A message for the Chancellor: stick to prudence and simplicity

Share

The Government's openness in allowing a debate over the shape of Wednesday's pre-Budget report is most welcome. It may seem strange that this public debate, about the right response to public anger over the price of fuel and to the higher-than-expected budget surplus, should be one between Numbers 10 and 11 Downing Street, but maybe this is just as well. After all, the approach of the official Opposition, both to the fuel protest and to broader issues of tax and spending, has been opportunistic, inconsistent and generally wrong.

The Government's openness in allowing a debate over the shape of Wednesday's pre-Budget report is most welcome. It may seem strange that this public debate, about the right response to public anger over the price of fuel and to the higher-than-expected budget surplus, should be one between Numbers 10 and 11 Downing Street, but maybe this is just as well. After all, the approach of the official Opposition, both to the fuel protest and to broader issues of tax and spending, has been opportunistic, inconsistent and generally wrong.

The broad lines of the disagreement between the Prime Minister and the Chancellor are well known. Gordon Brown seems more determined to resist the demands of the protesters, and keener to do the prudent and boring thing, namely to pay off more of the Government's debt, than Tony Blair, who is eager to put more cash back in the pockets of those residents of "Middle England" who voted Labour for the first time three and a half years ago.

There should be no conflict between these objectives. Given choices between higher public spending, lower taxes and paying off debt, the Chancellor should - and undoubtedly will - do all three.

On the spending front, it would seem from the weekend spin cycle that Mr Brown intends to raise the basic state pension substantially from next April. This is to be applauded. The Government was right to focus resources first on the poorest old people, many of whom do not even receive the state pension. Now it should begin to redeem the debt of honour the nation owes to those who have "scrimped and saved", in Mr Brown's words yesterday. However, it must be doubted whether Mr Blair will allow him to claw back some of the increase from better-off pensioners by reducing their generous tax allowances.

There will be predictable calls from some parts of the Labour Party for more spending on education and health, but these overlook the extent to which spending on these services is already rising.

As for the national debt, the unexpected and possibly one-off windfall of £3bn from higher oil prices should be squirrelled away to reduce the burden of interest payments on future generations - in contrast to the Thatcher government's frittering away of North Sea oil tax revenue on short-term income-tax cuts.

Tax cuts, meanwhile, are the most likely candidate for the rabbit that any Chancellor likes to pull out of his metaphorical hat on such occasions. Both he and the Prime Minister are to be commended for their firmness in resisting any cut in petrol and diesel duty. But which taxes will they cut instead? The small and irritating concessions for hauliers, rural taxis and small-engined cars trailed so far cannot be the sum total of pre-electoral largesse.

Whatever tax cuts the Chancellor has in mind, they should be tilted in favour of the lower-paid, thus reinforcing his policies to improve the incentives to work. Raising further the level at which National Insurance contributions start to be paid would be preferable, for example, to a cut in the basic rate of income tax.

It is to be hoped, therefore, that the overall balance of Wednesday's statement leans towards Mr Brown rather than Mr Blair. Except in one important respect, and that is the Chancellor's fondness for fiddling. The ever-increasing complexity of the tax and benefits systems is a drag on efficiency and an invitation to fraud and evasion. Whatever else you do on Wednesday, Mr Brown, no more of these patronising and gimmicky Christmas bonuses, free TV licences and silly tax-relief schemes for largely symbolic interest groups. To borrow a phrase from your Budget speech this year, keep it underspun, Mr Brown, and keep it simple.

React Now

Latest stories from i100
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Guru Careers: Financial Director / FD / Senior Finance Manager

Up to 70k DOE: Guru Careers: We are seeking an experienced Financial Director ...

Recruitment Genius: Sales Executive

Negotiable: Recruitment Genius: This company has been manufacturing high quali...

Recruitment Genius: Telesales Executive - OTE £35,000+

£16000 - £35000 per annum: Recruitment Genius: This company is the fairest onl...

Recruitment Genius: Production Planner

£18000 - £20000 per annum: Recruitment Genius: A Production Planner is require...

Day In a Page

Read Next
 

No more big characters or Tory clowns like Boris Johnson. London desperately needs a boring mayor

Rachel Holdsworth
Cilla Black lived her life in front of the lens, whether on television or her earlier pop career  

Cilla Black death: A sad farewell to the singer who gave us a 'lorra, lorra laughs'

Gerard Gilbert
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen