housing. Tell me where this temporary VAT reduction helps there? There is no VAT on food, and fuel in particular is actually going up again under the PBR since they are implimenting a previously postponed increase.

    This is a political budget, not an economic one.

    We need New Labour at a time like this, and thanks to a few whining Labour MP’s who’s idiocy led them to believe that Gordon was “the power behind the throne”, we now have Old Labour and it’s old proven useless policies instead.

    I don’t mean to direct any of this criticism of Labour MP’s in Tom’s direction btw, as if I recall correctly, he wasn’t one of the idiotic whiners calling for Blair to go. Something that some argue cost him his job. Makes me even more proud of him really 🙂

  17. We are doomed, I tell you! We are all doomed! Your man Brown has led us into hell.

  18. Cherry-picking a bit, aren’t you Tommy? Tiny reduction in VAT with debatable consequences combined with a booze, fags and petrol price hike.

    And the iniquitous NI rise, which will definitely hit the poor hard.

    Cheer on, Tom, show the downtrodden your support for their pain! Encourage them to pay more to you, they’ll love for it.

  19. Evan Price

    Tom, do you actually believe this nonsense?

    The fact is that the rich will look at other methods to avoid the tax increase (which is, in effect, about 8% as a result of the loss of the personal allowance and the increase in national insurance). I have no real problem with taxing the rich more, so long as there is a realistic prospect of getting them to pay it. The problem with this sort of proposal is that the more complicated the tax system, the more likely people will find ways around it.

    As to the VAT proposal; the sums invovled are simply staggering. The guestimates by the Treasury are naively optimistic at best and the cost to our children and their children are uncosted and will impact of their lives in a way that is both unjustifed and unprincipled.

    This was a political pre-budget report with mantra and dogma built in – Sadly, I predict that it will have little impact. I wish that the Government had done something positive – like reduce the cost of employment rather than increase it!

    God help us, but I pray that I am wrong and you are right. Experience, history and learning suggest to me that sadly, my prayers will be unanswered.

  20. Hitchy

    Tom,

    I’m a Labour member but even I have to take issue with the notion that this predicament a) is entirely global and b) would have hit any government in power at this time.

    The origins of the subprime mess were in America but if our interest rates hadn’t been too low for too long then our banks wouldn’t have lent so much money out. And why were our interest rates too low? Because the UK government’s inflation target was too high. Over two decades we’d been importing deflation from China and other Asian countries; the inflation target should have been close to 0%. Instead, the government was happy to encourage a consumer boom by leaving the inflation target too high, which allowed interest rates to be unnecessarily low – making money cheap to all and sundry.

    Because money was too cheap for the main business of lending to consumers and businesses, banks and funds had to do all sorts of hideously exotic things to try to generate a return on their capital. Hence the complexity of the mess.

    And then on top of all this – we blew the budget from 1997-2008. Untold billions have been spent on expanding the public sector when we should have been keeping spending in check and paying down the national debt during the good years. Government should have been acting to balance out the economic cycle by reining in spending during these years in order to have reserves to increase spending to generate a stimulus during the lean years – i.e. now.

    The trigger for this crisis was American; many of its symptoms are global. But there’s no denying that our government has exacerbated the impact it will have on Britain by spending too much for too long.

  21. Ah, the day New Labour lost the next General Election.

    Not that Im cheering from the rafters at that prospect, far from it. The measures which this government got wrong and sowed the seeds of this recession, are the policies which there is common ground with the Conservitives, ie low regulation and low personal taxation (as opposed to the indirect taxes which have balooned over the past 30 years).

    Not very many people have any money to take advantage of the VAT cut, the benefits rises are inadequate too. The scrapping of the 10p tax band is still to be resolved adequatly, while the income tax rises should either be set at earners over 100000, set at 50% or both rather than the half way house. NI rises are a cop out as well. Darling could have got the Old Labour solidly on side for a late June election. Instead we are playing out time before the next election.

  22. Darren

    “EVEN I was taken aback at how comprehensive Darling’s stimulus package was. I didn’t stay in the chamber to listen to “Boy” George Osborne’s pre-prepared denunciation – I’ve heard it so often before.”

    How utterly pathetic.

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