Was this really the most socialist PBR since Sunny Jim?
So with as much high drama as could be summoned, the Chancellor has delivered his Pre-Budget report, with the key measures of cutting VAT to 15% and raising the top-level of Income Tax not a surprise to anyone who reads the newspapers.
The Shadow Chancellor issued a stinging rebuttal, though whilst the passion of the performance was undeniable, critics are characterising the lack of policy as meaning that the Tories wish to ‘do nothing’ in the face of recession.
Vince Cable gave a more policy-focussed response, though would not have been heard by as many, given that some channels went back to their studios immediately after the Chancellor responded to Osborne. Putting the economics aside, I am at a loss as to how this PBR will play politically.
Clearly Downing Street thinks that when the taxpayer has ‘bailed out the bankers’ that the public will support the rich paying a higher rate of Income Tax. They will be hoping that the realisation that NI has gone up 0.5% from April 2011 will not register in the same way as the cut in VAT.
I am very surprised that alcohol, tobacco, and especially fuel duty will rise to make up for the shortfall in VAT revenue. With smokers and the licensed drinks trade already feeling the cold because of the smoking ban, these measures will aggravate many, though not as many as will be affected by changes in petrol prices.
One thing to notice is that, before the PBR, Quentin Letts was on Sky making comparisons to budgets under Jim Callaghan. Sure enough, George Osborne also referred to the former-PM (and Chancellor) in rebuking Alistair Darling for spending his way out of a crisis. The formulation of the media narrative as the Tories would have it is that this is ‘the most socialist budget since Callaghan’.
I don’t quite know if invoking the fear of Socialism is necessarily sensible, given that it appears to be the reverse of the ‘Stop the Toffs’ tactic that Labour adopted in Crewe and Nantwich. I don’t think many voters have the same tribal allegiances now as they did in 1979 – either to party or to class. I found myself somewhat underwhelmed by the whole affair, though I’d say Mike was right – today was the first day of the election campaign. There is clearly a thirst on both Labour and Conservative benches for some ideological clear water, and the economy/tax/debt is shaping up to offer that most-stark of contrasts.
All that remains is to ask: how long will we be kept waiting?
This evening’s cartoon is, once again, from the peerless Marf – see more by visiting the London Sketchbook.
UPDATE: In worrying about the licensed drinks industry, I completely overlooked the impact on the haulage industry. They reclaim the VAT on fuel (which will be lessened) but will have to pay the extra fuel duty. The same goes, I believe, for Black Cab drivers. Thanks to Mike L for pointing this out.