THE UK BUDGET
2006, 2007, 2008, 2009, 2010_2011
MARCH 21 2006
This year's budget will be a severe test for Gordon Brown. It is true
he has stopped the boom-and-bust oscillation, but at a significant
hidden cost: a great number of
people are bust even though the economy is still afloat and therefore
there is no national bust. Instead we have a huge national debt hidden
in personal credit card debt and overdrafts, and a balance of payments
problem that in former days would have sandbagged the Pound which today
is propped up by globalised financial interests. So somehow the
Chancellor will have to tell everyone tomorrow not to worry, and why
not. Of course he can always tell us things are worse elsewhere, and
that is why he can claim the national finances have not been blown.
It's relativity, people.
Let us hope this year we can dispense with complaints that chancellors
give with one hand and take back with the other. That is their job.
They need to encourage and discourage economic activity to channel it
into paths of survival. But the choice is ours. We then have to
respond, and if the guidance is good the results may be too.
Alternatively we can submit to economic and biological natural
Hmm.... The NHS was carefully avoided and there was no real move on
environmental problems. The relativity theory hinted at above in para
one did indeed feature heavily in the speech. which was brilliantly
delivered but may have ignored some big realities. Throwing money at
education may not actually achieve better standards of teaching or
pupil discipline any more than throwing it at the NHS has sustainably
quality of affordable
care. On the other hand 3,000 more science teachers is an excellent
aim. Projected borrowing is very substantial but because it is for
'investment' it is claimed to be within the rules. The chancellor has
rolled over his financial problems. The Bank of England may feel
David Cameron made a very strong and critical speech. But what would
his policies be?
My own view: This budget achieves very little. It was a defensive,
political holding exercise. It's main purpose was to preempt
accusations of mis-management. It sounded very bold but it did not dare
to deal with some real problems. That is because to deal with those
would create howls of protest. In this way the British Public cripples
all its political leaders. But then ever since Hitler we don't want our
leaders to sort things out. It has to be left to private enterprise
seeking its own survival and that, the theory runs, will ensure
national and global survival. Hmmm....yes....er....
I have been a bit mean in my comments. There are some sensible moves in
the budget. But I would have taken a much bigger carrot/stick approach
to the motoring problem. No doubt the expert advisors have cautioned
against this. But I would have increased the fuel tax as this is the
real way to make people buy low consumption cars and to make
manufacturers produce them. Then a massive attack has to
be made on black markets in fuel and other merchandise that distorts
the economy. The chancellor does not have a means in this budget to
deal with the aviation problem with greenhouse gas emission. We are
stuck with the aircraft we have. So the only solution is to make sure
they all fly full, and less. That needs international agreement in most
MARCH 18th 2007
If the following report is anything to go by, some of my criticisms of
the last budget will be answered in the coming one. These answers will
be unpopular with some, but that is inevitable if the government is to
take responsible action. The tax on 'gas guzzlers' is necessary if the
tax on fuels is not to rise sharply. The dilemma the Chancellor faces
is balancing tax raising between companies and the individuals who work
for them and manipulate their finances. It is right to encourage people
and companies to base their affairs in the UK. It is also vital to see
that they do not abuse the privilege, and shareholders should also play
there role. If taxes are to be relaxed on company profits, salaries and
bonuses must at the very least be rational and taxable.
Budget 'to hit gas guzzlers hard'
Gordon Brown is expected to raise taxes substantially on larger-engined
cars in Wednesday's Budget.
Some reports suggest that road tax on the least fuel-efficient cars
will double to about £400 a year.
At the same time, business groups have urged Mr Brown not to
introduce more company taxes.
Businesses are paying almost £12bn more in tax in 2008/9 than
when Labour came to power, the Engineering Employers' Federation said.
Surging taxes have hit manufacturer profitability hard and turned
many companies away from the UK, it added.
The Budget's green measures may fall short of those demanded by
environmental lobbyists, some of whom have called for road tax to be
raised to more than £1,000 for the worst polluting vehicles.
Friends of the Earth called for substantial measures to
tackle climate change if Mr Brown was to leave a "green legacy as
Good news, bad news
Consultants Ernst & Young believe Gordon Brown is unlikely to
introduce any business tax cuts, despite calls from groups such as the
"The best we can hope for is a programme of reduction
over the course of the next five years, but we are far more likely to
see no action at all," the group said in a report on its predictions
for this week's Budget.
It also predicted that there would be little on offer that would be
welcomed by individual taxpayers.
| Anyone thinking that the
chancellor will use his last Budget to reduce the tax burden is likely
to be disappointed
Patrick Stevens, Ernst & Young
"The good news is that there are unlikely to be any significant tax
increases for individuals," said personal tax partner Patrick Stevens.
"The bad news is that anyone thinking that the
chancellor will use his last Budget to reduce the tax burden is likely
to be disappointed."
Mr Brown is widely expected to tighten the rules on inheritance tax
in this, his 11th Budget.
And with property prices continuing to rise, many believe he will
on the issue of stamp duty. Currently, buyers have to pay the duty on
properties priced above £125,000.
However, he may also offer a few concessions to property owners who
are prepared to "go green".
Ernst & Young predict the chancellor will set out more details
the stamp duty land tax exemption for the purchase of so-called
"zero-carbon" homes, which he first mooted in his pre-Budget report.
There is also speculation that Mr Brown will offer tax
incentives to encourage people to install solar panels, wind turbines
and other carbon-free sources of energy in their homes.
Tory tax pledge
With Mr Brown under pressure from businesses to reduce their tax
burden, the Tories have revealed they will cut corporation tax by 3p in
the pound if they win the next election.
| We are confident we can achieve
this as part of a major reform of corporation tax
George Osborne, Shadow Chancellor
Shadow chancellor George Osborne said the Tories would reduce the
headline rate of tax from 30% to 27%.
He stressed that the measure, costing about £4.5bn, would be
funded by eliminating capital tax reliefs currently available.
Mr Osborne challenged Mr Brown to follow suit with a similar
"We are confident we can achieve this as part of a major reform of
corporation tax," he told the Financial Times.
"I would like the chancellor to do it. It's something he can and
Widespread belief that the day will mark Mr Brown's final Budget has
sparked a series of appraisals of his time at the helm of the UK's
finances. Former Tory chancellor Kenneth Clarke said Mr Brown had "got
the public finances into a quite dreadful mess".
But one economist said the economy had ended 2006 "strongly" and
growth projections for 2007 and next year were healthy.
"Mr Brown will once again undoubtedly talk up the extended strength
stability of the economy under his stewardship," said Howard Archer,
chief economist at Global Insight.
to with respect initially but after a bit
the opposition quietened down and listened. At the end, Gordon decided
he had got away with it. This budget will impress some economists and
bankers and company managers. But it will not be popular with the
electorate as a whole apart
from those who will clearly benefit. These are the particular cases
with particular problems he has addressed. The picture is so complex
that it is not possible to put these people into categories based on
income or wealth or even occupation.
The economy as some immense problems but also some impressive
strengths. Gordon Brown has been responsible to some extent for both,
the rest of us are responsible to a greater extent.
What surprised me was the speech from David Cameron. It was impressive.
There was not time to get into the real detail but he picked off some
telling weaknesses and sleight of hand. Ming Campbell also had some
valid complaints. This was a budget with a lot of changes and some
more help for the dispossessed pensioners, but there was no real
I have not got my head round it at all yet though reducing Corporation
Tax and paying for that by plugging loopholes is the right way to go.
But in general I think what we have here is the poor paying to help the
poor and not so poor.
Will it help to change behaviour and reduce global warming? Marginally,
but this is a long term process. There was an attempt to simplify, and
that is good. It is meant to be a reforming budget. Cameron's main
complaint is that the huge spending on public services has not produced
results. However, the reason for this is that demands on the public
services have risen beyond the wildest imaginings of any previous
government. We are an unhealthy nation of massively mobile individuals
who demand endless improvements, The state of the public services was
such that the spending could not cope with all these at once and the
people to staff such services are not easily come by.
I do wish people would stop talking about 4x4s. Four wheel drive does
not burn more fuel and some people live in places where the traction
is essential. The taxation should be based on proper criteria, such as
the consumption-and-pollution to effective performance ratio as well
as the engine capacity.
Charges of 'giving with one hand and taking with the other' are of
course the classic idiocy when budgets are discussed, as that is
precisely what budgets are for - to be balanced and to correct problems
and satisfy needs in the economy. The only point is: did he do it right?
The answer is - not in every case. Our economy is so complex, this is
next to impossible.
Those who accuse the Chancellor of being secretive and devious and
cunning and not revealing his true intentions and policy are of course
right - these are very necessary attributes of a successful Chancellor
of the Exchequer who has to deal with a nation that includes many such
characteristics amongst some of its taxpayers. Kenneth Clarke adopted
similar tactics and disguised them even better. Gordon's problem is
that he has to convince the public that once this awful job is behind
him he can take up the mantle of leadership, which requires other
qualities to come to the fore
same as te first. This was a 'chancellors budget', to
suit his plans for running the economy. The straightening out of the
tax system causes some collateral damage. It is not a budget seeking
votes or popularity amongst those it disadvantages. Overall it is
balanced and with fiscal drag will be balanced in the Treasury's
There is a bonus for those with children. But the help for the
disposessed pensioners will not break the bank
and the courts may yet have something to say to help them. This was a
budget with its eye on the medium and long term future, not on the
short term, from which I deduce there are no plans for a general
election before term.
OR.. ARE THERE!! (sorry, Homer) Perhaps this is a careful positioning
that there could be a much more popular adjustment available at the
moment needed, should this arise.
APRIL 23 2007
developed economies. We are in the same boat (excuse mixrd
metaphors). That is why the Treasury is not panicking. It does however
mean the business of prioritisation is extremely tricky. We do not wish
to be the country to fall through the ice as, to extend the metaphor,
the others will not be able to rush to the edge to pull us out. We will
all have to swim. We have our problems, others have theirs. To turn the
situation around by cooperative action needs a new stage in the global
UK economy 'skating on thin ice'
An influential forecast group is
worried about the risks individuals,
firms and ministers are taking with amounts borrowed.
Ernst & Young's Item
Club spring forecast said people are "overly relaxed about risk" and
are "spending as if it was going out of fashion".
Club chief economic adviser
Peter Spencer said: "The bottom line is that we are all living beyond
The Treasury said the UK's
performance and household finances remained strong.
The report highlights the current deficit in the public sector and
expresses surprise that it built up at a time of economic strength and
buoyant tax revenues.
"If the Chancellor is forced to borrow so much when the
economy's so sweet, what will happen when it turns sour?" Mr Spencer
"Ultimately we are all skating - not to say wobbling - on thin
ice," he added.
The Item club also says that the business sector is driving
economic growth faster than either government or consumer spending.
It points out that business investment at the end of last year was
13.5% higher than it had been a year before.
"The UK's macroeconomic performance, in the words of the IMF,
impressive' with the UK economy having now grown for a record 58
consecutive quarters," a Treasury spokesman responded.
The Treasury said UK net debt was lower than the European average,
as well as the US, and was second lowest in the G7.
"Household finances also remain strong, having benefited from robust
growth, rising employment and low and stable interest rates," the
Alistair Darling's pre-budget report and spending review - http://news.bbc.co.uk/1/hi/uk_politics/7034399.stm
The steps and corrections announced here are broadly speaking sensible
and what was required. However there will need to be some more
imaginative steps in the budget to get the Green agenda moving. And the
tax credit system is too complicated for those who need it.
OCTOBER 16th 2007
and spending review, especially about the tax
changes, from unions, banks and entrepreneurs, all of whom feel they
have been unfairly targetted, the Chancellor must have got it spot on!
They are all screaming 'unfair' and when that is challenged that it is
'bad for Britain and the British economy' (which they each think is
them and always will be). Personally I though the changes were quite
careful. However, we shall see.
There's a budget coming up. What should it comprise?
to sell alcohol below cost.
That would curb binge drinking and bring in some much need tax from
people who apparently have nothing better to do with the money.
Critics in the City and non-doms can be ignored. If any non-doms
decide to leave so what? The country is run for its domiciled
residents, so to be dependent on non-doms is a very bad idea. They
should be welcome but certainly not bribed to stay here.
to an essential activity such as transport to work or school or
shopping for food or housing, then the poorest can avoid it by going
green (with support if needed)and the well-off can either pay up or
avoid it by going green.
should be pursued with slight adjustments. There should NOT be
significant tax increase on alcoholic drinks. Instead the laws should
be enforced and licenses for establishments supplying drinks to drunks
should be removed. Binge drinking has got to stop, but to do that by
taxing it is as ridiculous as taxing muggers or burglars.
his speech, the budget was sensible in many
areas - but not all. It was not good enough. Although Cameron in his
reply lambasted the government for an increase in taxes on business, it
has to be said that these taxes are on gains an profits, not taxes on
the essentials of life. On the other hand I disagree with the tax
increases on alcohol - that is not the way to reduce binge drinking. It
will raise necessary revenue, so that makes some sense.
whole, while I don't agree with Cameron's alternative approach to Green
taxes, I don't think Darling's green taxes are good enough. On the
other hand the government is indeed preparing for seriously green
policies and committing the UK to these policies.
Summary: while this budget may look OK in the Treasury, it will be
extremely unpopular in the country. It's a budget of management, but
those who have been lured into an economy of growth and have ended up
over-committed or incapable of covering their essential transport costs
will not be laughing. The assistance for those purchasing greener cars
is welcome. But millions will be disappointed. The budget will not help
the credit crisis but some will say it shouldn't anyway. We have an
economic storm from which a few are sheltered but most are out-of-doors.
APRIL 3rd 2008
increase in tax on alcohol. This is a complex issue. I am sure it
is not beyond the wit of poltical economists to devise a way that the
sale of cheap alcoholic drinks in inappropriate quantities and places
to irresponsible people, including supermarket loss-leader sales, can
be drastically reduced. Tax revenue is required, but let the Chancellor
get it from where it should be taken with some justice.
I think there are some other changes that may be wrong - the so called
10p tax bracket for example.
MAY 13th 2008
a temporary measure that had to go, its existence had caused a lot
of people to factor it into their financial management. Those on tight
margins were really hurt by its removal, particularly if they did not
benefit from tax credits and various other allowances. The correction
below is the only way out, and more fine tuning may be required.
Basic rate taxpayers to get £120
Chancellor Alistair Darling addresses MPs
Chancellor Alistair Darling
has put up the personal tax allowance by
£600 - meaning anyone earning up to £40,835 will gain
£120 this year.
His £2.7bn tax cut for
this year came as part of measures to help those hit by the axing of
the 10p tax rate.
He told MPs he would lower the
level at which 40p tax is paid - so higher earners did not gain from
Tory George Osborne accused Mr
Darling of "cynicism". Lib Dem Vince Cable feared it was a "short-term
The shadow chancellor said Mr Darling had been "humiliated" into
to the Commons with "a mini-Budget to clear up the mess made by the
prime minister in his last budget as chancellor".
"Let no-one be fooled why you are making this statement
today - not because you wanted to.... but because this divided,
dithering and disintegrating government are panicking in the face of
the Crewe and Nantwich by-election," Mr Osborne said.
BBC political editor Nick Robinson said that the statement was
effectively an "emergency budget" forced by fears that a Labour
rebellion might see this year's actual Budget defeated in the Commons.
But Mr Darling claimed the change was the "fairest and
most effective way" to help those who lost out from the scrapping of
the 10p tax rate.
| For future years our aim is to
continue the same level of support for
those on lower incomes and I shall bring forward proposals to do this
at the Pre-Budget Report
He said it meant 22 million people on low and middle incomes would
gain an additional £120 this year.
The money will come via a £60 lump sum in September pay
packets, followed by a £10 monthly increase until the end of the
Of the 5.3 million households which had lost out from the scrapping
the 10p tax rate, 4.2m will receive as much or more than they lost when
the 10p starting rate of tax was axed.
Mr Darling added: "The remaining 1.1m households will see their
loss at least halved.
"In other words, 80% of households are fully compensated, with the
remaining 20% compensated by at least half.
"And in addition, 600,000 people on low incomes will be taken out
of income tax altogether."
Frank Field MP apologises to Gordon Brown
Mr Darling, whose announcement was greeted with cheers by Labour
said the measures would be funded through borrowing so as not to take
money out of the economy while it was slowing.
The abolition of the 10p tax was widely seen as one of
the key factors in Labour's poor showing in this month's local council
Speaking to the BBC later, Mr Darling rejected
criticisms that the measures were simply a political bribe ahead of the
Crewe and Nantwich by-election on 22 May.
"The same political critics just three weeks ago were demanding that
come up with something - not in November, but now," he said.
"Now I said that I would need to take time to try and
work this out, I took that time and I've come up with something that I
think actually helps a far wider range of people than people thought
Labour backbenchers had been calling for the chancellor
to spell out the compensation package ahead of next week's crunch Crewe
& Nantwich by-election.
Mr Darling said he would reveal his plans for further
compensation beyond the current tax year in his pre-Budget report in
Ex-minister Frank Field, who had led the rebellion
against the scrapping of the 10p tax rate, welcomed the announcement
and apologised for his remarks about the prime minister in a BBC
interview on Sunday.
Mr Cable welcomed the measures to lift low earners out
of tax. He told the chancellor: "It may well be that for a few hours
this will get you out of the difficulties that you created for
HAVE YOUR SAY I'm one of the
beneficiaries of this change, but I cannot believe how much time and
money has been wasted Mark, Leeds
John McFall, Labour chairman of the Commons Treasury select
said: "It is nothing but churlish and mean not to welcome a statement
today that benefits everyone who is on basic rate taxation and takes
600,000 people out of tax altogether."
The unions also welcomed the chancellor's tax allowance changes.
GMB general secretary Paul Kenny congratulated Mr Brown and Mr
for "listening to the public and changing tack" while Dave Prentis,
general secretary of Unison said: it was "a very welcome move".
Tony Woodley, joint leader of Unite, added:
"Reconnecting with Labour's social conscience in this way is a major
step towards reconnecting with voters generally."
For almost the first time in my lifetime, we have a budget outside the
orthodox mold, brought about by global events. I say almost as the
world war and postwar budgets were of course similarly influenced.
Today's budget contains what is necessary, and if it could be
criticised for lack of imagination that could only be done with more
up-to-date knowledge of every industrial development being planned by
the private sector and I for one am doubtful I have more knowledge than
the chancellor, even if there are things I know and he may not and vice
versa. So, enough talk from me on the budget. Obviously none of the
measures are perfect, execution will prove their worth, and the things
which will pull us through are not all contained in the budget in any
event. It sets the right framework and that is good. The remarks I have
heard do far from opposition spokespersons are beside the point.
Cameron just prattles on about the government 'not fixing the roof
while the sun was shining', which is actually the reverse of the truth,
and how the VAT reduction 'didn't work' - a fatuous remark since it
could not fail to work, instantly, with retailers and wholesalers able
to decide how much was appropriate to pass on to keep sales rolling and
supply the necessities to a population in straightened circumstancs.The
size of the so-called 'borrowing' is not critical as long as it is
enough. The vital issue is that it should not be wasted, and that is
what Obama and all quantitative easers will have to worry about too.
MARCH 24 2010
By now we have learned to respect Alistair Darling (even if I cannot
remember how to spell his name) and I have no doubt the Budget will
make sense. In the opening to this file I made some comments on the
absurd complaints we used to get in the media that chancellor gave with
one hand and took back with the other when that was the exact job they
are tasked with in order to guide market forces. In this budget, there
will be a novel twist to that: the chancellor must makesure that public
spending, which he cannot cut overall just yet, should be channelled
towards two vital areas: the first to encourage investment in the new
green economy, the second to move from some comfort zones so as to keep
a hand on some first aid zones to prevent the recession from causing
long term casualties, keeping serious support on retraining. Less a
question of cutting jobs than reallocating some and capping salary
increases for a good while.
We have now heard the Chancellor's speech and the opposition's (well at
least Cameron's) reply. Very interesting. The actions and policies
announced were impossible to criticize - they were intelligent and
imaginative. It was big too. Cameron did not even get round to any
serious criticism of more than a few on trivial points. Instead he
ridiculed the overall management of the economy over the past 10 years
claiming it was an utter disaster, principally on the question of
national debt. It was as usual with Cameron a great performance with
much to bring genuine laughter.
All I have to say is what I have been saying for a long time: this
Chancellor is a man who has the qualifications for the job and because
he has a Prime Minister who understands what he is talking about he can
do his job. It is a very difficult job. If the UK public were to be
daft enough to vote this government out of office at this critical
moment in our history, they will not be doing themselves a favour. I
would be the first to agree that many government initiatives and
policies over the past years have not worked, or have nor produced more
economically than they appear to have cost. I would agree that many
goals such as reducing the gap between rich and poor has failed but any
mathematician can tell you that in a growing economy in a global
expansion with elements of the population who are either illiterate, or
undeducated, or unfamiliar with English, or born into seriously
underprivilged circumstances, you will be doing well to stop the
difference going exponential.
Nick Clegg is ranting on the unfairness - and indeed there is huge
inequality - but to remove this in the UK or any similarly constructed
society is not that easy my friend. And it is no good expecting either
a Tory or a Lib Dem government to get the country out of a mess if you
think that is what we are in. Take a look around the globe.
MARCH 30 2010
By now we have heard all the comments on the budget from politicians
and those posing as economists. Most of the complaints are justified
only if one tries to insist that, for example, efficiency savings can
save money that can be used to repay debt. But efficiency must always
be improved where possible in the interests of the national economy and
the balance of payments. There is no way out of our problems other than
growth in industry, commerce and services that allow us as
a nation to pay our way in the world, and all that can be done by
the chancellor is to encourage employment in activity that enable a
balance in the accountable economic flow. Our money supply must be
managed in a globally compatible way, our tax and spending in a measure
that does not need any more quantitative easing than our trading
partners. Naturally the elephants in the room, China, the US, are
inclined to play by special rules with a game going on begtween them.
We have to make sense in a European context even though we have a
different advantage as well as a weakness through not being in the Euro
zone. Be that as it may, the crticisms of Darling's budget are water
off a duck's back, as the whole business is outside the comprehension
of the Tories and even Vince Cable has nothing very interesting to say.
No, there is nothing Darling has failed to understand. He was and
remains the man of the moment. Govenrment has a big role to play now in
helping industry to get its act together in tune with government policy
for the new economy. That alone can reduce our reliance on imports we
cannot afford, stimulate exports to the rest of the world, and try to
manage our transport system. Strikes in the rail and airline systems
are not exactly a good idea and there is a significant difference
between the airline and rail strikes. The rail strikers can believ they
can get away with it, even though they harm themselves as well as the
country. The BA cabin crew have no idea what they are doing and cannot
possibly win - somebody really should try to explain to them but I
guess they have, and have given up. It's a sad case. Most of those
striking don't have enough education to understand what is going on.
If, as the militants claim, it is the differential between the pay of
top industrialists and cabin crew that they do not accept, they must
find another way to suggest a solution. Striking to hurt BA cannot
possibly achieve that end, nor can it increase\job opportunity and
security which is what they claim to want.
APRIL 1st 2010
The fools are out and about, and that includes some I thought were wise
main business groups have waded into the row over Labour plans to
increase National Insurance.
"This is a tax
aginst jobs" bleats Digby Jones. The truth is this National Insurance
increase is one part of what has to be a very carefully balanced
programme of tax collection and spending cuts, of which the vital
property is the efficiency-to-pain ratio. This will hurt a bit, but be
very effective and very fair. The secret of taxation is to mix and
match, to spread, be broad based and to above all avoid avoidance. It
will have a certain effect on employment but this will NOT, as is being
claimed, be harmful to the UK economy even if it causes some
businesses, when it the change comes in, to consider carefully when
employing people. They should do. It is in their interest and the
country's interest and the public's interest that they should do. That
is part of what we call efficiency and it applies to the private and
public sector alike. It will be the key to an economy
that can grow, be green, be sustainable and be NOT LIKE GREECE.
Peter Mandelson is accused of being patronising when he says that
people are being misled, he should be. That is the approach deserved.
C'mon, Stuart Rose, your are a bright guy, come off it. A.D. is a
Chancellor who is worth it. The Tories are clueless and Cable is a
A new Coalition budget is being drafted. If they get it right, there
will be not much done that would not have been done had we had no
change of government at all, apart from some changes that could be for
the better as it is easy for a new government to axe some well meant
attempts that are failing as well as a few errors that are hanging on
and some quangos that we could do wiothout. However, I am far from
convinced that there is coherent thinking yet.
A 'Star Chamber' to vet departmental spending is not a crazy idea for
the following reason: we hear endless opposing arguments about top-down
government versus bottom-up intelligence and assessment of effective.
Let us put this argument to bed for ever. Government is, should be and
must be top-down and strong, particularly in times such as we face now.
But that means it must be seriously in touch with the
coalface/grass-roots/public-opinion/hands-on-operations through really
good feedback. The Cabinet and PM must have properly qualified and
experience people to sort the wheat from the chaff in th feedback loop
and bring to the Cabinet only those matters that need POLICY decisions,
once they have shaped these from the technical and economic realities.
Only in this way can the competing demands of ministers be rated and
judged within the overall economic constraints and requirements we now
June 22nd 2010
OK, here we are with the FIRST COALITION BUDGET IN 70 YEARS.
Not a silly one I admit. It risks increasing child poverty but has
measures built in to try to prevent that. It will cut growth more than
Labour's plans. I have serious issues with 20% VAT. Osborne thinks the
young poor only need food and clothes to climb out of a poverty
trap. How wrong he is, they need a few selected purchases that they
will probably turn to drug dealing in order to equip themselves. It
would be better to plan 5% VAT on food and clothes for 2012 and go for
the National Insurance increase. By all means have the NI concession
for new businesses that Osborne is bringing in, the two are not
mutually exclusive, though I would modify that too.
Some good stuff to stop welfare abuse though. About time, though the
examples quoted are probably not as widespread as implied.
One other point. An Osborne supporter says "we have to grow out way out of the
deficit, so the corporation tax reduction year on year is vital". Er...
excuse me, if you grow business but reduce the tax it pays, how to you
dig your way out a deficit? Admittedly some of the reductions will be
clawed back by a reduction in allowances.
10pm: I have had time to think a bit more about this budget. Quite a
lot of good small to medium changes. On the big things, they have got
it wrong. The VAT rise is a big mistake - a very big mistake. VAT is a
very important and necessary tax, and should never be abused. It is
Unemployment is not a price worth paying, the alternative is for a lot
of people to be paid less. The Irish understand that the party's over
(till the next one.... if there is one). The British don't seem to get
JANUARY 3rd 2011
A rise in VAT to 20% is about to kick in.
I repeat, this is not the moment for such a rise in such a tax. Indeed
it might never be, but certainly now is not the time. It is marginally
mitigated because in the UK we do not have VAT on certain items.
However, 17.5% is quite adequate. There should probably be fewer
exceptions to it. Nobody in the UK is going to go without clothes when
as a nation we throw out and give to charity enough to clothe us all
MARCH 23rd 2011
I am not enjoying Osborne's budget speech at all. "From Adam Smith to
Nigel Lawson" he intones, British Chancellors have done a great job....
For me, Lawson was an ignorant man and remains one. Norman Lamont tried
hard but carried the can for Lawson's errors, and Kenneth Clarke who
came later was the man worthy of the Adam Smith mantle. If we have
another Nigel Lawson on our hands it does not bode well.
So far, at 1PM, I have heard a lot of little stuff but nothing
important, but no doubt that is to come in due course.
1:15 - a lot of useful stuff, but hard to say what it will all result
in. Then he removes the fuel tax escalator and cuts duty slightly and
deals with some significant tax changes for business and banks. More on
Interim summary: some encouragement for growth, even green growth, but
programme. Much talk about manufacturing and bold invention which he
hopes will come about.
The small cut in fuel duty, and the stopping of the fuel escalator and
a further planned rise will be paid for by a tax on the oil companies.
In case people think this does not makes sense, actually it does. The
windfall profits from which the companies benefit on the crude price is
cause by world demand and supply. The price at the pumps of refined,
delivered product in the UK is another thing altogether. The
relationship is complex. So oil companies cannot not try to recoup
money by putting up pump prices in a competitive market where consumers
are struggling already and cutting back on non-essential travel. They
need as always to balance their income, their investment, exploration
and market position so as to make sense now and in the future.
So, what is the coalition government's message to citizens of the UK?
It is this: We need growth, but it cannot be growth that hurts both the
balance of payments and the climate control agenda. That rules out
indiscriminate stimulation in the cause of instant employment. We need
the 'right sort of growth'. It can be in manufacturing and it can be in
service industries that support the currency, but any-old-growth is
what has got us in this mess and starting it again is suicide. That is
the message. It is clear.
The budget is neither a give-away or a take-away. That is quite correct
in the circumstances. What is given in a few instances is taken back in
many smaller changes over time. That is also, correct, that it what
budgets do. It is not as green as I would like, but that cannot be done
suddenly it is a course that has to be kept in motion and accelerated.
That can come if the budget changes help. We do not need more tax on
fuel right now to pursuade people to use less and buy greener cars,
they are already in that position.
MARCH 29th 2011
The biggest nightmare in my view for the UK Treasury is the terrible
balance of payments situation in respect of goods. In spite of the weak
pound, ONS figures showed a worsening in
the UK's trade balance with the rest of the world, with a deficit of
almost £27bn in the final quarter of 2010.
last quarter's figures were hit by the weather, which
also hit our services trade badly. But the fact is we have a long way
to go for the weak pound to give an advantage big enough to referse
this huge deficit.
NOVEMBER 29th 2011
The Autumn Statement (mini-budget) today, devised to deal with the
crisis in the Euro zone
and the world economy and rising unemployment in the UK, has turned
into a major piece of policy. Hardly a mini-budget in fact, it is a
big change which includes a level of 'Quantitative Easing' and a lot
else besides. It put the Chancellor, George Osborne, on his mettle and
he definitely rose to the occasion. I am seriously impressed by the
content and the presentation and delivery. Calls from Shadow Chancellor
Ed Balls for his resignation or a Plan B or both were very loud and, it
has to be said, not treated very seriously. Osborne's mastery of his
brief was at all times evident in all the subsequent questions.