Budget 2010: the Belize gambit | Richard Murphy | Comment is free | guardian.co.uk .
Alistair Darling won a rousing cheer for announcing a crackdown on Lord Ashcroft’s tax haven. But we should read the small print.
Or so I say over at the Guardian. Follow the link, above.
My budget commentary for SMEs is on AccountingWEB. As it operates behind a registration wall I repeat it here:
The chancellor had a choice today: People or bankers, and he seems to have put people first, argues Richard Murphy.
The UK needed three things from today’s budget:
There were three things the UK did not need today:
Alastair Darling delivered. Not in quite the way I would like of course, Budget day being a day of universal moaning, but he delivered nonetheless.
First he committed to growth. I have argued for a Green Investment Bank and I am a member of the Green New Deal group that has been pushing that agenda. It’s not got enough capital, and it’s not clear it will be a bank, more a fund. But the messaging is clear, and the cash is important. The yield for the economy will be much more than the sum to be invested.
The commitment to providing better funding for small business is also vital – and I especially welcome the appeal process on credit. Simple forcing banks to have to account for their decision making processes will both open these up and make the lending market more competitive. That’s good for the SME sector, but it’s also real operational pressure on banks to improve their performance. That’s on the ground reform that could deliver real change.
Third, he has not played with the tax system today in any serious way. How often can we say that after a budget?
That does mean some opportunities were not lost to tackle avoidance – in particular through capital gains tax where the increased allowance for entrepreneurs was welcome but keeping the rate at 18% when the income tax top rate is 50% is an open invitation for abuse.
Other measures on evasion and avoidance also disappointed. The emphasis on increasing penalties for those using offshore is, of course, good news. Those using secrecy jurisdictions increase the tax burden on all honest people. However, there was, unfortunately, no news on the end of the domicile rule despite the obvious problems it causes and no news on change to our outdated and uncertain residence rules which continue to allow abuse. Announcing consultations on both would have been good.
Even better, announcing consultation on creation of a general anti-avoidance provision could have put down a clear marker on the future direction of tax policy that would have been politically popular and which would have provided enormous stability for tax the tax system – by outlawing avoidance the moment you think of it. But it did not happen.
However, grab what is available. Business rates relief is good news. It’s overdue and the whole business rates system needs reform.
Stamp duty reforms are not as significant – and the backlash from people who have just moved will be strong (I was on air at Radio 2 at lunchtime and the email complaints flooded in). In addition, these changes will be capitalised in house prices in days.
Let’s cut away all the wrapping, the rhetoric, and the horseplay, of which there was too much. Alastair Darling presented a choice which contrasts markedly with the Tories. Labour puts employment first, and will spend now to keep people in jobs and businesses that supply them open here to generate the wealth that pays the taxes that will repay the debts. The Conservatives, alone of all political parties in the G20, argue for cuts now top keep financial markets happy when there is no evidence that markets are unhappy. So this was politics: People or bankers first. All else was wrapping around that choice.
You decide. Those listening to Radio 2 have no doubt where I stand.
FT.com / Markets – Gilt prices ease on borrowing forecasts.
As the FT notes:
In a Budget that was relatively neutral for markets, gilt prices eased and consequently sent yields a little higher after Alistair Darling, chancellor of the exchequer, lowered his forecasts for public borrowing by more than expected.
The yield on the benchmark 10-year gilt moved 4.1 basis points higher to 3.95 per cent after the UK Debt Management Office said it planned to issue £184.4bn in 2010-11, slightly lower than market expectations. However, it will still be the second biggest year for debt issuance on record following the £225.1bn issued in 2009-10.
I did my Radio 2 commentary with a man, through his obvious anger (he shook when speaking in the studio) was forecasting:
OK, I think I made the last up – it was hard to tell.
And the reality is markets have confirmed they will deliver all the borrowing needed because they think the UK can afford it.
As it can, of course, so long as we keep spending to keep people in work – becauase people are the only source of wealth that will repay debt.
My co-commentator clearly hasn’t learned that yet. Down in the wealth management sector in which he works they clearly still think that wealth is piles of cash paid to bankers.
What baffles me is why the BBC gave him air time.
I enjoyed myself watching the spectacle of his discomfort. Carry on the way he is and he won’t last long enough to see how wrong he is. Which would be a shame.
FT.com / UK / Politics & policy – Banks face ‚Äòpayback time’ in Budget .
The chancellor will also confirm that banks will be required to make simple current accounts available to all citizens, to help tackle the problem of “financial exclusion” among 1.75m “unbanked” Britons.
This is vital if predatory lenders are to be beaten and poverty is to be eased.
But the conditions have to be tight – not least very low or no charging. And overdraft notification fees must reflect marginal cost for supplying them – little more than a stamp in other words.
The days of the banks exploiting ordinary people have to end.
FT.com / UK / Business – FSA dawn raids rock City institutions.
Three prominent financial institutions, Deutsche Bank, BNP Paribas and Moore Capital, were on Tuesday embroiled in the UK’s biggest insider dealing case yet after dawn raids at 16 locations led to the arrests of six people.
More than 140 officers from the Financial Services Authority swooped on premises across London and the south-east, seizing documents and computers from both Deutsche’s and BNP’s UK headquarters as well as Mayfair-based Moore Capital.
Three City professionals, including senior executives at Deutsche and BNP and a trader at Moore Capital, were among those arrested on suspicion of being involved in what the FSA called a “sophisticated and long-running” insider dealing ring.
Most insider dealing is booked through secrecy jurisdictions, of course.
FT.com / Media – Guardian chief flies off to EasyJet.
Carolyn McCall, chief executive of the Guardian Media Group, is to become chief executive of EasyJet.
Thanks goodness.
Anyone who sat on the boards of Tesco and the Guardian at the same time as McCall managed did not win my vote to be CEO of the only left of centre news group in the UK.
Brendan Barber says on the TUC blog:
Policy Exchange have a new report out today, Health and Safety: Reducing the Burden. It’s about as close to being relevant to the needs of the modern workplace as Alice in Wonderland.
Policy Exchange say:
The health and safety culture in Britain is having a pernicious effect on our lives. Health and safety is becoming a ritual excuse for not doing anything. Health and safety is itself potentially becoming dangerous to people’s health.
Brendan is right to say:
Anyone who seriously believes that there is a culture of over-compliance needs some basic lessons in the reality of working life in the UK. Last year 30 million days were lost due to injuries and ill-health caused by work. And a quarter of a million people were injured at work. These were caused by employers failing to comply with health and safety regulations.
But the issue is even more important than that. Without health and safety we would not have effective functioning markets in the UK.
You would not buy a coffee when out – it may not be safe. Or any food from supermarkets, for the same reason. Or drive a car – which would be a death trap.
The reality is health and safety gives us the confidence to buy. It does not harm markets and private enterprise – it’s the bed rock on which much of it is built.
But such joined up thinking is beyond Policy Exchange.
Heaven help us if the Tories get in.
It’s budget day, which is going to be busy.
I’m twittering through the budget itself. I’m RichardJMurphy on Twitter. This will contribute to the Left Foot Forward and AccountingWEB live coverage.
I will also be on the Jeremy Vine show on BBC Radio 2 at about 12.20 and after the Chancellor sits down.
And I will have budget articles out for AccountingWEB and Forbes this afternoon, all being well.
As a result it may be quiet here!
It’s Keynesian.
It focuses, properly, on jobs.
It recognises that if we get jobs right we repay debt.
It’s a good start to budget day.
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