Darling's Big Mini-Budget

The quiet man gets the tone right for the statement of his political career

By Martin Bright Published 24 November 2008 19:12

Prime Minister's Questions has been increasing in volume recently, making me think that parliament is already in election mode.

But even the most hostile recent Brown-Cameron exchanges were as nothing compared to the atmosphere surrounding this afternoon's pre-Budget report.

Alistair Darling began very low-key, almost sotto voce to early chortles about his claims that the government was "living within our means".

But the jeers began in earnest as the chancellor stated that the present crisis began in the US housing market.

Somehow such conduct felt inappropriate here. Vince Cable later described the situation as a national emergency and he is right. His party leader, Nick Clegg, sat through the proceedings in respectful silence, as did his Liberal Democrat colleagues - respectful not of the government, but of the gravity of the situation.

David Cameron would have done well to order his backbenchers to sit through the statement in silence. Such an approach would have spooked the government and, in the end, the chancellor drove them into submission with his relentless, quiet monotone anyway.

This was an assured performance from Darling, who appears to be genuinely unflappable in what he can now say is an "unprecedented global crisis" without being accused of talking down the economy. Indeed, such was the hyperbole flying around the house that this seemed like something of an understatement.

Darling won the battle with Downing Street to be honest about the fact that a fiscal stimulus now would have to be paid for later. This didn't stop George Osborne from punishing him for his frank approach, but it rather spiked his guns.

The chants from the Labour backbenches of "What would you do?" seemed to unsettle the shadow chancellor.

It was striking that Darling's economic forecasts were so optimistic: 1.5-2 per cent growth to return as early as 2010. I do hope he's right. There's clearly no point whatsoever in putting a set of emergency measures in place if you don't think they will work.

George Osborne said this marked the greatest failure of public policy in a generation. Like Margaret Thatcher before him, his voice has lowered a register and his righteous fury was at times impressive. At key moments, however, his voice cracked including when he described plans to increase National Insurance as "not just a tax bombshell but a precision guided missile".

Osborne's attack went down well with the Tory backbenchers, but it did not wound his opponent, who was able to engage what now must be Labour election narrative: where the government acted the Tories would have done nothing. "What would you do, George?" is a slogan of some resonance.

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Tags: Economy 2008

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8 comments

Wed, 2008-11-26 22:31 — Jon Pavitt

Why oh why do press and media interviewers let Gordon Brown, Alistair Darling et al get away with making the statement that "Britain is better placed than the rest of the world when facing the downturn because the UK has one of the lowest levels of borrowing compared to other developed countries."

This is utter hogwash. The published figure may look ok but that is only because Gordon started borrowing ideas from those "clever" bankers and moved vast sums of money "off balance sheet". And that term is a complete subversion of reality. What is the point of a balance sheet if it does not reflect a true and fair state of assets and liabilities (whether it is a bank or the UK).

Specifically PFI projects and massive amounts of public sector pension liabilities (all unfunded and hugely inflated by labour's binge over the last 11 years) means that the real UK debt position is probably two to three times what that mealy mouthed government spokesman is trying to pass off as the truth - for goodness sake nail them!

Thu, 2008-12-04 10:22 — james10

A cut in VAT of 2.5% cost.£13billion That could increase the Retirement pension by £25 per week, paid for later by a 2% increase in employer NI conts. What a better way to spend the money.

Fri, 2008-11-28 17:38 — Nilsey105

gnuneo ;
"Tesco's just had a lovely little bonus of 60% of £12Bn -"

So this is how they will pay for a new stadium for EVERTON FC. Terry Leahy great blue that he is thank you .

Sat, 2008-11-29 02:23 — gnuneo

in slightly related news, talking about VAT:

http://www.theregister.co.uk/2003/07/11/chip_vat_fraud_gang_sentenced/

"A criminal gang found guilty of an £11m VAT carousel fraud * involving computer chips has been sentenced to a total of 31 years in jail. Confiscation orders totalling £7.1m have been made against some of the nine gang members.

In a highly complex operation the criminal organisation established companies in England and France to buy and sell high-value computer chips in what is called a 'carousel' fraud."

yet we learn that now:

http://news.bbc.co.uk/1/hi/uk/5178788.stm

"VAT fraud in the UK has reached record levels, HM Revenue and Customs statistics show.

Criminal activity accounted for £7.4bn in UK trade in the last quarter alone.

Justin Rowlatt, investigating the problem for the Panorama programme to be screened this Sunday, said the most profitable form of VAT crime was "carousel fraud". "

so this "highly complex operation" involving 9 people, that scammed the tax-man of £11m, has to be repeated to the tune of 2690 times every year, in order to account for the VAT discrepancy? Involving somewhere near the figure of 24,210 people? Or did i make a mistake somewhere in the math? And presumably Customs would have gone after one of the larger operations!

so now i'm left wondering which part of the UK economy is supremely equipped to be moving goods around within themselves, and already have operations between countries, AND have the money available to pay for the best legal minds to scrutinise the operation?

nope, don't have a clue. Would sure be nice to get that money though, wouldn't it? What with the 'Big Black Hole' in UKplc's finances and all that? Be better than cutting services... and more popular one might suspect.

anyway, was just a random thought. Wonder what the shadow Chancellor's team would say??

Wed, 2008-11-26 02:06 — gnuneo

the only one who set out what *should* have been done was Vince Cable, whose quiet voice should have had far greater coverage and analysis than the bleating of the Tories (who by the by were generally accurate in their criticisms), or the mealy-mouthed assurances of Yvette Cooper.

now for the Budget.

an absolute, and comprehensive, disaster. No other way to describe it.

take the "centrepiece" - £12,000,000,000 'spending boost' by a reduction of 2% off VAT. Talk to any small-business/shop owner - who in their right-minds imagines that these people will go through their store and reprice everything with 2p off the pound? Anyone? Anyone AT ALL?

so where does all this TWELVE GOD-DAMNED BILLION POUNDS go? Most will not go to the consumer (there is no requirement for it to be passed on astute observers will note), instead it will be accumulated by the shops as extra. Would that be so bad if Britain was still a "nation of small-shopkeepers"? Not so bad, no.

BUT - and my god what a BUT - modern Britain is instead a "nation of Supermarkets", with Tescos apparently taking 60p in every pound now spend in our shops, or something equally horrendous.

so back to the Question - WHERE will this £12,000,000,000 go? Well, if Tescos takes 60p of every pound, then Tesco's just had a lovely little bonus of 60% of £12Bn - with the other supermarkets raking in most of the rest.

and how will this money be repaid? By putting up taxes *across the board*, the NI contributions, by cutting essential services already cut to the bone.

what is New-labour about? We can see this clearly with this "mini-budget" - they have handed the ultra-wealthy owners of supermarkets a sweet and easy £10Bn *MINIMUM*, and then taxed the normal citizens extra to make up the cost of this Christmas present to our grotesquely wealthy.

there is much more to rant about as well, but one thing in connection to this is striking - who is it that sits upon Brown's "Economic Council"? No unions... and Lord Sainsbury.

Wed, 2008-11-26 02:23 — gnuneo

and then there is the laughable 45% new tax bracket - deferred until *after the election*. The woman interviewed on the BBC said it succinctly - "We are not worried about that, because it will never happen". She was clearly one of the people who *should* be targeted by this new bracket, and had some insider knowledge.

why announce it NOW, but put it off till after the election? Why not bring it in immediately, along with the other measures Vince Cable mentioned, some of which can be found in the comment section here:

http://www.newstatesman.com/blogs/martin-bright/2008/11/gordon-brown-sun...

because its entirely bull. The extra year is to give accountants time to find the loop-holes, or indeed simply to allow new-Labour to be able to drop it, when it turns out that the economy is NOT rising back up next year, like the mythical Phoenix that has frankly greater grounding in reality than Darling's economic wishful thinking.

this was the last straw for me, new-Labour's abject failure to invest in new Green-Economy Cooperatives, whilst not only handing over significant extra £Bns to the already grotesquely wealthy but [insert large amounts of VERY powerful expletives here] then "balancing the books" by starting to rake in money from the *entire* economy - including the poorest - JUST when the recession will be biting hardest?!?

sure - borrow now to boost the economy - no problems with that, the Tories are frankly being economically ignorant, but then use that money to BOOST THE ECONOMY - create new jobs in cooperatives that stabilise the local economies, invest in long-term infrastructure (again, built by local companies, not tax-evading multinationals), put up benefits and wages at the lower ends, tax-cuts should have been to raise the tax-thresholds, NOT TO HAND THE MONEY OVER TO CORRUPT AND PIRATICAL GROTESQUELY WEALTHY SUPERMARKET OWNERS!!!

new-Labour have now lost ALL credibility, backbenchers your seats are lost, without leadership change. Now.

Wed, 2008-11-26 14:31 — greed

it s all mickey mouse
kick start the economy by making councils pay for their supplies up front instead of putting millions into Iceland any plans for infrastructure bring forward
trains, roads, housing. it would be nice if we could help our manufacturing companies but we dont have any. Why do the banks and insurance companies fall in shit and always come out smelling of roses. Endowment morgages ect they gamble, when they win they win big when they lose (they never lose)
can joe the plumber change the world

Mon, 2008-12-01 00:11 — gnuneo

well!! It took me 5 mins after i posted this (and it really was a spur of the moment thing) to spot the 'error in the math' - the figure quoted by Customs was how much *trade* was fictitious, not how much tax-money had been lost. In fact, that should 'only' be about £5-6bn/year, involving 'only' 5000 people.

well, i feel much better now knowing that the Treasury allows the multinationals to *only* scam the UK tax-payer out of £5-6bn. Presumably now we might see a public campaign of "shop a multinational" hotlines, where concerned citizens can phone in if they have evidence of such?

or are such tactics only used to make normal citizens spy on each other?

btw, very disappointed no-one else saw that flaw, tsk tsk, schooling today... :/