The budget that the Chancellor delivered yesterday has received a mixed and tribal reaction in the press. The truth is that we are weeks away from a general election and the message of the budget was explicitly political – ‘the Government knows what it takes to guide the economy back to growth. You can’t gamble on the Tories’. In many ways Chancellor Darling cuts a reassuring presence, his delivery is that of the refined Edinburgh advocate that he once was and not that of a supporter of the International Marxist Group (that I also gather he once was!) – despite the references to Robin Hood.
The reality is that soon after the impending general election an emergency budget is likely to be needed and much of what was delivered to partisan cheers on the Labour benches yesterday will be torn up. A fundamental problem with the budget was that it ‘failed to map out a credible plan for Britain to stabilise its national debt‘ – although the Chancellor did promise efficiency savings delivered by (amongst other things) cutting the numbers of germs breathed in by our nurses and doctors. Of course there were some welcome provisions in the budget but the real issue for me was the complete absence of a vision or of any sort of progressive plan to chart Britain back to full economic recovery and to heal our economic divisions. That the loudest cheer came when the Chancellor announced a double tax treaty with Belize speaks volumes for the real value of this budget.
The Government’s policies to raise money to plug our eye-watering public deficit did not extend merely to squeezing the remaining pips out of the wealthier members of our society who can’t commute from Geneva but most shockingly, many of the measures in this Budget will hit low-income, working families hard (the 1 per cent. national insurance increase which is a tax on jobs, the freezing of personal allowances, the increase in fuel duty). The Chancellor may pose as a latter day Robin Hood but many people of modest incomes will feel the strain –and not only the cider drinkers!
One of the best articles in reaction to the budget however was written by Sean O’Grady in the Independent:
“Slowly but surely Britain is turning into a “conflict economy”. It is what happens when the national cake stops growing and people start fighting to protect their share – more strikes and strife, in other words. Public vs private sector; bosses vs unions, Scotland vs England; resentment of immigrants. Slow growth means slower living standards for all.”
He goes on to look at the key components of how we will feel the squeeze – sluggish wage growth (including private and public sector wage freezes and cuts), tax rises, increased mortgage rates hitting many harder than tax hikes and poorer public services; and he concludes that, “Britain will be a grimier, meaner, nastier place to live; that is the real cost of the financial crisis.”
It certainly feels like that doesn’t it? I walked into work the other day, passing two picket lines en-route; it was how I imagined the ’70s to have been. Of course there are isolated good news stories of manufacturing opportunities coming to Britain but the closure of the vast Corus plant at Redcar is sadly much more symbolic of the national mood. If you dare to raise your concern, Lord Mandelson and co cut you down and accuse you of talking down Britain as if it is somehow unpatriotic to question this trend. Likewise, there is a massive overreliance on public spending in areas of the country that is simply not sustainable.
I know that the City has few friends at the moment, but even the Chancellor says that he recognises its contribution to our nation’s coffers and to its economic narrative – but hardly a day goes by when you don’t hear from people in the City who talk about a flight from London of jobs and talent – more people commuting from Geneva etc is bad for Britain and bad for our tax receipts. The City may be part of the problem but the financial services industry is also part of the solution and the Government’s gesture politics is doing our country long term harm.
What Britain needs is a plan to heal our conflict economy, to cut our national debt and to get our economy moving. When the Conservatives’ policies are not being stolen by the government, the party has been outlining plans to heal our conflict economy, encourage job creation and plug the deficit. In the longer term the Conservative party recognises that competitive tax rates are vital to make Britain a good place to live and to do business.
One of Gordon Brown’s legacies as Chancellor was to create a client state where more and more families rely on government for income (be it for a tax credit or for a job), the government will do all it can to strike fear into the heart of families up and down the land of what might happen if the Tories get into power. Progressive Conservatives understand that an economy in conflict is not sustainable and the challenge to an incoming Conservative administration will be to heal the conflict as they rein back the client state and put Britain back on the road to recovery.
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You have it right – the conflict is to keep what we have.But – and it’s a big but – I suspect the strife would vanish pretty quickly if we get a Tory government. The strikers would KNOW that management would be backed properly ( unlike BA at the moment – I thought Willie Walsh very good this morning on Breakfast). They are striking now because they know later in the year the mood will change and they will be outcasts.
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