One last canter round the Budget course but now it’s time to dismount
This is where I came in. Another Gordon Brown budget: how well we know them by now the thumping delivery, the gabbled numbers, the loopholes closed and opened, so many initiatives, so much complexity, so many popular causes. British films, British science, children’s centres, cars propelled by fuel made from processed hen-droppings — are they all there this year? (Yes.) Are these the same schemes as last year’s? (Quite likely.) By now some of his audience must think that this is what budgets are like. They can never have seen or heard anyone else’s. Old hands have learnt to listen for the gaps between the sentences. What has he somehow forgotten to mention? What low ball has he saved up for the small print of an Inland Revenue notice? This week our ears were cocked for the biggest omission of all. Would he, in his modest way, tell us that he had given these budgets his best shot but that this was his last? It is surely the last of this Parliament. He knows that some chancellors dismount but more are unhorsed, even when (as Margaret Thatcher said of Nigel Lawson) their position is unassailable. He must also know that his horse is getting restive.
Doubling on losers
For this week’s dressage test, he presented what he told us was a well-trained economy, sound, steady, healthy and outpacing the lesser breeds of Europe. A stewards’ inquiry might raise awkward questions. This horse has been fattened up on a diet of imports, but one of these days it will need to get back into training. His mistake, surely, has been to build up the least competitive parts of the economy: that is, the parts for which he and his colleagues have direct responsibility. High on inflation and low on productivity, the public sector may even be getting less efficient, as it takes on hundreds of thousands more people to no obvious proportionate effect. Somehow it still seems to be the home of stress and shortages. This Chancellor’s response has been to raise his bets and double up on losers. Public spending has grown faster than the economy and much faster than his revenues. His budget surplus is now a distant memory and he has to plan to borrow, year in, year out. Even borrowing is no more than tax deferred, but the evil day cannot be put off for much longer — until the next budget, say.
Watch the cash
Creative accounting eases his way round the corners. Once again, so he proudly tells us, he has kept within the limits of his selfset rules, but that kind of thing is easier with self-set definitions. Network Rail, for instance, is defined as a private company, so money pushed its way does not count as public spending. The Private Finance Initiative helps to ease the load on the government’s balance sheet, but, as companies find out the hard way, such debts are still owed and will have to be paid. Public sector pensions represent a huge postdated cheque, and it would take some £700 billion to put the bank account in order, but there is no trace of this on the balance sheet, either. All chancellors gloss the figures — Geoffrey Howe invented negative public expenditure — but when it comes to loaded presentation, partiality and double counting, this one is a champion. A good rule with figures like this is to watch the cash position. It gets worse.
Payment in washers
One portent from this year’s Budget: the British government can now borrow money for 50 years at a time. So we join a club of which Switzerland, until lately, was the only member. Now it is getting quite crowded. The French have joined, and so has Telecom Italia. Even the Greeks, whose accounts have been exposed as fiction, can borrow for as long as 30 years. Anyone who had lent to our own dear government half a century ago would get his money back in washers — inflation has seen to that — so today’s lenders must believe that today’s governments are more trustworthy. Sancta simplicitas. Alternatively, they can see no better investment opportunity in the decades ahead than to tie their money up for a yield in low single figures, less tax, less inflation. As portents go, this one is scary.
Less means better
Always happy to mind business’s business, the Chancellor is offering to regulate the regulators and to make the Better Regulation Task Force more regular and, of course, better. Something like a Less Regulation Task Force would be better still, but simplification was never his style. We still await the Better and, preferably, Less Taxation Task Force. Adam Broke as president of the Chartered Institute of Taxation proposed something like it — a body of tax specialists to keep the law under review and try to make it less complex and burdensome. Last year’s Finance Act was the longest ever and the least penetrable. Now another specialist, David Martin, argues that tax law could and should be cut in half. In Tax Simplification (Centre for Policy Studies, £10, probably tax deductible if you have a good accountant) he shows the way. A bonfire of schedules, an end to the VAT rules which prescribe different regimes for sorbets and baked Alaska.... It would need a chancellor who believed, as Lord Lawson did, that taxes should be low, simple and compulsory: in other words, a new one.
Death and taxes
No classic detective story was complete without a murdered millionaire, to be found in his locked study, staring blankly at a nameless doom. One such story went over the top and featured six millionaires. The detective — was he called Inspector Hawkpoint? — looked for a common motive and found it. Then he arrested the Chancellor of the Exchequer. The Ides of March neared, the budget was looking hopelessly unbalanced, to put the public finances in order would require a sudden surge of revenue, and the quick way to get that would be from six lots of death duties. Today’s Chancellor would have an alibi he keeps them in stock, as his colleagues at Westminster noticed last week — and he achieves his ends with more subtlety, but we can all of us recognise our doom, and put a name to it.
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