How did Darling do? And how did I?
photo courtesy of Ian Grainger
It was broadly neutral and low-key, as expected, perhaps mildly revenue-raising from what experts like David Smith are saying. So, what did I get right about the budget - and what do I think of it?
I was right that he'd include some Old-Labourish feelgood sweeties: those were the the big one-off increases to winter fuel allowance, increases to child benefit and child tax credits. I'm reasonably happy with those changes, and with the changes to housing and council tax benefit to encourage people into work as well as the (not very loudly trumpeted) tightening of the medical test for incapacity benefit. But I was shocked that relatively low-paid families without children are going to be worse off: scandalous, this, for a Labour chancellor; so I think perhaps less should have been given to the old and childed, more to the younger poor and the less well-off childless.
I think the delay in the already-announced twopence fuel duty increase is shrewdly political, and not just in the sense that it gives small relief to drivers and transport firms. I think the government is wisely imagining a hot summer and trying to avoid any risk that lorry drivers' tempers will rise as they did in the summer of 2000. A delay till October should cool things slightly. I'm with him on this move.
He did indeed increase green taxes, by changing vehicle excise duty and capital allowances on business fleet cars. well done, I say. And on top of that, he's put nearly a thousand pounds on the price of the most polluting cars which should make some difference - though I'd rather he'd introduced it within months rather than in 2010. His schedule gives plenty of time for those who fancy big cars to take out finance now and avoid his new charge.
He slapped a surprising amount on booze and fags: capitalising on No Smoking Day and recent talk about binge drinking to up duty not simply by 6% above inflation this year, but by 2% above inflation for four years after that: a sort of "booze escalator". Fair enough, you might argue: booze got off lightly in the Gordon Brown years and in the wake of the smoking ban it's right to turn the screws on our remaining smokers.
But on non-doms, I agree with Vince Cable that this is a ridiculous pin-prick in the finances of the super-rich, Russian oligarchs and so on. It's also potentially unfair to less well-off non-doms such as some academics, who may have difficulty deciding whether their foreign earnings will be enough to justify their paying the £30,000 levy. Much fairer would have been to simply bring them all within tax, after say three years of living here if that was thought fair. Would lots of them move leading to huge job losses? I doubt it very much. If they're as mobile as they say and can simply up and work anywhere, why do we assume that the jobs they create - if they create any - are in the UK? Mightn't they just as well be in India or China?
And the stuff he said about fixed-rate mortgages is ridiculous, We've heard it all before, a few years ago, and it's going nowhere: not until we've had decades or low interest rates will it make any sense for the average person to sign up now to a long-term fixed-rate mortgage. If we hear about this again in a few years I think everyone will simply laugh. Equally ridiculous is the expansion of shared equity mortgage schemes to key workers: all that does is subsidise house prices without helping people really to own property, and to partition the labour market and entrench class and economic equality. Much better to try policies to manage house princes down in a soft landing, manage buy-to-letters out of their portfolios and ensure less well-off first time buyers benefit most from a marginally increased supply and lower prices.
I was right that he'd revise his growth forecasts, though to be honest I still think they're too optimistic. To be fair, I don't think he can afford to be any gloomier than he absolutely has to, for fear of actually signalling a recession into existence. But he's assuming a pause in growth, essentially: that the economy will grown less slowly for the next two years, but then speed up again without any recession in between. Well, that's the scenario that suits Gordon Brown's planning for a 2010 election, and if it comes off he'll be delighted. But is it anything like the truth. I doubt it. I think David Smith's word "Panglossian" is appropriate. It doesn't suit Alistair Darling to say or think so, but the truth is, we're on the edge. I expect growth to be down significantly below 2% this year, and to be in recession in 2009; I expect borrowing to balloon. I expect Alistair Darling's nightmare scenario to come to pass, and think all his figures are way off beam.
Have your say - join the discussion