The start of the Budget was an opportunity for Alistair Darling to take a bow
on behalf of the Labour party and its handling of the crisis. A timely reminder,
just as we go into the last stage of the general election, of who saved us from
certain disaster. Beyond that, the Budget, as was widely trailed, kept an eye on
the future ut resolutely refused to put any meat on the plans for cutting the
deficit, except to say by how much the debt would fall over the coming years.
Indeed Darling made a point of highlighting how his public spending plans
would remain the same. The big decisions on spending have been delayed – nothing
then to turn the voters off.
Darling made a point of trying to help business. Indeed, his tax cutting and
spending amounted to a benefit of £2bn for business. That will be helpful, but,
given the 6% shrink in the economy, that doesn’t add up to huge injection of
He gave more relief to entrepreneurs, revealed that Royal Bank of Scotland
and Lloyds would be forced into lending up to £94bn over the next year and said
business would also have a means of complaining officially if they felt they had
been unfairly refused credit.
Given the struggle to obtain credit, business will feel these measures are
helpful, although it remains unclear whether any complaints process will have
any real teeth.
But many of the big tax takes that had been discussed in nervous anticipation
refused to appear. There was no hike in VAT (though it will probably come
later), no great rise in capital gains tax and no fiddling with the corporation
tax rate. The big guns were not brought out. For now.
Did he target the rich once more? Well, yes he did. He has effectively
introduced his own mansion tax through a rise – to 5% – of the stamp duty rate
of residential properties worth more than £1m (cue some swift price cuts to save
many a wealthy house buyer a fortune in tax).
He also introduced a penalty of 200% for those who fail to declare offshore
income. These two elements will hardly raise a fortune, though they will leave
the core Labour vote untouched.
In short, the Budget is pretty low key. The headline writers will attempt to
create a storm out of it, but, in essence, the story is how Labour has refused
to take any risks with the economic recovery.
Whether they should have offered a detailed and coherent plan by now is
another matter. Darling and Labour believe doing that could make them a hostage
to electoral fortune, something they weren’t about to do.
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