More Tax, More Borrowing, More Pain

November 24, 2008

The Labour Government is going to borrow a mind boggling £118 billion in 2009 to help it pay for the economic mess that it has got us into. That is the long and short of today’s pre-budget report. This figure is sufficient to understand the trouble our nation’s finances are in and why the promised stimulus was such a letdown and more worryingly, why Labour will significantly raise taxes in the coming years.

Everything else that the Chancellor announced pales into insignificance when compared to next year’s borrowing figure. Bearing in mind that borrowing figures for this year have had to be revised twice upwards by the Chancellor, the estimated borrowing figures cannot be accurately relied upon.The borrowing figures for the next five years are;

£78bn in 2008/09
£118bn in 2009/10
£105bn in 2010/11
£70bn in 2011/12
£54bn in 2012/13

The promised fiscal stimulus to stave off a deep recession was nowhere to be seen. A £20 billion giveaway including the cutting of VAT from 17.5% to 15% for 13 months was off set by a £40 billion tax rise including a 0.5% increase in national insurance contributions for employers and employees alike from April 2011 and a new 45% tax rate for those earning £150 000 or more.

Today we saw the return of Old Labour. The politics of taxing everyone as much as possible but taxing the rich until the pips squeak returned with a vengeance. Prudence, stability and other such sentiments espoused by the PM for so long were all binned for a tax and spend binge and it was shame that it fell to Alistair Darling to deliver the Pre-Budget Report and not Gordon Brown as it would have been pleasing to witness him contradicting everything he has said previously about the economy under his watch. The Chancellor blaming global problems for the state of the UK economy at each and every turn was frankly embarrassing.

George Osborne gave an excellent and perfectly pitched response by heavily focusing on the hypocrisy and sheer incompetence of this Government. It was a very hard hitting rebuttal of Labour’s and especially Gordon Brown’s profligacy and the reckless tax and spend policies that have left the economy in such a mess and the country facing a national debt of £1 trillion.

If the measures in the pre-Budget Report were what this Government thought would get the economy moving again, then it is badly mistaken. If it thought that these measures would win the next general election then it is surely living in cloud cuckoo land.

Brown’s Double Standards

November 16, 2008


George Osborne rightly points out that if Gordon Brown borrows heavily to kick start the economy we may see the ‘collapse of sterling’ and a ‘run on the pound.’ All those following the value of the pound in recent months will know that it’s value has already dropped substantially as I have mentioned here and here. In addition George Osborne justifiably accuses Brown of pursuing a scorched earth policy of leaving the economy in as much debt as possible for when the Conservatives come in power which I mentioned here.

Both of the above are not only valid criticisms but crucial in ensuring that our country’s finances and currency are not damaged beyond repair. George Osborne’s comments are what anyone would expect a Shadow Chancellor to make especially as he is likely to end up correcting these mistakes. These comments are not talking the economy down and neither will they lead to a collapse of Sterling which is happening already.

But quite bizarrely Gordon Brown instead of responding to the seriousness of the allegations made against him and responding to that charge regrets this ‘partisan talk’. I think the G20 summit and woolly talk about saving the world’s economies has detached him from reality. Only a few of weeks ago, the Labour Party produced a dossier attacking George Osborne mentioned here which was fair game but when George Osborne responds, he is accused of being partisan.

Brown realises that the charge made against him is entirely valid and reasonable but for him it is inconvenient and particuarly annoying at a time when he is trying to portray himself as the economic Prime Minister of the world. Most people will want these partisan attacks to continue to ensure Brown is held to account for his policies and to prevent him from ruining the economycompltely.