That was terrible. A new 50% rate. A borrowing level that is more than all previous governments combined. It wasn't a budget to restore some sanity to the economy. It was a purely political budget, designed to appeal to the small group of hardcore lefties who believe we should squeeze the rich until their pips squeak.
The 50% new top rate will only drive away those who create the jobs in this country. Jobs will be lost because if a businessman or woman employs ten people, and pays them £20,000 a year, the new tax rate will eliminate at least one of the jobs.
The borrowing levels are truly horrific, and although Captain Darling announced a steady reduction of the deficit and national debt over the coming years, he didn't explain how. The tax rises are nowhere near enough to fill the black hole created by Brown. The spending restraint is pathetic. We need to cut spending. You can cut spending without cutting frontline services easily. ID Cards can go, as can unelected regional government, the quangocracy, the spin doctors etc. We can privatise the nationalised banks, we can privatise the Post Office for some revenue. You can also go for efficiency savings throughout the Health Service, the Police and the Schools. Of course, I would cut money from them too, because we have spent far above inflation, and with the supposed deflation, money will go further now.
What if there is a gilt strike? There is no credible plan to control the deficit or the debt. Investors will get spooked if the government cannot afford to repay its debt. If there is a gilt strike, we won't be able to fund this stupid utopian schemes. The IMF will be called in, and huge spending cuts and tax rises will be forced. The government already takes in immoral amounts of tax. The FTSE has fallen already. If we cannot control this debt, our recovery will be extremely more painful. The pound is falling against the dollar. Perhaps Jim Rogers was right.
David Cameron's response was brilliant. He completely tore Brown a new one. The claims to prudence are dead. 16 years of economic growth with record tax receipts and a benign world economic environment, and yet Brown runs up the biggest budget deficit in the developed world, and it was already the fourth highest before the crisis began. All claims to stability are dead with the fastest rising unemployment in the developed world. CPI inflation is still way over target. I bet Brown wasn't banking on that when he changed the inflation target from RPI to CPI, thus preventing the Bank of England to raise interest rates in 2004 when it needed to in order to pour water over the developing credit boom, which then was a candle, but is now a forest fire. He still preaches that unlike the 90's we have low interest rates. The artificially low interest rates across the world have helped to bring about this crisis. Brown will probably think deflation is a good thing and he will say, ''Under the Tories it reached 10%, under Labour it is -4%.''
I can't believe Darling believes London will remain a centre of global finance when he has announced a very punitive and unfair tax regime. What he should have done is to have cut spending and use the money saved to raise the personal allowance to £12,000, thus talking 7,000,000 out of tax altogether. That would have provided an excellent stimulus to the economy, all without extra borrowing. He could have announced that he would cut corporation tax for small, medium and large business, and he should have abolished National Insurance by cutting spending. If we had risen spending in line with inflation, we'd have been spending around £450 billion a year. We could cut £100 billion and use it to fund a massive program of tax cuts. It will prevent the so called deflationary pressures we are facing. It would provide a massive stimulus to aggregate demand, and the supply side would receive a massive boost. The increased tax receipts from growth could be used to fund the services we seem to love.
The fact that Captain Darling believes we will have 3.5% growth in 2001 shows the dreamland he and Brown live in. Brown's forecasts were legendary for their obfuscation and just plain damn inaccuracy. The growth forecasts were just full of piffle. This was a budget designed to target Labour's core vote, and they want to punish someone for being rich and successful.