Sunday 26 April 2009

Was this the most depressing budget in history?

I couldn’t possibly let this week go by without commenting on the budget, which took place last Wednesday. I don’t think it’s an understatement to say that it was quite possibly the most important and significant budget that’s ever taken place during my lifetime, and probably since the end of the Second World War.

If someone asked me for my first thoughts and reactions on the budget, I think the polite way in which I would respond is by saying ‘What an absolute total mess we’re in. How did we get into this situation?’

For the past 18 months or so we’ve all known about the credit crunch, we’ve seen the economy slip into recession, but Wednesday’s budget seemed to take the seriousness of the situation to a completely different level.

Last Thursday, I scanned the front pages of the daily papers. Every newspaper these days seems to interpret news events through their own prism of how they see the world. So for the right wing press such as the Mail, Express, and the Telegraph, the budget was a return to bad old days of class politics, in fact judging from the Telegraph’s front page, you’d think we were on the verge of another Bolshevik revolution!

In contrast the Guardian seemed generally more supportive of the budget, whilst the Daily Mirror painted Alistair Darling as a Robin Hood figure, taxing the rich to help the poor! The Sun amused me though, with its front page, which listed all the bad things we can focus on before noting that at least the sun was shining!

I’ve really tried hard this week to read as much about the budget as possible, to listen to all the different reactions, and analysis and to find out just how good or bad this budget really is and what this means for the UK’s economic position.

Having done this to the best of my ability, I’ve come to the conclusion that overall it was a pretty bad budget on the day, and will prove to be a bad budget over the next few months and years. The Chancellor's predictions for economic growth over the next few years appear to not only be overly optimistic but have also been totally discredited by economic experts, the City and in particular the IMF. I’m not quite sure how the Chancellor and the IMF can come to such widely different estimates in economic growth! Obviously someone has got their figures wrong.

Alistair Darling claimed the 50% tax rate on high earners was not politically driven, reports say that Labour had conducted a number of focus groups which the results suggested that this was a popular measure with key Labour voters. Seeing as Labour has spent so long ignoring is traditional working class support base it’s of no surprise that they’ve introduced this measure. People are rightly angry with the banking class that is partly responsible for getting us into this mess, they’ve become Public Enemy No 1.

The argument against this is that the revenues received form taxing those earning above £150,000 won’t make a significant difference, and that in reality we are penalising those who are responsible for generating wealth in the country. I get pretty tired of hearing this argument about wealth generators.

It gives the impression that only this elite group of high earners are making a significant contribution to the wealth of the nation, surely all of us in employment paying taxes are contributing to the country’s wealth? Generally I’m not overly concerned about those individuals earning over £150,000, I’m sure many people on low incomes still pay a significant amount more of their incomes in tax then those high earners.

What I would like to know is why this government isn’t making more of an effort to claw back some of the millions lost in corporation tax that many major companies seem to be avoiding. Only the other week, The Sunday Times reported that the Internet company Google has avoided paying £100 million in UK tax despite annual revenues of over £1.25 billion!

What has really stood out for me about this budget was the amount of government borrowing that will be required over the forthcoming years, and the increase in national debt, and the unavoidable tax increases which will occur. The whole thing has made me incredibly disillusioned with our political class. I just struggle to get my head around some of the figures and to understand how we’ve ended up in this mess. It seems that for 10 years of so we were happily going along with continuing economic growth, easy credit, rising house prices, the supposed end of ‘Boom and Bust’ economics but all along we were sitting on a ticking time bomb!

From what I can see that main reasons why Britain if facing such a difficult recession in comparison to other countries is that our economy has been over reliant on the financial services industry which has collapsed, a level of personal consumer debt which has been too high for far too long, and an over-inflated housing market.

I’ve always been generally quite optimistic about politics and our politicians. I’ve never been the sort to say ‘They’re all just the same, they’re all as bad as each other’ But I have to say that at the moment I’m feeling very let down by everyone. The Government for being in power over the last 10 years and the Opposition for failing to highlight or see any of these problems.

The only politician who I think has emerged with their reputation enhanced is the Lib Dem's Vince Cable. He’s the only person who I have real faith, confidence, and respect for in his views on the economy. Not only do I think that he should be running the Lib Dem party, but I’d feel much more confident about things if he was actually Chancellor of the Exchequer.

Who ever wins the General Election next year, I believe that not only do the have the problems of dealing with the worst economic conditions that most people can remember in their lifetimes, but there is also the issue of trying to restore public faith and confidence in the political establishment and their ability to competently run the country’s finances. For me I’d just like to see some genuine honesty and respect from politicians which seems to have been totally lacking at times when it comes to running the country’s finances.


  1. Rodney, i think you along with a lot of other people are over simplifying things. Yes the over reliance on the financial services sector has had a significant impact but that is not where the real problem lies. The real issue comes with the false growth fuelled not just by corporate and personal borrowing but by the state dependant economic growth that has occured due to a fat, obese public sector fuelled by left wing lunatics obsessed with the redistribution of wealth whilst having no idea how real wealth is generated.

    When did you last hear Gordon Brown stand up in parliament and say we have saved this, we have made this more efficient? you didnt because all you heard was we have spent £2billion on this and £3 billion on that, no out put or results based focus at all - they have had one policy throw money at everything because they have such little 'real' life experience, they are career politicians.

    I dont know one single business that hasnt been involved in someway in a government project or infact fed 'funding' by the government. It makes me wonder how much 'real' growth in the private economy there has actually been - either way Labour have without a doubt done its favoured trick and tried to blow the countries wealth on its deluded understanding of how to make people better off.

    This government has taxed and taxed, it has cut the head off the goose that laid the golden egg with its taxation and legislation.

    It has, like every labour government, attempted to redistribute wealth in a way that makes everybody poorer.

    I suggest you take a look at something like AWM, the over inflated salaries, the Chauffeured in cheif executives, the over disgusting spend it or lose budgets, the quango delirium that helps them forget it is tax payers money they are squandering at the end of every financial year on jollies to ensure they receive the same sized cheque the following year.

    Its not google you want to be chasing (at least they provide 'real' private sector jobs and technological innovations, they provide lots of services free too! it is the likes of AWM you should be investigating and those who operate within, lets see how long they would last in the real 'results' based private sector.

    Before i leave you to continue your invetigation into AWM, did you vote Labour in 12 years ago? i hope you rectify what you contributed too in election next year.

    Heres to a debt bigger than 300 years of collective government borrowing and the thirty years of misery it has brought to existing and furture generations.

  2. Nathan..Always entertaining always controversial!

    I'm not going to deny that Labour has contributed to the growth of the public sector over the last decade, and I have read reports that certain towns in the country have economies that depend almost entirely on the public sector. But too many people, in the private sector and on the political right are trying to shift the focus and attention away from the government's economic policies, the bankers and the failures in financial regulation.

    Instead we're going back to sticking the boot into our old friend the public sector. I'm sorry but I'm not falling for it!

    Todays bankers are now the equivalent of what the Trade Unions were in the 1970s. I don't need to remind you of what your beloved Thatcher did to the Unions, but there are parralels. Both flexed their economic and political power almost unchallenged, both thought they were untouchable, but public opinion turned against the Unions, and it's turning against the bankers! Yes you can talk about public sector waste, but it's going to be hard to turn people's attention away from those groups that for so long told us they were creating wealth and prosperity for us all, only for us to find out that we're all now saddled with mountains of toxic debt!

    What makes me laugh is that the public sector is always being pushed into operating along private sector lines. How many Public/Private partnerships are out there these days with the specific aim of introducing private sector practices to improve efficiency, raise standards, and give the public choice? Public sector bodies were encouraged to increase salaries to attract the very best from the private sector, yet now that we have Chief executives of local councils earning £250,000 per year, people start crying that salaries in the public sector are too high and that those individuals are living in a cosy bubble away from the harsh realities of the recession! What does the private sector want?

    I'm glad you've raised the issue of Advantage West Midlands, as I do now want to find out what the real story is behind these regional economic development agencies. What are they really achieving? What is the cost to tax payers? But please don't try and divert attention away from those that have really got us into the mess that we now face.