The PBR – a first reaction

Posted on

Having spent the PBR tweeting furiously — which seemed to be picked up on over a wide audience — now is the time for first, calm reactions.

So, good news first:

  1. Spending is to continue;
  2. The young and those over 50 are to get special support to find work
  3. This is to be paid for by a tax on bank bonuses — which is welcome
  4. Front line services are being protected
  5. Benefits will rise despite there having been deflation — which avoids a bear trap and an injustice
  6. There will be some Green investment (but by no means enough)
  7. The government is saying now is not the time for Inheritance Tax cuts — so creating a distinct battle with the Tories
  8. Major attack on offshore planned
  9. Serious anti avoidance measures planned — including hard hitting stuff on abusive tax advisers
  10. No tax increase for small companies — politically wise
  11. New fund for small business — but not clear it is big enough at £500 million
  12. The Bank Code of Conduct will happen
  13. Borrowing remains in line with all other major economies

Now the bad news:

  1. Too little green spending by far — if it is £300 million in all I will be surprised - £200 million on insulation, £85 million on boilers and £10 million on electric vans
  2. 1% pay freeze in the civil service is incredibly unfair to some very low paid people
  3. Growth forecasts do look optimistic
  4. The commitment to halve the deficit is too rigid by far — no Chancellor needs their hands tied like that
  5. 0.5% NIC increase enhances incentive to tax avoid by use of limited companies

And the missed opportunities

  1. No mention of a financial transaction tax — despite the promise in the papers that it was going to happen
  2. VAT increased instead of creating a bank debit tax and VAT is more regressive
  3. No extra tax on bank profits
  4. CGT not increased — and it should have been
  5. No tax on empty houses
  6. No General Anti-Avoidance Principle
  7. No serious extra restriction on allowances for the very wealthy
  8. No plan to end the domicile rule
  9. No plan to change the rules on corporate residence to stop companies leaving artificially

So was it good? Yes: because it retained the commitment to spend and that is by far the most important thing to do right no. No, because the commitment to fairness was not strong enough and some public sector employees are going to lose out badly. And there’s just not enough for a Green New Deal as yet.

I’ll take it, but it could have been better still.