Most things are clearer after a night’s sleep. I finished broadcast comments on the PBR after 10 last night (Radio 4’s The World Tonight about 11 minutes in) so it was a long day. What does the PBR look like this morning?
The most important point by far is that there are no serious cuts: if there had been these would have tipped us into depression. That’s the good news.
There is a tiny, quite inadequate Green New Deal. It’s better than nothing: it’s a long way from good.
There is good support for the unemployed. It’s good that those on benefit are not going to lose out. In Ireland they are being made to suffer, badly.
The public sector pay freeze makes little sense and will antagonise a loot of low paid people. The pension cap in the public sector is fair, I suspect.
The failure to say what will be cut in due course makes sense: the Tories aren’t saying anything either.
But there are worrying signs: the increase in national insurance is one. NI is a regressive tax: employee contributions are limited to earnings of about £40,000. There is no NI on investment income. So the high paid and those with unearned income benefit most. The incentive to tax avoid will increase as a result and the need for reform rises with it. This was the wrong tax to increase. The TUC and Compass have proven tax can be raised, fairly, in so many ways the the option taken was to increase tax on those in work and least well off. That’s wrong.
And welcome as the tax on banker’s bonuses is, and the 50% tax rate to follow is, the moves on tax avoidance were nothing like the £5 billion claimed. That was misinformation and unwise. Real measures to tackle avoidance — again from the TUC and Compass (both of whom I advise, I should add) would have made a lot more sense and raised more than the NIC charge.
There was no commitment to a financial transaction tax: that was a disappointment.
Nor were there increases in capital gains tax or inheritance tax — the latter was just held constant. Empty houses remain undertaxed and a massive waste resource as a result.
The measures on offshore are very welcome — but there was no sign of the reform needed to ensure companies also pay their tax — and the new low rate of corporation tax on patent income is a tax abuser’s charter.
So what comes out of all this? First, a welcome commitment to keep spending to keep people in work, but second a lack of vision. The latter is worrying. Osborne got a lot of sound bites for saying the UK was no longer the place who wanted homes, pensions or aspiration to save. Each was very, very hard to justify unless you are very well off indeed — but then they are the only people he is interested in and the ones he will make sure benefit when he slashes benefits and public sector pay — as happened in Ireland yesterday. And despite that Darling did not make clear where he is going. If he is really going for cuts he must say so — although I think they are going to be very hard to find.
He has instead to make clear that this crisis is going to be paid for by those who created it or benefitted from it — who are the best off in our community. This is the logic of the TUC, Compass and Green New Deal programmes. They offer a clear vision of protecting the vast majority, as must happen. They are underpinned by the philosophy that all are better off in more equal communities. And they are underpinned with a genuine belief in community — which is wholly absent from Tory plans.
The PBR is done and dusted. The budget is the next challenge. The battle lines for an election are clear — and one thing seems obvious, which is that the choices will be stark and very obvious between left and right this time. I guess for that we should be grateful — because the Tory message can, surely, only appeal to a minority because only a tiny minority will ever benefit from it.