GOVERNMENT IS OUT OF IDEAS AND OUT OF STEAM
April 30, 2009 4:11 PM
In North Devon Journal
In North Devon Journal
NOBODY could have envied Alistair Darling his task as he presented last week's Budget.
His essential dilemma was to judge whether to keep injecting money into the economy in order to stimulate recovery, or start the process of trimming public spending.
The hangover from this crash is going to take many years to clear. Savage cuts will become the norm of our politics for some years.
In the event, what we got was a pick and mix Budget of recycled announcements from a government skilled in raising people's hopes but incompetent at actually delivering help.
The biggest disappointment in this Budget is its failure to sort out the unfair tax system.
Taxes are too heavy on those who can least afford it, and too easy to avoid for those who know how.
The new higher rate 50p tax on income over £150,000 is something I have supported in the past. But with capital gains tax now as low as 18%, cunning executives will easily avoid the new tax. It will raise virtually nothing and smacks of old fashioned class warfare.
The priority should be practical help for people who are struggling. That is why my colleague Vincent Cable proposed a new starting level for income tax of £10,000, which would save many people as much as £700. He plans to pay for this by clamping down on loopholes and exemptions that benefit the richest people and biggest businesses.
With a shocking deficit this year of £175 billion we need a national debate about what the state can and cannot afford in the future. I am intrigued that even a hardliner like David Blunkett is now saying that we should scrap ID cards, which will cost several billion.
Replacing the Trident nuclear deterrent on a like-for-like basis is going to cost anything up to £100 billion in today's prices over the next 40 years or so. Even people like Nicholas Soames, former Conservative defence minister, have started saying we must think again about that.
To reduce spending in the years ahead and avoid painful higher taxes is going to need some big decisions and tough choices. With the best will in the world it is now clear to everyone that the current Government is out of ideas and out of steam.
But what we need is not a return to the party which started most of the very policies which have led us into this mess, but rather a completely different way of conducting politics.
This commentary was first published in North Devon Journal on 30 April 2009
Nick Harvey's column appears every other week in the Journal
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