The Thick of It

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Friday, March 23, 2007

Cramp

It has been quite a week. A former top civil servant breaks the code of anonymity and confidentiality between government and official to criticise Gordon Brown. Labour was criticised when it came to power for bringing in Special Advisors by politicising the civil service - quite a detailed account can be found here. It seems that now civil servants themselves have no problem with acting political. Anyway, it created opportunities for cartoonists and Tory speech writers to make their Stalin jokes.

The 2% cut in the basic rate of income tax at the expense of the 10% starting rate "simplifies" our tax structure to one where we only have two rates. This gives Britain a proportional tax burden rather than a progressive one. This means that someone on £20000 pays about the same proportion of their salary in tax as someone on £30000 or £40000. Income Tax is clearly a political "sacred cow" and Brown clearly wanted to cramp to Tories for space. For that I think the 2% cut was a good move.

Budgets over recent years have been labelled dull - I think that is testament to Brown's succefful stewardship of the economy. This is something all Labour activists nned to remind people of. When I was growing up under Thatcher and Major from bust to boom to bust the economy wasn't stable and was a serious political issue. Today it seems that the substantive part of economic policy isn't an issue. We have to ensure people don't take it for granted because economic stability isn't guaranteed.

1 comment:

Leo Schulz said...

The 2p cut in the basic rate was, in my view, an act of near political genius. Just as Tim says, it cramps the Tories, and just where it hurts.

No one can have any doubt at this point that Labour is perfectly capable of running a very successful economy. I don’t think any government in the history of statistics has ever before had 40 quarters of continuous growth. The last 10 years in Britain have been good for almost everyone. Although labour market flexibility has been critical to the success, no one can say Britain is a low-grade economy. Quite the opposite, it is the highest value areas of the economy that have thrived.

Still, I am not completely happy with the Budget. The 10p starter rate – originally itself an innovation from Gordon Brown – was in my view an excellent measure. It was especially good for women coming into work through part-time jobs, or the recently unemployed or disabled coming into employment at relatively low rates of pay. If you have no children at this level you are now worse off. If you have a family, instead of keeping the money you earn, you are now required to claw it back through tax credits.