Monday, November 24, 2008

No more the bottler

VAT down from 17.5pc to 15pc. New higher tax band for the super-rich. £3bn of capital spending brought forward. National insurance to go up after the election. New air taxes on long-haul. Increases in pensions and child benefit brought forward. Whatever you make of today's Pre Budget Report, no-one can say it lacks ambition.

The Prime Minister has been called many things over the past fifteen months - but the soubriquet which possibly did him the most damage was the one applied to him in the wake of the decision to postpone a 2007 election - 'Bottler Brown.'

Well, I never believed Gordon Brown was a bottler, and this package today has proved it. He is, and always has been when it comes to the economy, a man of huge political courage.

Not the least courageous bit of it is that Mr Brown is attempting to turn the normal laws of politics on their head by promising tax increases if his party wins the next election, gambling that this will partly help defuse the inevitable Tory claims of a hidden "Labour tax bombshell."

Will it pay-off? Well, if I knew that, I'd be sitting in his chair. It doesn't help the government's case that it is borrowing huge sums of money in the hope of things turning out okay to address a problem caused by banks borrowing huge sums of money in the hope of things turning out okay.

But even if Brown goes on to lose in 2010, and the apparent rebirth of Keynesian economics after decades of monetarist orthodoxy turns out to no more than a fleeting glimmer, I think he's done the right thing by Britain and its neediest families today. Maybe history, if not the electorate, will give him credit for it.

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Quiet_Man said...

The Chancellor announced a so-called fiscal stimulus of £20 billion, and then failed to admit that he was taking £40 billion back. What kind of stimulus is that?

We're going to be paying for this governments spend, spend, spend policies for decades.

Cyberleader said...

I can't imagine it paying off, people aren't spending because they are worried they won't have a job next year.

Giving them a bit off VAT won't do anything, plus its just storing up trouble for later.

jaymason said...

booze, fags and diesel/petrol all have duty going up so prices won't come down. Bet that when VAT goes back up duty doesn't come down

Patrick said...

You're insane. A trillion pounds of debt and you say 'he's done the right thing by Britain'.

I know you are a lefty but it is now, I'm afraid, time to admit that Labour have once again failed.

Brown has destroyed the Labour party today - and no more than it deserves.

Ben said...

I'm afraid, Paul, you're clutching at straws here. And what is worse, the straws are imaginary.

The tiny reduction in VAT (limited by our EU masters) will make no significant difference to consumers. It will increase costs to business without increasing their revenue. Business users will be paying more in fuel duty but able to reclaim lower amounts of VAT. The costs of employment are being pushed up by increased NICs.

The costs of servicing the unimaginagably large national debt will fall on us for generations to come.

I see no reason for anyone, whatever his political persuasion, to have much hope.

Ben said...

Oops. Unimaginably.

Barnacle Bill said...

Paul this PBR was sole designed to get our glorious unelected Leader the accolade of winning a fourth term, that is all he cares about, nothing to do with saving the country.
Once he has proved he was the Messiah of NuLabor and not Tony Wots His Name, he will then quietly resign to take up a post at the IMF, leaving Darling and all the other mugs to pick up the pieces.

Anonymous said...

I'm surprised that you are so optimistic, shall we wait and see if there is any huge upturn in the Christmas retail figures?

stephen rouse said...

Awful lot of people who seem to be positively hoping that this fails.
Could it be that the Tory nightmare scenario is they win the next election just as the benefits of this package kick in? Do they then stick with the Labour plan they are presently mocking, or jeopardise the recovery by lurching back to the market approach that got us into this mess in the first place?
The former would be an ironic negative image of Blair's early years - a Keynesian Tory party taking the credit for a Labour-generated recovery. However Osborne, bless him, still seemed hell-bent on the latter approach this morning.