Pre-Budget Report Comment…

BUDGET Lead 18

Today the next election campaign started. Not with a bang, with an ill fated whimper by Alistair “Gordon Brown” Darling. Tax cuts in the short term, but permanent tax increases to pay for them. Clearly Brown believes that spending our way out of the situation may work, but if it doesn’t then frankly we are in for ten years plus of paying for his spending if we don’t go out and spend in droves. There were a few good points to the report, most notably the rise in the pension and the investment in Job Centres.

However here is the stark reality of the report is that if you earn over twenty thousand pounds per year you are going to be worse off via National Insurance from 2011, one year after the last possible date that an election can be held. What I would have done on the National Insurance front is raise the level that you have to pay National Insurance by a significant level of say two or three thousand pounds, thus getting more revenue from those who can afford it and not hitting those on low incomes.

The cut in VAT is a reckless measure in my opinion because it costs billions of pounds and is a risk as many people will save money as their jobs may become insecure and not spend. It’s just not enough of a discount on goods and services to make people rush out and spend over the next thirteen months. I would have raised the Income Tax level allowance sharply by effectively giving people two hundred pounds in their pockets. That would have cost a lot less than the VAT cut and may have been move effective in getting people spending.

It’s going to be a long hard road for the average worker in Britain for the next few years and I believe that these measures annouced today won’t be enough to help them out significantly. In very blunt terms, unemployment will rise and the economy may not grow for an extended period. This could spell disaster for the government and could mean an epic win for the Conservatives at the next election. How a Conservative government would differ from Labour administration would be very clear- spending would be cut in public services such as the NHS. It is a very interesting if slightly worrying time to be working in this country.

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