Jason Nissé: Just how lucky is the Chancellor feeling?

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The Independent Online

After the pre-Budget report (PBR), you have to wonder who the real opposition is. If you were looking for someone to question the Chancellor's numbers seriously, neither the Tories nor the Lib Dems fitted the bill. Shadow chancellor Oliver Letwin jumped about, but he was like one of those cartoon characters being held at arm's-length and swinging their punches into thin air. And Vince Cable's offering was so low-key, it soun-ded like a background hum.

After the pre-Budget report (PBR), you have to wonder who the real opposition is. If you were looking for someone to question the Chancellor's numbers seriously, neither the Tories nor the Lib Dems fitted the bill. Shadow chancellor Oliver Letwin jumped about, but he was like one of those cartoon characters being held at arm's-length and swinging their punches into thin air. And Vince Cable's offering was so low-key, it soun-ded like a background hum.

If you want a critique that lands its punches, you need to look to the Ernst & Young Item Club, Morgan Stanley, Barclays Capital, Capital Economics or the column further up the page from PricewaterhouseCoopers. These, and others, raised serious doubts about the public sector revenue and expenditure numbers. Everyone thinks Gordon Brown is spending too much and getting in too little in tax.

In truth, it is more of the latter than the former. The PBR figures show there has been a shortfall in the amount of tax he hoped to collect - mostly for corporation tax - but Mr Brown argues he can make it up before the year end. This assumes he will get 21.5 per cent more corporation tax in the last five months of this year than in 2003-04.

In the first seven months the increase was a heroic 12.5 per cent. This is rather like the team leading the Premier League in December assuming they will not only win it, but also snaffle the FA Cup, Champions' League and Strictly Come Dancing.

To meet his targets, he needs the Inland Revenue to improve its collection of corporation tax, which is why he leaked a clampdown on tax avoidance early last week. He also needs an exceptional boost from petroleum revenue tax and a nice post-Christmas tax and national insurance boost from City bonuses - which is why he announced a purge on NI minimising schemes. If this all goes his way, he should buy a lottery ticket as well.

It could, though, be a Machiavellian plot to become the next premier. He gets through the election and in the March 2006 Budget has to put up taxes, which he says will be used to invest further in public services. This will play well with parts of the Labour party heartily sick of Tony Blair's pseudo-conservatism and strengthen Gordon's hand for the leadership election that will follow the Prime Minister's promised mid-term retirement.

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