After the bone-idle hacks of our press repeated all the ‘soundbites’ and all the Treasury ‘bull-points’ as carefully prepared for them by Gordon Brown’s spin doctors, it is great to see proper hard-hitting analysis from the best financial journalist around – Jeff Randall. Here it is - - -
But there’s no doubt who won the confrontation of NewConservatives versus Labour in the media. The front pages of The Sun and the Mirror were ecstatic; The Times, The Guardian, the Mail and the Financial Times were guardedly favourable while The Telegraph and the Express were the two lonely anti-budget papers. Cameron asked to be humiliated and Brown accomplished - - er - the trick.
Not a record to be proud of
By Jeff Randall
For most taxpayers, Brown's final Budget feels like being given a few quid by the burglar who has been robbing our homes since 1997. Not exactly a cause for wild celebration; a glass of Tesco's cheap fizz at best.
The Chancellor's last hurrah was classic Brown: lavish self-congratulation, mixed with formidable presentation of carefully selected statistics. He polishes his numbers like a second-hand car dealer buffs up an old banger. Gordon Brown's skill is to make all those facts and figures look good. The trouble is, the shine only lasts five minutes. On close scrutiny, the product invariably falls short of the salesman's patter.
It's often said that Mr Brown is deeply flawed: personality flaws, character flaws, temperament flaws. A man with the charm of a Red Army tank commander and the conversational skills of a call-centre answering machine. None of this would matter very much if his words were not so hopelessly misaligned with his subsequent deeds. It's here that we find the most damaging flaw of all: a burning desire to create a client state.
For the past 10 years, the Chancellor has droned on about creating "an enterprise Britain". He was at it again yesterday, calling for "an aspiration and high-achievement economy". It would be funny, if it weren't so serious. Everything Mr Brown does demonstrates a pathological loathing for those who gain personal success. Genuine achievers are not patted on the back; they are whacked with his Clunking Fist.
Baby-boomers who battled through the post-war state-school system to higher education now find themselves vicariously punished by a regime that plans to discriminate against the children of parents who went to university. House owners who, instead of squandering family income on mindless consumption, choose to improve their homes are to be punished by higher council tax, imposed by an army of property inspectors (snoopers).
Mr Brown is almost always on transmit, rarely on receive. But he does appear to have listened finally to those business leaders who have been warning him that Britain was fast losing its competitive advantage. Reducing corporation tax from 30p to 28p is better than nothing. A nod to the powerful multinationals, such as HSBC, which have threatened to redomicile to countries with more commerce-friendly tax regimes. The cut was long overdue. The UK's business tax rate was reduced by Mr Brown in his early days from 33 per cent to 30 per cent, making it the EU's fourth lowest. But that position has been steadily eroded. Ireland's, for instance, is down to 12.5 per cent.
Of course, if you're really determined to nurture enterprise, it's not just the big boys that require a boost. Those most in need of tender loving care are one-man bands and company start-ups, fledgling businesses that form the bedrock of a dynamic economy. So what's Mr Brown doing for them? They get the Fist. The tax rate for small companies is to be raised from 19p to 22p in 2009. As for red tape, the compliance costs of which are put at £40 billion a year by the British Chambers of Commerce, not a word from Mr Brown. Nothing, nichts, nada. For him, regulation is a recreational drug. Not surprisingly, the reaction of Richard Lambert, the CBI's director-general, was lukewarm: "These changes will not initially reduce the overall burden of business taxes, and there will be losers as well as winners." David Frost, Mr Lambert's counterpart at the BCC, agrees: the Budget is bad news for many small businesses.
On personal taxes, there was a surprise. The basic rate of income tax will fall from 22p to 20p in April. It's a crude headline-grabber that will be partly nullified by the abolition of the lower starter rate of 10p. Even so, it has already wrong-footed the Conservatives. As the Taxpayers' Alliance says: "Gordon Brown has basically delivered George Osborne's first Budget."
In effect, if you pay income tax, it now kicks in at 20p, twice what it did. The net result is that some people at the bottom-end are worse off. Even the Chancellor's henchman, Ed Balls, admitted to the BBC: "This is not a giveaway budget." Thanks, Ed. You'd better keep your fingers crossed that Gordon wasn't listening.
Surely there must have been something positive in all that mind-numbing detail, which, by the way, I noticed had John Prescott nodding off.
What about those 125,000 poor souls who lost their pensions when their companies collapsed before the rules were tightened up in 2005? Mr Brown promised them an extra £6 billion yesterday - or at least that's what he said. But when I checked with Dr Ros Altmann, the former Treasury adviser who has been campaigning to help bereft pensioners, she was furious. "Another example of Brown's spin," she said. "He talks about £6 billion; it's nothing of the sort. For those in most urgent need, they will be no better off."
Oh dear. Let's hope that Dr Altmann, for once, is wrong. It would be nice to think that the Chancellor has buckled to pressure from The Daily Telegraph to do the decent thing and compensate those who were encouraged by the Government to tip their savings into unsafe company schemes.
Once the lights have stopped flashing and the circus moves on, the public will soon work out what many independent economists have been saying for some time. No matter how adroitly Mr Brown tries to refract the numbers through the prism of propaganda, he has made much of Middle Britain worse off.
One reason for the discrepancy between the Chancellor's surface joy and our pain is that he fiddles the inflation rate. Yesterday, he boasted that it had been kept below three per cent, close to his guideline rate. But when measured by the traditional Retail Price Index, it is up to 4.6 per cent - and rising. Prices are going up, as are taxes. The Item Club, a forecasting group, calculates that, due largely to Mr Brown's stealth snatch, the share of household income spent on tax has risen from 33.6 per cent in 1997 to 38.3 per cent last year.
You'd have thought with all that hard-earned money pouring into his coffers, Mr Brown's official financial position would be rosy. Sadly, that's not true. In a desperate effort to buy votes, he is borrowing £35 billion a year to plug the gap between the Government's income and what it spends. At this rate, he is on course to borrow more than £150 billion by 2011.
So, after 10 years, 11 Budgets and what seems like an eternity of information manipulation to make Gordon's record sparkle like fool's gold, how will he be remembered? He's the Chancellor who loved to boast about how much he had spent on schools and hospitals, without ever telling the truth about what we got for all that largesse. Value-for-money was a yardstick that existed only for other people; never for him.
Brown leaves the Treasury with the Government's annual expenditure running at about £590 billion, and projected rise to £674 billion in 2010-11. Under his stewardship, public spending as a share of national income has risen from 37 per cent to 45 per cent. Is it any wonder that his push for greater productivity is being shoved backwards.
Mr Brown's annual spending on education alone is £75 billion. On health, it's even more, about £100 billion. And what's the upshot? Many state schools are so poor that responsible employers complain of chronic illiteracy levels among 16-year-olds.
Frustrated, the Chancellor has given up even pretending that state schools can produce enough young people to fill places at our best universities. Instead, he is bullying top institutions into dropping their entry requirements and punishing students from grammar and public schools. Disgraceful social engineering, affirmative action of the most destructive kind.
As for the health system, it's coughing and spluttering. Hospitals are being closed and nurses sacked.
A record to be proud of? I don't think so.