In it I suggested that the temporary VAT cut probably wasn’t that good a measure, and that efficient and effective government was a much better way of putting money in people’s pockets.
I still hold to that. I don’t think the VAT cut really helped that many people (I have saved a few quid over the year, but I’ve probably not spent any more or less than I otherwise would have). The poorest benefited least, because a larger part of their spending was on VAT-free or reduced VAT items. And I suspect the impact of the rise will more than outweigh the effect of the cut – not because the figures are any different, but from the purely psychological effect a tax increase has.
And then there are all the other tax increases. A 45% tax on high earners. A 50% tax on banker’s bonuses. In the current climate, in which being a high earner is becoming a mark of shame and bankers deserve hanging, drawing and quartering these will doubtless be popular. I’m sure Darling is hoping they’ll be enough to help people to overlook the years Labour spent cosying up to the City or that it was the financial powerhouse behind a lot more years of growth than years of recession.
The ½p increase in National Insurance will perhaps be less popular (since it is, effectively, a tax rise) and public sector workers will, no doubt, be disappointed to hear that they will be having a 1% cap on pay increases for two years (a good chunk of which will be wiped out by the National Insurance increase).
There was some other tinkering. I can only view his boiler scrappage scheme as petty politics since he clearly knows I’ve just replaced my boiler. And I’m sure Gala Bingo in Tooting will welcome the drop in bingo duty. But the deferral of the corporation tax increase for small businesses obviously has to be welcomed.
However, the key problem, the elephant in the room, is the borrowing. And nothing here really seems to be tackling the problem the next government will have to face – indeed, he raised his borrowing forecast. So while we have the promised bill to half public debt in four years there is nothing to back it up.
Darling had the chance of being the real Iron Chancellor today, putting politics aside and making announcements that might be politically painful but in the national interest. His announcements may not have been electoral bribes, but failed to grasp the nettle of public spending.
And, like a year ago, I come to the same conclusion – the best solution is good, efficient, Conservative government.