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 selection.

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 improved the 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 puzzled.

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 problems 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.

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 cases.

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 they were 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 chancellor".

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 CBI.

"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 act 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 on 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 fully funded by eliminating capital tax reliefs currently available.

Mr Osborne challenged Mr Brown to follow suit with a similar tax-cutting pledge.

"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 should do."

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 and stability of the economy under his stewardship," said Howard Archer, chief economist at Global Insight.

MARCH 21 2007 2:00pm [typos corrected and an added paragraph March 22]

The Budget was delivered in a better style than previously. The Chancellor was not listened 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 wiggle-room.

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

MARCH 24th 2007
Having had three days to consider it, my final thoughts on the budget are the 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 favour.

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 so that there could be a much more popular adjustment available at the moment needed, should this arise.

APRIL 23 2007
The thin ice referred to in the article below applies to many of the world's 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 revolution.
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 our means."

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 asked.

"Ultimately we are all skating - not to say wobbling - on thin ice," he added.

Growth 'impressive'

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, 'remains 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 spokesman added.

OCTOBER 9th 2007
Alistair Darling's pre-budget report and spending review -

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
Judging by the number of complaints about the measures set out in the pre-budget report 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.

MARCH 9th 2008
There's a budget coming up. What should it comprise?
Thats about it.  Except that (contrary to conventional wisdom) it is perfectly possible to forbid supermarkets 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.

MARCH 12th 2008
Although the current situation is far from as comfortable as the Chancellor portrayed it in 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.

On the 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
I see from the news that a lot of people share my reservations about the 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
It became clear very soon after the Budget that while the 10p tax band was 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 the change.

Tory George Osborne accused Mr Darling of "cynicism". Lib Dem Vince Cable feared it was a "short-term gimmick".

The shadow chancellor said Mr Darling had been "humiliated" into coming 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.

'Fairest way'

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
Alistair Darling

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 year.

Of the 5.3 million households which had lost out from the scrapping of the 10p tax rate, 4.2m will receive as much or more than they lost when the 10p starting rate of tax was axed.

Field apology

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."

Please turn on JavaScript. Media requires JavaScript to play.

Frank Field MP apologises to Gordon Brown

Mr Darling, whose announcement was greeted with cheers by Labour MPs, 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 elections.

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.

Further compensation

"The same political critics just three weeks ago were demanding that I 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 possible."

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 the autumn.

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 yourself."

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 committee, 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 Darling 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."

APRIL 22nd 2009
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 men.
Britain's 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.

So when 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 wind-bag.

JUNE 7th 2010
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 face.

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 being abused.

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 that.

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 yearly.

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 that later.

Interim summary: some encouragement for growth, even green growth, but no 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.

As discussed, the 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.