Wednesday, 23 March 2011
Hey Big Spender...
In a couple of years' time, there's a pretty good chance either Labour are going to get egg on their collective face, or else the Tories, to some extent the Lib Dems, the money markets, the OBR, the IMF and countless more economic bodies are. That is because everyone except Labour agree that if you don't deal with the staggering deficit quickly, there will be no economy left in which to 'encourage growth by spending' - the Labour line. Around the end of this Parliament we'll see who was right. I'm inclined to think that the ones with the right idea on how to deal with the deficit are not those who created it. Labour's idea of how to get out of the budgetary hole we are still in, remains to be to throw in a spade and dig.
It was a sensible budget. It gave a couple of breaks here and there to signal that the end of the pain was in sight; to signal the Government has positive plans to help people, not just save the economy; to signal that it is listening. There were no ludicrous and uncosted giveaways. Some people seem genuinely upset at this. Some of them seem to struggle with the idea that it may be possible that a nation does not enjoy a rise in living standards every year until eternity. Yes, sometimes, we have to tighten our belts, sometimes we have less money than last year. Yvette Cooper-Balls proved herself one such moron on radio today.
She thinks it totally unacceptable that the Government didn't increase living standards of everyone in Britain with the backdrop of an economy on a slow road to recovery with a war chest barer than a nudey centrefold. Presumably she would like headlines like "all benefits doubled", "NHS spending to top £1 trillion" and "Cooper-Ballses fall to number two on poll of world's most irritatingly, smug-for-no-reason couples". However, there is only so long you can give away money you don't have and call it a budget. 13 years wasn't a bad record in a way.
The main themes continue to be pay off the deficit and encourage private sector growth. The former continued with a neutral budget of no giveaways. The latter by the simplifying of planning regulations and reduction in corporation tax and plan for its continued downward movement through the life of this Parliament.
There was too a show in where this Government thinks money should be coming from and going. Motorists were given a 1p tax reduction in addition to the cancellation of Labour's proposed 5p increase in April (it was their fuel duty escalator). This is a 6p reduction, not 1p as Ed Miliwho tried to claim when suggesting the January VAT rise of 3p on fuel duty dwarved today's cut. Accusing the Coalition of Del Boy economics when his basic mathematics is more akin to Plonker Rodney's left him looking like a bit of a silly boy. This fuel cut is being paid for by a windfall tax on the oil companies who have been raking profits in hand over fist with spiralling crude oil prices and even higher charges to customers. An increase to the bank levy, not a lowering of the 40p tax rate band paid for the rise in tax free personal allowance.
So all in all, it was a budget that simply said, things are on track, but look where they will go when we've cleared up Labour's mess. The long road to budgetary balance remains ahead, but at least the Government are staying on it. No foolish giveaways that they can't afford financially or politically. Anyone who was disappointed by this budget has fundamentally misunderstood the situation. This was not a budget designed as a panacea for all our financial woes - it takes more than 1 year to sort out a recession. It is merely pointing out that the road back from a deficit like this is long, but there is light at the end of the tunnel.