Budget 2010: the "We'll deal with it later" budget

Well, that was interesting wasn't it?


As I blogged about a couple of weeks back, there really was little point in Alistair Darling simply 'going through the motions' so close to the General Election.  His Budget Statement was an exercise in political posturing rather than fiscal prudence; as anyone could work out by the numerous mentions of a certain Tory Lord...

I will admit, to fail to present a full Budget before the General Election would have seriously damaged Labour's credibility; but we still need to recognise that this was merely an exercise in vote-winning rather than getting this country's finances back on track.

Quite simply put, Darling's message can be summed up in five words: "We'll deal with it later".

As expected, the Chancellor steadfastly refused to announce any public spending cuts; reasoning that it would be more prudent to give the economy a chance to recover before cutting back on spending.  Either that, or having realised that such a policy would hardly be a vote winner.  Watch this space for a swift Labour U-Turn should they win in six weeks time.


Instead of using the C word, the Chancellor decided to paint things in a different light, referring to Public Sector savings and reforms instead.  Now please forgive me if I'm getting the wrong end of the stick, but isn't "saving money" the same as "cutting spending"?

In fact, the Chancellor announced a number of increases in spending; from allowing more Tax Credits for those aged 60+ to extending schemes for those aged 16 to 25.  If you believe what the Chancellor says, apparently almost all of this funding is to come from the 50% tax on bankers' bonuses, which has raised £2bn.

My one concern here is that this Bankers Tax appears to be the catch-all solution to all questions of funding.  What worries me is that there was no explanation as to how much of this £2bn would be going to each spending increase, so there is no way to see whether this "solution" fits.

Moving on...

A further scheme announced is called "UK Finance for Growth", which will aim to increase the number of new businesses and stimulate growth by operating as an investment bank, with control over £4bn of assets.  £2bn of this will be raised by private investment, with the rest coming from the capital held in the Channel Tunnel Rail Link.

Again, please excuse me if I'm wrong, but isn't this just the same as mortgaging it?  Now even I know that mortgaging property is something you only do if you can't get the money anywhere else.  Who mortgages their property in Monopoly just because they don't want to break a £500 note?

All in all, this was a Budget designed to find every last penny possible - from mortgaging CTRL to putting an extra 20p on a £2 glass of cider - without getting it from the taxpayer.  But even they'll be an extra £200 out of pocket (on £20,000 a year) thanks to the N.I. increases.  And all to the backdrop of another £167bn being borrowed to finance it all.

But remember, it's all OK because we can put it off until tomorrow...