Tuesday, 22 June 2010

Gulp! Budget Day

The first budget for 13 years where Brown hasn't written it. So hopefully gone, is the deceit, the sleight of hand and the downright lies which have dogged every budget since 1997. Osbourne's budget apparently will do exactly what it says on the tin.

The coalition’s "Emergency Budget" is expected to included tax hikes and hard cuts in government spending. I argued during my election campaign that unless it was one of the most unpopular budgets in history the Government wouldn’t be doing its job properly. The scale of our deficit necessitates such a budget.

All the indications from the 'pre-Budget noises' are that reducing the deficit will be met by concentrating on cutbacks in the public spending, rather than tax hikes. Ushering in a new "Age of Austerity" (whatever that means), no government department will escape the axe, including the NHS, despite Cameron indicating during the election that spending on it would be ring fenced. The NHS will probably lose the services of many managers, and already a planned hospital has been cancelled.

Predictably the unions are already warning of hits to front-line services and subsequent strikes. Undoubtedly there will be some sort of impact on front-line services, but there’s plenty of scope in the public sector that can be cut without affecting them. The joke non-jobs for instance created by Labour; fruit and veg advisers, politically correct Quangos, diversity officers, weekend explainers, walking coordinators (seriously, I’m not making these up) and so on. Just by getting rid of useless Quangos could cut £13Billion.

Osbourne has an opportunity here, and some are getting excited by possible cuts ahead, but I have doubts as to how far he will seize it. We shall see.

Although Government spending is the main focus there will inevitably be tax rises. Taxes that I expect to see go up are; VAT possibly to 20%, Capital Gains possibly to 40% but more likely 30%, some sort of Bank levy and the obvious alcohol and tobacco (that will be another 2 of my local pubs closing). However, overall spending cuts are more important than tax rises which often generate less revenue the more they are raised and only encourage jobs to go elsewhere thus threatening the fragile recovery.

I never used to watch Brown's budgets, it was largely a waste of time as the details would often take days to unravel, but today I will watch, if only for one simple reason. Amidst all the economic gloom and pain, there is likely to be one amusing sight, that of copious amounts of steam emanating from the Labour benches as they get angrier and angrier while Osbourne wields the knife. Their faces are likely to be a picture. Expect to hear shouted phrases like; 'same old Tories', or 'they enjoy making cuts', or 'they're the party of the rich' and inevitably 'Ashcroft'.

What hasn't changed with the new Government is the leaking to the press. When Cameron said the UK budget should be presented to Parliament first (not the EU) what he really meant was that it should be presented to the UK press first. Whatever happened to Budget purdah, when leaks used to be a resigning issue?

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