The Budget that destroyed Brown's alibi

I could barely listen to this morning's performance by the Prime Minister on the Today programme so irritating is his inability to give anything approaching a truthful, principled answer on any question and so painful the contrast with the way his predecessor handled such interviews.

His attempt to suggest that the £2.7bn borrowing was a deliberate measure to give a fillip to the economy was painful. Truly painful.

But I struggled my way though it.

And two points struck me.

The first was that he appears to have changed his investment rule. When John Humphrys asked him about exceeding the public sector debt ceiling on 40 per cent of GDP he interrupted, denied that he was breaking the rule and said that it applied over the economic cycle.

That's funny. I could have sworn that rule applied every year.

If he has changed the rule, he has opened the way to a massive borrowing spree.

The second point concerned the abolition of the 10p rate. He claimed he was doing this in order to simplify taxes at two rates.

Now, this has always annoyed me, because he introduced the 10p rate in the first place.

Until this point, the Government had a response to any smartarse who mentioned the fact that Brown had introduced the rate. No, they said, he didn't introduce it for political reasons (to make himself look like a low tax Chancellor) and he didn't abolish it for political reasons (to make the Tories look silly and cut the basic rate).

Instead he did it for principled reasons. He wanted to help the poor and do it quickly. As tax credits didn't exist he put the 10p rate in place, always intending to replace it later when credits could do the work instead. And in his last Budget that moment finally arrived.

Really. That was their line.

But there's a problem, you see. That line was fine (ish) when they were planning to compensate everybody by changing the tax credits system. But now they have done it a different way - through tax allowances. And that method, of course, was available to them in 1997 when they introduced the 10p rate.

Indeed Andrew Dilnot at the Institute for Fiscal Studies urged them at the time to use allowances and not complicate the tax system.

So Alastair Darling's emergency Budget has destroyed Brown's alibi.

He now has no defence against the charge that his introduction and abolition of the 10p rate were political stunts.

Comments

[Howard]

Agreed. What nobody has raised this morning is that Brown is not making the political weather but reacting to events. that why he is finished. All the interviews are rather overkill don't you think?

[Ezra Mayo]

All true, but when I reflect on the nature of politics and political expediency I have to agree with Brown that, in terms of looking after low-paid families, tackling child poverty etc.. he has been effective. What really matters in the end is the result. He's a rubbish leader, and New Labour are a spent force (finally!) but at least he's not the husky-hugging empty vessel we'll get in 2010.
Is he not, with all his weaknesses, a nobler soul?

[Jim Laflin]

Brown is quick to blame instability in world financial markets for his failures.
Has it occurred to anybody that his only successes were when the same world markets made it easy to be successful, and even in that period he had to sell the nations gold reserves and borrow extensively to finance his extravagant spending plans.

[Ian Evans]

Let's not be fooled by this : they are trying to do 2 things with our 2.7bn and you can only 'give' something once.

Firstly, they seek to compensate the poor (or 80% of the losers) for losing out from the 10p shambles - well, ok, they have done a reasonable thing there.

Secondly, however, they are 'giving' a tax handout - but guess what, who are the losers there? Two lots, first the rich (which is ok), but also those poor who previously lost out relative to the 10p debacle!

So, by not targetting the money, they have, on the one hand, compensated the initial losers, but, on the other hand, they have then made them losers with respect to the tax rebate. You just couldn't make it up.

[BlairSupporter]

Absolutely:

"... so painful the contrast with the way his predecessor handled such interviews."

If the Labour party is not yet wondering WHY they dumped Blair for this man, they have been drinking too long from the well of self deception.

And to think that some used to complain that Blair didn't answer questions. At PMQs and on Radio 4 interviews, he was openness exemplified.

Brown's 10p tax abandonment was meant to be lost to scrutiny in the ensuing general election run-up. The run-up that ran out of steam, when "courage" deserted the back-stabbing present PM.

[James Strachan]

Ezra Mayo.

No.

[David, Edinburgh]

Brown will find a way to massage GDP upwards, thereby meeting his 40% rule. The £2.7Bn borrowed for the by-election is small compared to the extra revenue the Treasury gets from recent oil price rises. I wish you lot would stop referring to "scrapping the 10p rate". It is more accurate to say that Brown has doubled the rate from 10p to 20p.

[John Portwood]

Mr Brown also rejected Conservative claims he had broken his own "sustainable investment" rule, which says debt must be kept below 40% of GDP.

He said the government had met both this rule and the "only borrow to invest" golden rule over the most recent economic cycle, which he said had lasted from 1997 to 2007.

"We are now in a new economic cycle," he added.

Note the last sentence. This means that the Government can continue borrowing in the assumption that it will be able to repay in the future. A casual glance shows that the last time the economy was about to enter low growth/ recession was in 1991 not 1997. Total net government borrowing in that period:(91-07) £400 billion.

[Jeremy]

The guy has lost it. We all know it, we're waiting for him to work it out....

I believe him when he says that he has the best intentions of the British public in his heart, something gets lost by the time the words reaches his mouth though.

Global credit crunch precipitated in the US. Right so British banks were not part of this fiasco then were they? Who ultimately regulates the banking industry?

A southern England that is bankrolling the north & Scotland to indulge in their single parent fiesta at our expense.

(Whoever manages to market an upside down version of the Italian National League will be more popular than bees at a honey pot)

Gordon, your revolver awaits you in the drawing room, can you get Darling to follow you please.

[Mark Robinson]

"There is something wrong with the way in which we make our decisions. The Government listen too much to the pollsters and the party managers. The trouble is that they are not even very good at politics, and they are entering too much into policy decisions. As a result, there is too much short-termism, too much reacting to events, and not enough shaping of events. We give the impression of being in office but not in power. Far too many important decisions are made for 36 hours' publicity."

These words, spoken fifteen years ago by Norman Lamont about John Major's government, are just as applicable now than they were then.

Tony Blair was a great Prime Minister - but now even better when viewed through the lens of the last year.

[bert]

There is one great big major problem. The alternative is Cameron, a second rate counterfeit copy of Blair, which even the most gullible voter can spot, after all they have seen the master at work. Cameron and the tory party also learned a lesson at the master's feet. Their thinking, 'are you thinking what were thinking' is so bleeding obvious even to a halfwit, 'If having a, slimy oily salesman, who butters up the mugs, worked for Labour it should work for us'. It only demonstrates that the Tories, like labour, will do anything to gain power.

[G.Margaret]

BERT
Tony Blair stepped straight into Margaret Thatchers shoes and continued her policies(but with a lot of nasty "New Labour" bits added)
He saw how the public voted her in three times AND then voted in John Major. But Blair wasnt half the conservative politician that Thatcher was so hopefully the public will bring back the real Conservatives again

[thomas]

Gordon Brown hasn't lost it because he never had 'it'.

Brown hasn't got any legitimacy because he didn't face any challengers in a leadership election, he hasn't any mandate because he hasn't won a general election, nor can he claim any positive track-record at No11 since it is clear he wasn't responsible for previous stability and doesn't claim any responsibility for the current instability.

It is also increasingly unlikely that Brown will ever have the opportunity to lose anything, as he as he is unlikely to be in the position to lose the next general election for Labour as they realise they are heading for collapse.

Brown isn't a loser, he is a sad and frustrated man. No wonder he gets so angry!

[Neil]

I too watched Gordon Brown's interview with John Humphreys, it was so painful, and made one cringe so much that one was tempted to turn off. I got the distinct impression that Gordon Brown makes up the story as he goes along.

[Jamal McAkhbar]

The problem for Labour is that their strategy was to create a hegemony of perpetual rule through a combination of devolution settlements(so when England turned on them they could claim they were anti-british) and growth of the client state to Scottish levels (45% of working population). There is no money left for either. They have no alternative strategy.

[Alan]

"Is he not, with all his weaknesses, a nobler soul?" Er, no, Howard. He's an Ah-soul...

[Stan Rosenthal]

It's all very well having a poke at Gordon Brown (and I share Blairsupporter's views about his shabby treatment of the former Prime Minister) but how many other politicians have done so much to lift people out of poverty (both here and abroad)? The 10p business was an aberration in this context, which Brown is now doing his best to rectify, as well as giving a much needed boost to the economy at this ctitical time. I wonder whether Finkelstein's mates would have shown such concern for the poor if it had been them who had abolished the 10p rate (as the Tories clearly intended to do).

[Peterson]

Mr.Brown nearly, oh so nearly got away with it. If it wasn't for the opposition parties and Mr.Field, he would have done. He didn't care for the lower paid then and he wont in the future. The unfunded tax cut he has given will only last this financial year, so it looks as if he will get away with it next year, and every year thereafter.

[DISGUSTED OF TUNBRIDGE WELLS]

On a lighter note; has anyone else noted the greying of Brown? I reckon that within six months he will morph into a lookalike of dear Alastair Darling.

[tony]

Taxation? Do the 3G spectrum auction porceeds count as taxation?

I wonder what the present value of the proceeds foregone by the losses arising because of the writedown in values of 3G licences etc compared to what wpuld have happened if the licenses had been given free.

Once again the law of unintended consequences (like the removal of the tax credit reclaim on dividends) shows that the best ideas cause problems.