Budget Reactions

Thanks to everyone who joined in today's Live Blogging session which was simultaneously carried by 10 blogs across the Blogosphere.  My reactions whilst listening live was much the same as those also taking part.

What did people think of today's budget?

What did the Tax Payers Alliance think to Darling's last Budget Speech?  Chief Executive Matthew Elliot is quoted on their web page as saying:

"The Chancellor has utterly failed to face up to the horrific scale of Government borrowing and debt. There was a handful of tax holidays and spending cuts, but nothing to deal with the debt addiction which threatens to make Britain the next Greece. The public are crying out for serious and sizeable spending cuts to rebalance the books, but the Government is living in La-La Land. Large spending cuts are essential for taxpayers and for the health of the economy but Gordon Brown only knows how to spend more, not less. We need a real Budget after the election that faces up to the serious realities of our situation."

BTW the TPA has released their manifesto ahead of the General Election which is riddled with common sense ideas which no doubt millions of people would vote for - expect the political parties to brand it as "popularist" as they do with most ideas which people might actually like.


What did Fraser Nelson think?

Personally, I forgive Darling all the partisan stuff in his speech - this is a pre-election Budget after all. There is no act of wanton vandalism, like the 50p tax. Stamp duty on properties over 1m is rising from 4 percent to 5 percent, but does anyone seriously think this would not have happened under the Tories? And there was quite a bit of sense. Entrepreneurs’ tax relief for capital gains tax was doubled to £2 million. There was no extra splurge. All told, Darling did what he could to salvage his own reputation before he passes into history as the Chancellor who picked up the most poisoned of all chalices from his predecessor. 

What did the BBC's Douglas Fraser think?

It's a bad day for scrumpy, cider and the Wurzels, and a good day for kids who make their living making and playing computer games.

Duty on cider is soaring by 10%, on top of an alcohol tax accelerator.

The cynic might look at a map of the cider-producing counties of England, and find few marginal constituencies in which Labour is a contender at the general election.

What did Sky New's Jon Craig think?

After the Budget, I asked the Treasury pointyheads who always give a thoroughly baffling briefing to economically illiterate political correspondents just how many people would be affected by the Belize crackdown.

"Errrr," came the reply. Embarrassed shuffling of feet and staring at their shiny shoes.

"How much will this raise for the Treasury?" someone else asked. No answer to that, either.

Never mind, a shameless piece of tribal, class war, stuff-the-Tories politics had cheered up Labour MPs as they prepare to go back to their constituencies and defend their seats in the weeks ahead.

What did the Adam Smith Institute think?  Dr Eamonn Butler replies:

the Chancellor did not mention that the trade deficit had risen by £7bn or that business investment has fallen 5%. Nor that a government which was borrowing £6bn a year when it came in is now borrowing 27 times that, at £167bn in 2009/10 and another £163bn forecast for next year.

What did The Fink, think?

Basically nothing happened in this Budget because he had already announced policy earlier.

The entire Budget was anchoring.

What did Michael White of the Guardian Think?

Alistair Darling struck a tone of high-minded responsibility but I was not convinced by the way he magicked away those mountainous deficit and national debt figures

What did Gentle Ben think?

This was his Budget, we are told by the Treasury, meaning that while Mr Brown may have been allowed to have his say (do you think he ever stops to say to his Chancellor ‘thanks for not treating me the way I treated Mr Tony’? no), Mr Darling was in charge. And while he has emerged with credit as one of the few straight-talkers in the gang who kept a cool head while others flapped, he is also a Labour politician who has an election to fight. So in addition to the narrative about tough choices (that Tories would not have made), there were specific digs: the rejection of a unilateral bank tax, the offsetting of a stamp duty cut for first time buyers with an increase for those buying million-pound properties, the boast that most additional tax was coming from the top 5pc of earners, the decision to pay for long term care by freezing IHT allowances, the extension of the ‘temporary’ rise in winter fuel payments for a year inviting a campaign question to the Tories – ‘will you extend it?’ and particularly the partisan attack on Lord Ashcroft via a convenient tax information exchange deal with Belize. It was a pointless Budget without a spending review, but it was above all an election Budget from a Labour politician. 

What did I think now I have had some time to mull things over?

In some regards this was a "pointless budget" but in having said that, the fact that our finances are in grave turmoil and the Chancellor had nothing to offer the people who work in this country but dry humour about tax arrangements with Belize highlights exactly how vacuous the people who make up our cabinet are.

We are screwed.  Royally screwed.  What do Labour propose to do?  Tax us more and borrow more.  Great, thanks, because that has been working really well for the last decade or so hasn't it!

Take the pulse of the people you meet tomorrow and ask them about the budget.  When they have finished bumbling along and regurgitating TV news sound-bites ask them how they will personally benefit?  Cue vacant stares.  

This is a budget that does not benefit individuals, and it does not benefit society, nor set a course to correct the ugly vandalism that has defaced our Exchequer.  It is a Budget by the Labour Party, of the Labour Party and for the Labour Party.  Alistair Darling could not offer anybody any reason to vote Labour even with the control that the Chancellor has; he has crystallised how impotent the Government has become.  The sooner the election is called, the better.


Finally, what did Paul Waugh think?  He wants to know how you can deliver a budget with a straight face when it has so many holes in it!

Live Blogging The Budget

On Wednesday afternoon at 12:30pm here on Governmentitus we will be live blogging the last Budget before the General Election in cooperation with a number of other blogs. The Budget will be carried on all major television channels except for BBC1 which will be showing Bargain Hunt (no, really!).

Importantly for us, we will be looking carefully at the different ways that channels report and editorialise the announcements. We'll be able to compare, for the first time here, one event reported several ways in a live environment. Good for bias checkers as well as important for everyone who pays tax in the UK.

The Chancellor’s speech will certainly be a political affair rather than a fiscal exercise, so we can expect plenty of unaffordable goodies deferred until after the Election with a challenge issued to the Conservatives to oppose them.

This chat will be a collaboration between A Tangled Web, All Seeing Eye, Barking Spider, Biased-BBC, Corrugated Soundbite, Dick Puddlecote, Governmentitus, GrumpyOldTwat(thanks for the pic!), Man Widdecombe, and Subrosa - all excellent and highly recommended blogs. If you haven't been to some of them before then please take this chance to try them out.

From Biased-BBC, All Seeing Eye and David Mosque will be in the moderators chair so it'll feel just like our regular Question Time evenings. To catch the live blogging, come back here on Wednesday, March 24th just after noon.

As Good As Certain...

Making bold predictions can be a very unrewarding game, especially if you are a journalist.  Us bloggers can get away with it a little more, but we are still wary.  Anatole just can't resist it, he seems to make one every week; or at least he used to many years back when I read the Times.  I came to realise very quickly that whatever Anatole would predict not only would not happen, but, very often the exact opposite would happen... I was not a Times reader for very long, they were way off the mark with too much and gave New Labour too much unwarranted credit.  It was like being led up the garden path.

Anyway, it's not too often I am over on their site but I was tonight and Anatole has predicted that Labour are going to "do a 1992" and win the General Election, because the Tories have to measure the budget response right, and he feels they will not do this.  He even says:

But next week’s Budget will be a pivotal political event, not because of anything Alistair Darling may or may not say, but because of the response he will elicit from the Tory frontbench.

This could be the best news yet for David Cameron and George Osborne, they may not realise it but it really is.  Maybe in the last few years Anatole has turned it around and got a few right, and if that is the case it is I who will indeed be left with egg on my face.

His theory that the Conservatives must make more of the Budget than Labour is simply not true.  Alistair Darling is about to stand up and say how he wants to buy Labour some extra votes on money borrowed off of the future toils of the tax payer.  He wants to nudge the Conservatives into immediately replying with specifics about what they would cut after a General Election, and quite frankly even Cameron is not stupid enough to do that.  Nobody believes what labour has to say on the economy the trust is gone.  Nobody argues with crazy people in the street, they accept they are crazy and walk on... They certainly don't shout crazy back.

The Conservatives do need to shape up their policy announcements, but that does not mean they have to make specific pledges on cuts, the best weapon the Conservatives have between here and May 7th is that nobody believes Labour when they talk economics, nobody believes the numbers.  Like the mob, they would appear to have two sets of books running, one for the public when they need election promises, and the other that tracks the real cost of their profligate failures.  Talk cuts by all means, say that they will be robust and deep - people will appreciate that and take it as honest; but specific cut pledges in a budget week is not a good idea.

When Alistair Darling stands up and says he is going to add £5 to the winter fuel allowance David Cameron should throw Ed Millibands Energy Taxes back in his face, when Darling says he is raising the State Pension by £4 Cameron should remind everyone who raided the public pension purse.  When Darling remarks about borrowing to spend on investment Cameron should repeat that we are spending more on debt repayment to banks than we do on our under equipped and under supported Armed Forces.  And so on, ad nauseum.

What Cameron should not do is get dragged into a fight about numbers and projections that are probably not even true.  Labour will be setting traps.  He should insist that if the PM can't even tell if he has spend more money year on year on defence and if Liam Byrne is confused as to whether there will or will not be any new taxes there is clearly some work to be done to straighten out the books and only when after a Conservative Government has audited the books, and the bank statement, will they truly have an idea what measures are needed.  It is Labour that has created this uncertainty but that the Conservatives are ready to roll up their sleeves and give people a straight picture.

Anatole tries for an observation:

The Tories made three closely related mistakes in devising their economic and electoral strategy at the nadir of the financial crisis in the winter of 2008-09

No not quite.  The real problem is that the Conservatives, especially early in this Parliament began to believe the propaganda that was coming out of 11 Downing Street about such things as "ending boom and bust" and having developed some grand new economic platform that virtually did away with inflation.  The removal of powers from the BoE and the setting up of the FSA allowed for the debt bubble to grow unfettered and was a big part of why there was a massive recession.  It was all lies, they should have rejected the premise of Gordon Browns claims.  Their language at the time regarding economics was to the line of "sharing the proceeds of growth" - they wrongly accepted the premise that there was unlimited growth to be had.  It wasn't that they built it at the wrong time, it was that it was built on a foundation of sand. When the credit cards were being cut up and we hit our limits, the Tories were just as lost as Labour.  When it went wrong, Brown claimed that "nobody saw it coming."  With a little more Tory caution, Browns best defence line would never have been accepted.

Buying into Labours falsehoods will prove to be the Tories biggest problem.  I have been saying for some time that the Conservatives need to disassociate from Labour.  By accepting Labours lies and building their policies on those same falsehoods they not only validate the Labour Line, they set themselves up for their own failures and u-turns.  The NHS, The EU, Public Schools, Devolution and Green Taxes are all areas where the Conservatives will have to unpick their position and set a new direction after the election, and all because they have built their policies, well defined or not on the New labour reality rather than the real world reality.

So how do I know the Conservatives will win and Anatole is wrong?

Assuming that the new Budget confirms these Labour plans for long-term fiscal consolidation, how should the Tories react? The answer is simple. Instead of quibbling about Alistair Darling’s figures and forecasts, the Tories should endorse his budgetary numbers and promise to carry out essentially the same macroeconomic programme.

All David Cameron has to do now is, not do what Anatole suggests and the election is his.

I Probably Missed Nothing... Right?

I have pretty much missed all of the PBR reporting today because of work (however, I am more grateful to still be in work that to have had the time to have caught it though!) I did catch a brief summary earlier online at the end of lunch so I kind of have a feel for what I will be heading home to on the news tonight. In my mind, it is not too important to know the in's and out's this minute, as what tends to happen with the Budget and the PBR is that it takes a few days for the analysts to sift through and find the real details rather than the fluff announced at the dispatch box.  I also want to add that it's a good thing as well that the Treasury left the VAT announcement until 9th December, nothing like giving the nation a whole 10 full working days, (plus the Christmas period) to implement an entirely new Tax rate on top of the tax accounting rules due to come into force on 1st January 2010... Very considerate and visionary of the man charged with setting the course for economic recovery.

With the announcements and what it will likely mean, I already feel from behind my veil of ignorance that I will probably be stuck to my previously stated mindset; that the UK will again not be out of recession after Q4, and my guess is that it will be Q2 2010 at least before a return to growth. Though, given how long it we have been in recession and potential impact of the PBR I guess Q1 2010 could be realistic, but I still harbour doubts so will not change my outlook; well, not yet anyway. I am also guessing that in a few days time, when the likes of John Redwood and Fraser Nelson have dug through the details, whatever the top line cut figures are on my TV tonight will actually be revealed to be lower, and/or the proposed tax hikes actually deeper into our pockets... Like I say, I will wait for a few of the better economic journalists and organisations to have a good pick through, as they tend to do a pretty good job these days interpreting these budget announcements back into English.

Another thought occurs; weren’t the online MSM sites promising a big expenses scandal today? Has this been slipped out the back door under the cover of the PBR...? I will have to see about getting online later and having a search for the news (gossip).

Blackadder Quote

Goodbye Darling

Effing Bankers

The Government has today announced that it is to roll out an insurance scheme for the banks to encourage them to start lending more to people. This is being offered by the Government (in case you missed it) after banks lent too much to people who can not afford to repay it. As people now have no money left, and a significant chunk of the population now owes as much as they could possibly hope to pay off; Gordon Brown and Alastair Darling have decided that the Government should "do something".

On the same day that the insurance scheme is announced, RBS announced that they are in a little bit more trouble that was initially realised, certainly more than Gordon Brown knew about when he handed over £20bn in capital a few weeks ago.

RBS purchased another bank a few years ago called ABN Amro. This bank had also lent a lot of money that people can not afford to repay. They helpfully lent what now extends to £2.5bn of credit to a Russian Chap with a big impressive chemicals business. Unfortunately that chap can no longer afford to keep the company going so it will probably go to the wall and default on the loan. But don't worry, the British Tax Payer can pick up the bill. No, not because the treasury coffers are over flowing; but because the Chancellor knows some Asian fellas that are prepared to lend us a few quid to bail out these defaulting loans. I am not sure what the rate of interest is, but what the hell, we will not be paying them back anyway - the IMF will have take care of that for us, we can worry about paying the IMF back later.

Perhaps I have unrealistic expectations of elected officials and Government in general. Maybe, I have watch just a few too many episodes of the West Wing, or not enough of Yes Minister. Something inside me says, this is all completely wrong. Wrong, wrong, wrong! Mr Brown, this credit crunch has not come about because of a lack of regulation, it is because we had bad regulation. You have not ended boom and bust, you have exaggerated it.

I wish someone could explain to me where this Government is authorised to borrow and spend, and spend and borrow in such a reckless fashion. Was this in the Labour Party Manifesto? Has Parliament debated the two separate bail outs? Has the chancellor been on ITV, BBC, SKY News taking calls from members of the public and addressing their concerns? I don't recall the national debate about the UK taxpayer covering UK banks defaulting foreign loans. We have a Democratic Deficit.

Some bankers have made off with £millions in bonuses. Were they acting illegally? I can only assume not. Otherwise the government would have launched an investigation and would be bringing these thieves and crooks to justice. Not just in the courts, but in the newspapers and TV news. Why has this not happened? Because they were not acting outside of the law.

So what is the government going to do when pumping £billions more into the system fails to lure indebted Brits further into debt (and thus kick starting a boom cycle, that Brown insists that no longer exists?) Borrow more money?

The government needs to be more pragmatic in it's approach to this crisis. By covering the debts of negligence that far transcends economic sense, the Government is covering for those poor investment decisions. They have nationalised the failures of the banking system. How many Banking heads have rolled? None. How many tellers, and branch assistance have lost their jobs? Loads. Is this right? No, it is not. The decision makers made the mistakes, they are keeping their jobs and the tax payer is funding it.

I think Interest rates need to come back up a little. UK banks need to attract deposits from abroad. Savers in the UK should not be unduly punished. We also need to avoid another surge of poorly secured credit on the first sign of economic recovery.

The Bank of England should be granted emergency powers to investigate all deals over £100m (or at a value deemed appropriate, and practical by the BoE) that is now on the Governments portfolio to see if those loans were based on sound financial decision making. If not then legal action should be considered by the government against the banks, and from the banks against the employees that made them. The Government can not keep maintaining that bankers were greedy and made errors if no one can be found to have fallen outside of the regulations.

Those toxic debts should be targeted, and identified. I am not sure if a Government Toxic Bank should be set up, but if these bad investments are identified, then it might not require a Government solution. Solvent banks and financial institutions might help struggling banks, with compensation of insurance. Certainly the Government should be looking for the banks to write down a share of the debts, at their loss, rather than propping up the whole rotten system.

The FSA should be culled and regulatory powers handed back to the BoE and the Treasury. The BoE must then openly report on the banking sector in the UK, and be charged with improving confidence in the UK financial sector.

Some of the money being offered into bailout schemes should instead be offered in entrepreneurial grants to companies that have a chance of getting a foothold in the emerging Asian markets, such as China and India... I am talking about small and midsized companies with UK based staff and management who are trading in sound products and emerging technologies. Our economy needs cach from the East, and we need companies creating new jobs.

The Government should also reduce the size of the State, to reduce the burden upon the tax payer. Can we go onpaying for big Government AND big Government debts? I don't think so.

I am not economist and I am not a banker. You may not agree with any, or all of the above, nor may the Government. I am, however, a tax payer, and I have not been consulted in how my tax money is being spent, or on my concerns for the future tax burden on me and my family. And that is what has annoyed me most of all.