Further VAT rise was considered

The question is whether or not there is a "black hole" in the Treasury figures.

If there is, then the VAT increase is still planned but hidden.

If the sums add up then we will know that someone just forgot to change the text when the proposal was dropped.

What is wrong with Robinson's memory? Or is it that all BBC political reporters have a Labour chip implanted into their brain?

VAT was brought in by the Wilson Government of 1974 - with a "luxury" tax of 25% - Thatcher, in 1979, nerely ironed that out - and then weighted to the lower end - 15 and 25% became 17.5% - and that was mostly because Europe said we must have it there.

By all means continue the anti-Thatcher rant, but get the facts right, and, perhaps also, remind all New Labourites that it was 18 years of Tory rule (following Thatcher's pattern) that gave them, the benign economy that it took them 10 years to destroy.

What can one say. If this was in their plans till the weekend, then what were they really thinking?

I'm sorry, but as you keep spinning, each additional explanation becomes less plausible than previous ones.

Unfortunately the joke, such as it is, is on us.

Why on earth is this news; why not focus on what we know is actually happening? If the Government cannot consider every possible option during unprecedented times without fear of freedom, how can expect them to ever make the correct decision? Nonetheless I'm sure the member of staff responsible for putting up the document in mistake is in hot water.

I also find it amusing how the BBC has repeatedly offered comments from the public about how the 2.5% drop in VAT will make "little difference" yet suddenly a possible 1% increase in VAT is the end of the world! Somewhat of a contradiction, Nick.

Are we still assuming Darling makes the decisons and not the puppet master?

Any more surprises Nick? My God this party is in self destruct mode.

This comment was removed because the moderators found it broke the house rules. Explain.

My, My Nick you are rapidly becoming an advertisement for NuLabor.

Nick,

of course they should raise VAT to 20%.

This is getting seriously bizarre, let me explain.

In the early seventies I was walking down Tottenham Court Road, and had heard that VAT was to be increased. So, I went into an electrical shop and purchased a radio which I wanted, to beat the increase in VAT. Just as you suggest.

The bizarre bit is that I was stopped by a BBC reporter who then asked me what I had done and why I had done it. The answers were braodcast on the evening news and on the radio. My wife went ballistic because we were not exactly flush with cash at the time. I had not told her what I was going to do, yes I know man under thumb and all that!

It was seen by most of the people I worked with and it was just so emabarrassing. But my point is that I would say that I would put up VAT to 25% in 2012 so that there is a real drive for people to spend now. When we got to 2012 I would then say well done, I will only put up VAT to 20%, as a reward.

Problem solved, or am I being just that little bit cynical. Looking forward to PMQs and so glad that there is to be a debate on the crisis budget, good old Pericles wins the day again. Will he name the dead that's what I want to know, the killings go on.

But did he originally plan to go further?

Darling is a puppet chancellor. Brown's bullying nature prevented him from relinquishing control to Darling.

The corrupt, deluded Brown demands that he run everything himself, and consequently we're all screwed for geenerations because of his mistakes and lies.

Thanks Labour.

Economics shmeconomics! There is other stuff going on, Nick. Backdoor ID cards anyone? Iraq (The illegal war, remember that?) and Afghanistan a bloody mess?
I read that the National Security Agency in the US didn't trust Tony Blair (Surprise!) and bugged his phone calls. Apparently his code name was 'Anchory'. They had to remove the 'W' as otherwise everyone knew who they meant.

Nick

It looks as though NuLabour not only hide the surprises in the small print, but now they are hidden off-page, rather like their PFI.

There's a large black hole in this emergency budget of around £100Bn.

Call me cynical but are there future tax rises coming that Brown n' Darling aren't admitting to? Or rather won't admit to..... until after the next election on the implausible assumption they get re-elected?
Welcome to Brown's "There is no “hidden manifesto” – “everything is above board”."

Isn't the narrative something like this:

- Brown plans 1% rise in VAT
- Brown dithers and chickens out at last minute, cancelling the VAT rise
- Treasury very hasily edits documents and spreadsheets to remove references to it
- Hacks spot the sums don't add up because of the removal of this (and other?) tax rises
- Agh, cock up - miss editing a pesky addendum and the VAT rise becomes public.

This isn't just a cock up as Angela Eagle claims, if so why was the document containinig the VAT rise signed by Stephen Timms?

Nick,

if I was Cameron at PMQs I would go on this one. Cheshire Cat Gordon should be exposed for what he is a very weak man, he is not a leader, he is led, the only trouble is who is leading him, where does he get his orders from.

As the repercussions of the credit crunch continue to hit the retailers, two apparently in deep trouble today, then it is many poor women who will be hit the hardest. These women are probably the only earners in many families, so much for working families tax credits!

Lets be clear - we are in a mess and we've got the wrong set of lunatics in charge of the asylum, just to mix up the metaphores.

Since the only plan that Broon and Darkling have is to blam the tories, blame the rest of the world, increase borrowing, put up taexs, blame the tories and the rest of the world, should we be surprised at anything they propose.

The only thing they fail to factor in is that if we don't have any jobs, then we don't have any income, then they can't raise money on any kind of tax.

Everything else is pie in the sky. Forget dogma, do something to create proper jobs, then the money will flow. The only jobs this lot are worried about are their own.

#11 Poprishchin

Absolutely brilliant, you have brightened up an otherwise dull day. My sides are still sore from laughing.

Nick

Gordon having a last minute change of mind is just confirmation of his dithering.

Now he has had a few days more, is there anything else that he would like to change? Oops too late, its been published.

When they dropped the VAT rise, what did they fill the gap with? Improved 'growth' projections? or do they admit that their is a hole in their finances?

FWIW: Did you read this story before you posted it, or did you do a 'Timms' and just accept what you were given by brown/darling?

I ask because this line:

it would not fit into Labour's "fairness" agenda. It was, after all, Margaret Thatcher's policy in 1979 to cut income tax and raise VAT.

is frankly pathetic -- 25 years ago, in entirely different circumstances Maggie did something that helped towards the repairing of the british economy - making the ecoinomy so strong, that it has taken a decade of labour incompetence to destroy.

ps. Had a chance to ask mandleson about his tarriff meetings with Oleg yet?

1. Pensfold wrote:
The question is whether or not there is a "black hole" in the Treasury figures.

There are certainly a few "black holes" where there should be brains in Nu Labour.

It was already clear to many by Sunday that the Treasury themselves had consulted with the markets and realised just how bare the cupboard was.

That is why debt was the real story on Monday.


https://cassiuswrites.blogspot.com/2008/11/not-much-of-toaster.html

But the suggestion of a VAT rise, as well as the black hole in the figures which no doubt will be debated today - is clear evidence that Labour's grip on the situation is thin; and that they cannot be relied upon to tell the truth.

Remember, Alistair Darling said as recently as Monday that we were in a "relatively strong" position and hence would not suffer so much.

If raising VAT by 1% raises only £5bn this is going to be a drop in the ocean compared to what this country owes. I'm assuming the amount goes up daily as there is some form of interest to be paid on these loans?

This uncertainty is one of the many reasons that virtually no retailers will pass the 2.5% vat reduction onto their customers, and retailers will just use it to cushion the blow for them when they have no customers at all next year.

We've recently been contacting our uk clients (we, being an i.t. company) to ask whether they want to pass on the vat reduction to their customers or just pocket the difference by increasing their base prices. So far all the retailers we've asked have said exactly the same thing as each other, without any prompting/advice/suggestions from us:

"we'll pocket the difference ourselves; it's only a couple of quid even on massive items anyway so our customers wouldn't even notice it, and it'll give us a tiny bit of extra cash to help us when things get really bad later on."

Brown/Darling are in a world of their own; they've got absolutely no idea how the real world works.

pps.

seen this?

https://www.telegraph.co.uk/news/worldnews/europe/germany/3521147/Germany-and-ECB-resist-calls-for-stimulus.html

Germany have a balanced budget and are better placed than UK to give a stimulus -- but say that you 'cant send your way out of recession' - and the ECB agreee.

Brown is upto his kneck in debt, so what does he care if he lumbers us with a few hundred billion more?

Are you going to write about europe not 'following browns example' ?

Gordon "look at me Im at the front, look, look, I'm leading - where are we going? oh are we, ok let me through - look I'm leading, Im at the front, look at me!" Brown is worthless.

Four years ago I was giving a lecture to 50 Iraqi Forensic Officers, at Bournmouth University.

At the end of the lecture, on old fellow came up to me and asked.

"Excuse me sir, why has our country been wrecked and how long will it take to repair?"

Frustratingly my answer to him has come to roost.

I replied to him. "You country has been wrecked because my government, never had a proper stratergy, and it will take a minimum of 20 years to clear up the mess."

Sadly ironic.

Now here's a little thing that nobody has really focused on.

N Ireland might well benefit from a cut in VAT because Eire has a much higher level of VAT, and there's a strong incentive for those who want to buy VATable goods to buy them over the border.

If we were to cut VAT a little more, to cover the transport costs, we could cause Belgian, Dutch and French shoppers to cross the channel and shop here for those VATable items.

That would achieve the economic boost that the government is looking for.

Sit back and wait.

An additional 2.5% of VAT ain't the half of it. Get used to it, people, whether the next government is red or blue, taxes are going up significantly.

The only question is whether the increased taxes are matched by reduced spending, to minimise the period of retrenchment. Labour don't have the courage to do that and will therefore cop out. Tax more = spend more as far they are concerned. The Tories, as usual, will go overboard and slash and burn the public sector.

Forget about going out and spending before taxes go up, get yourself on the NHS waiting list for your hip replacement op, pronto, because once the Tories get back in, you'll be waiting a lot longer.

various# the real truth

I dont think Nick is going to talk about Oleg & Mandelson.

Might be worth dropping this one.

Don't make me laugh...Alistair Darling as the chancellor who wanted to tell the truth? With Gordon Brown as his puppet master? The man who has spun more on the economy than Tony Blair and his dodgy dossier on Iraq.

I'm sorry but newlabour wouldn't know the truth if they drove straight into it at a hundred miles an hour.

Their poll ratings are going straight back down again; the BBC will feel no compunction to support their case because there are going to be public sector cuts whomsoever is in power.

Even the Guardian's poll now has Alistair Darling's PBR as a 71.1% failure vs 28.9% success. If they can't get their own people to supprt they are going to be reliant on balhamu and CEH packing the polling booths in 2010.

This is an incompetent and malicious government. It seeks to portray its narrative of fairness agendas and social justice while simultaneously lifting out of every pocket in the land.

Newlabour are fakes and frauds.

Call an election.

What Brown, Darling and King fail to grasp is the reason we are in this mess is because people have been spending far too much. This is the culture of "I want it now, so therefore I must have it".

Whatever happened to the idea of 'saving up'? Or making do?

I was down at my local rubbish tip (sorry, recycling centre) the other day, and was amazed to see a skip filled with 'old' plasma TVs. We have become a nation of Squanderbugs. (Younger readers can look this up!)

Borrowing lots of money from the banks in order to buy imported goods will do nothing to help the economy.

Nick, you are in danger of being the shining example of those in the BBC who have relinquished their responsibility for unbiased reporting, plus the corporation's essential independence of Government.
Your pro-Brown/Darling positioning is sadly embarassing to witness. There is a need for far more rigourous and critical analysis of Brown and his stewardship of our failing economy.
His excessive borrowing, off-balance-sheet expenditures (a la PFI), penchant for stealth taxes, spin and unproductive, excessive spending is what got us all into this mess.
His PBR is simply digging an even bigger hole for the future and we will all lose out, not just the super rich. The actions taken will fail to achieve his goals and result in a prolonged and severe recession, massive national debt and consequential higher taxes for the next Government.

The government, economy and country is taking a pounding from all the negative comments - are people turning this into political point scoring?

What happened to the British Spirit? Isn't this a time to club together, to work for the common good and ensure survival for all?

I see Britain as a proud nation with creative thinkers, hard-workers and a social conscious. We can be a country to help lead Europe out of recession. We have some of the best economic minds and politically astute people in charge.

Let's support them now and leave the finger pointing until later...

Dosn't exactly inspire confidence does it? Those in charge(ish) of the Country's finances seemingly flipping a coin to decide whether raising or lowering V.A.T. is the answer to all our problems,no doubt they had people working on spinning either option as a wise and correct decision before it had been made.

Mervyn wants the banksbanks to lend us more so that we can spend our way happy!

Already we can see Gordon rubbing his hands with glee as he prepares to seize control of the banks if they don't do as they are told - which is what Real Labour has wanted all along.

In their 1983 manifesto, Labour said:

"We expect the major clearing banks to co operate with us fully on these reforms, in the national interest. However, should they fail to do so, we shall stand ready to take one or more of them into public ownership."

New Labour is now replaced by Real Labour!

While you are looking at that, read what they said about the Common Market too!

"the European Economic Community...was never devised to suit us, and our experience as a member of it has made it more difficult for us to deal with our economic and industrial problems."

So, that budget, Air-Hair-Lair (2), where Sir Geoffrey Howe advised the nation, contradicting all of those denials made by the Tories in the 1979 General Election campaign, that he was doubling VAT from 8% to 15% didn't really happen! Amazing how the mind plays such tricks!

Nick

There was another slip - in both the Chancellor's speech and all the official Treasury documents.

He forecast GDP growth for 2008 as +0.75% - and said that this assumed a contraction inthe current Q4.

But so far in 2008 the figures have been +0.3% in Q1, nil on Q2, and -0.5% in Q3.

This does not add up.

They must have meant to say -0.75% for 2008 rather than +0.75%.

Why has thos not been noticed? Please raise it. It is a fundamental presentation error.

By the way, I work for a large worldwide bank and internally we consider his projections for 2009 and 2010 as extremely optimistic. It could be much worse.

Mr Cameron asks whether the 58% figure for the national debt as a proportion of GDP is the same as under Labour in the 1970s. Mr Brown says he is sick of having to deliver "an economic lecture every week" to Mr Cameron

OOOH tetchy
Dave hit the nerve

Nick why do you just say whatever Labour's PR tell you.

Don't you have your own brain? Why don't you question the government instead of being their voice. Isn't that what the media is there for, to speak for the people.

You really are showing yourself to be so biased after every blog you post

Shame on you

So Browns answer to EVERY Question today was " The tories would do nothing".
If that is the best he can over he should not "Do nothing" himself

The something he should be doing is RESIGNING and CALLING an election

Do they consider the cost of businesses changing every price tag, altering their computer systems/websites/invoices and accounting practices?
The businesses that only show vat inclusive prices will not drop prices, this will not help the consumer.

Why not just rise the lower tax band again (that was easy to implement for businesses)
and then implement a higher tax rate, this will take the preasure of low earners, and not effect higher earners much if done right.

The government clearly has no idea of how to manage money, we need some people with real business knowledge to trim the fat of the government...

BBC political editor Nick Robinson tells BBC Two's Daily Politics says Mr Brown went out of his way to say he would never raise VAT as prime minister and was trying to "kill the notion" that he has been privately trying to arrange doing so.

Nick you got this wrong unless of course you and Brown are admitting that Brown wont PM in 13 months time when VAT rises from 15% back to 17.5%

My word - the PM's witty repartee is quite breathtaking. At evry charge laid against him by the Tories, his response is to ignore the question and call the Tories the "do nothing" party. Such a towering intellect!!

Isn't it just a little scary that this is the man who is passing on to my 3 month old grand daughter a staggering mountain of debt.

The VAT reduction is totally the wrong way to go about the problem in my opinion. If passed on to the consumer (which is by no means certain as some commenters have pointed out) it should provide a small boost to consumption which will help the economy in the short term.

BUT the main problem with our economy over the past few years has been that the amount we consume has been rising far quicker than the amount we produce causing the huge private debt explosion which has to be paid back at some point ie now.

Measures to encourage more consumption, more borrowing and to get house prices rising at silly levels again will just reinflate the bubble and delay the day of reckoning, of course a collapse in consumption wouldn't be good but at worst a small drop might take us back to the levels of 2005 or 2006, hardly a disaster.

What we need to do is to encourage PRODUCTION in the UK so that we can AFFORD to consume more over the longer term. A cut in VAT will affect prices of both British made products and imports equally, my preferred alternative of cutting employers and employees national insurance contributions would cut costs for British businesses, thereby encouraging jobs and production here, it would make our exports more competitive and would put still put some money into the pockets of consumers to maintain consumption levels.

My beermat calculations suggest that if the chancellor has decided that he has £15bn to 'give away', he could have reduced employers contributions from 12.8% to 10.8% and employee's contributions from 11% to 10%. As this would also mean a big wage cost saving for public sector bodies such as councils, the NHS etc, this money could be recycled into frontline services and some of their funding increase for next year clawed back to improve government finances. (Or alternatively, this saving could be taken into account to offer slightly bigger NI cuts.)

Of course the public finances should have been in much better condition to start with and we wouldn't be in this mess, several years of relatively strong growth should have left us with several years of budget surpluses and more room for manoeuvre much like say Germany or Canada have. A tighter fiscal policy over the past few years might have also helped to avoid the worst excesses of the housing bubble.

The increases in funding to the health and education sectors should have been more gradual, this would have meant the money could been spent effectively rather than wasted as some has and the public purse would not have been so strained.

Longer term once the immediate downturn is over, I would even consider putting up VAT to 20% to pay for more direct tax cuts to boost our competitiveness. Low income earners spend a higher % of their money on zero-rated and exempt products anyway so they would not be hit as hard as some claim and an increase in the basic pension could help those people who don't pay NI anyway cope with the small price increases that would result from this policy.

30 MyNewsReview

"What happened to the British Spirit? Isn't this a time to club together, to work for the common good and ensure survival for all?
I see Britain as a proud nation with creative thinkers, hard-workers and a social conscious. We can be a country to help lead Europe out of recession. We have some of the best economic minds and politically astute people in charge."

I agree with the first bit, but not the second bit. There is a great british spirit, and I think a willingness to all club together to get things sorted out. The problem is that the people in charge are still doing things which are mind-blowingly stupid and which just make things a lot worse.

So, I think we'd all be willing to work together, but you need the people in charge to know what they're doing. It's no good blindly supporting the people in charge when they're doing everything they can to destroy us.

Negative comments would begin to disappear I think if the people in charge had any idea what they were doing; the negative comments are going on not necessarily because we're in a bad situation now, but because the people in charge are actively making it worse.

What has become patently clear after the last forty eight hours is the underlying motive for the savage attack on George Osborne from Mandelson and Alistair Campbell.

Newlabour were reeling after his attack on the PBR on Tuesday and had clearly not expected such a savaging from someone they had hoped to silence.

Now that Osbornme is back in the ascendancy, we can expect more of the newlabour economic mirage to unravel as it is doing with these VAT revelations today.

The simple fact is the tories proposed cuts of 37bn from public secotr spending and newlanour opposed it. Now newlabour are pickpocketing this policy and proosing 37bn of cuts themselves.

The governemnt is all over the place, reeling form blow after blow raining down on it form the opposition, from the economy and form the truculent banking sector.

They simply can't govern and the tories will now steadily rise again to take over a bankrupt country as the Great British public; resourceful, hard working and honest as they are, reject newlabour for the pack of idealogically doomed fakes that they are.

Call an election

BBC political editor Nick Robinson tells Daily Politics Mr Brown could do better in a "crisis election" in the near future than a contest in the longer term. Charles Clarke says Mr Brown should announce today that he will not go to the country until 2010. Ken Clarke says he thinks the PM wants to have an election in 2009.

Nick tell us is this another breifing that you have had before parliament

When is the election Nick

For far too long the banks have been falling over themselves to entice people to take out huge loans they can't afford. Now Mervyn King wants the Banks to resume 'normal' lending.

The Bank of England needs a proper Bank Manger like Captain Mainwaring who understood the need for sensible financial management.

The idea that when you are deeply in debt, you can make things better by spending even more is "sheer folly. We're all doomed...."

38 mrxavia

If anyone does want to pass on the vat reduction, it'd be a decrease of 2.13% by the way. So here's a big warning to retailers who are thinking of passing it on...

DO NOT REDUCE YOUR PRICES BY 2.5% - YOU WILL LOSE MONEY!

Copied from a techie forum:

"I've just worked it out; if your price holds the vat inclusive figure, then if you wanted to pass on the full vat reduction you'd need to multiply your current price by a factor of 0.9787 (1.15/1.175) to end up with a vat inclusive price where vat changes from 17.5 to 15% (or put it another way, reduce your prices by 2.13%)"

(similar logic also takes effect when it comes to reverting back to a higher level; don't just increase your prices by the vat rate increase)

Re #21..

Retailers are going to pocket the differential of 2.5% on he VAT reduction to help pay for the Employer NI increases and copy the Govt. example of raising base prices to cover the delta as per alcohol, tobacco and petrol.. what's good for the goose this xmas et al...

The problem with a tax cut is it seems to be temporary. The tax rises seem to be permanent. So 1% extra will cause lasting problems - in this climate of cut throat sales, the 2.5% will do nothing. Does Darling (guffaw) and the organ grinder Brown do their own shopping? Can someone do the VAT changes calculations on the John Lewis List for me so I can see what my taxes will get cushy MPs for their tax funded second homes?

You know when the opposition deliver the goods... when either:

a) Brown says "I will take no lectures..."

and reels off the tractor statistics.

It's really good direct hit when...

a2) 'I will take no lectures and he flags up Cameron was there at Black Wednesday.

It's decimated his argument and...

a3) "I will take no lectures" and Brown has to resort to quoting back the Thatcher era.

or

b) Labour do exactly what the opposition say they should do with the line "we were planning this all along."

or

c) a Labour policy announcement has several opposition policies in it, in various states of 'semantically mangled' prose.

So with the VAT thing....

Brown might as well had a 'Kick me' on his back.

Even Mandy has thrown the contents of his handbag all over the floor.

So there has to be truth in it...

#30.

The British Spirit was strangled to death when Labour:

a) devolved government.
b) labelled everyone into their little groups with tags like "hard working families" or 'middle Britain".
c) favoured one section of society than another.

There is no Britain.

It's currently broken.

What's the big deal? The government works through all the options, takes into consideration expert opinion on the impact of various options and then decides what to do. I just don't see how this is even vaguely a story. Would it be better if the government didn't look at all the options? The fuss at PMQs looked like a standard piece of cul-de-sac debate - pointless.

So there we have it! the tory do nothing party, with the do nothing attitude.

While the government continue to work hard for the people with a reduction in Value Added Tax, an increase in family tax,more pressure on the banks to lend and restore confidence, and last but not least a price war in the food stores, with weekly shopping coming down in some stores by up to 40% and theres more with oil now two thirds cheaper than what it was, massive pressure on the energy companies to lower theirs rates.

Yes indeed labour working for the whole nation, while the tories with the NO PLAN play politics in a very serious time.

Wake up clueless rich kids and stop flip/flopping all over the shop.

"But did he originally plan to go further?"

Well yes Nick. YOU TOLD US remember? Yesterday. You were told that they considered it and then dropped it. In fact you and Peston were told. You then told us that it was all fine as it was published and available online. Then today Labour backtracks and says it was a mistake. Oops! Sloppy briefing by HQ to Nick and Robert.

"plan to increase VAT to 18.5% was dropped as late as last Friday. It followed what I'm told was a lively debate between Gordon Brown and Alistair Darling although both sides insist there was no row."

Did Gordon tell you on Saturday then?


"I have been told by one apparently well informed source that the Treasury were considering a further VAT rise to 20% in 2012."

But you were told before the idea was dropped?

Nick I like you but this is one hell of a weird version of events.

derekbarber.

Do nothing party? The 'getting rid of newlabour party' will do quite enough for most of us right now thanks very much.

Call an election.

derek. Your post is the type of reaction that makes us the laughing stock in Europe. read some foreign papers and see how they are amazed at the failure of this governemnt. and then read about how they think our class obsession is silly. I am not rich. I am reasonably well off, but that is because I worked for it. I know that is amazing, but when I get up at 6 in the morning and go to work I put the hours in to make money.
If you think life is for free with your rich kids comments, then it makes sense that you vote Labour. 1 in 4 Brits on benefits (mostly disability). Largest number in Europe. It really disgusts me to read posts like yours that sem to disregard the hard work people like me put in for you to enjoy and then have the cheek to call us rich kids.

Do some work... see how it feels

Darling and Brown are a double act, good cop bad cop.
It would be nice to think someone in Government is trying to be honest, but it is a vain hope.
The Government shows again and again it is not to be trusted.
The Labour Party will rip itself apart because the huge egos that are clashing now will look to each other for someone to blame.
Mandelson was the final nail in this Labour coffin.
The anger and bitterness is not all comming from the people, it is seething in the Labour Party.

@51

the big deal is that the document was signed by Timms on the day of the PBR so the tax change is going to happen if Labour get back in and they should have announced it

#52

Ooh, good job I'm sat down.

For a start, a Conservative government would have already:

1. Frozen council tax (increases of 10% next year are planned)
2. Introduced cuts in corporate tax (not Labour's freeze)
3. Introduced NI deferrals (not a planned hike in them).

That's doing nothing, of course it is.

Oh, and I forgot.

Increased the stamp duty & IHT thresholds...

As for food prices, I'm glad to see you have cottoned on that food is zero-rated for VAT.

Lastly, I'm not a child, neither am I rich (Labour have really been working for me).

As for flip-flops.... too cold this time of year for me.

Perhaps though you could explain to me?

Why Brown is cutting government spending after 2011 more than the Conservatives planned to?

Why is Brown hiding details of the tax rises to come?

Yeah, he's working hard - saving his own neck.

How much more of this 'the tories would do nothing' rubbish can we take - it's clear that this is going to be the thrust of Labour's pre-election strategy.

Brown is an habitual liar but the Tories don't seem able to counter this by articulately reinforcing the actions they have proposed - come on, get a grip!

51 1238kmh

"What's the big deal? The government works through all the options, takes into consideration expert opinion on the impact of various options and then decides what to do."

It's good that they were thinking of all options, but it's bad that they didn't consider the impact of those options (or if they did think about them they must have developed a deliberate scorched earth policy)

The vat rate reduction defies all logic; nothing about it is good. Nobody's going to pass it onto customers, it costs tax payers massively, and most of the profit for it will (as other people have said) be eaten up by the subsequent increases in employer/employee national insurance and the costs of changing their systems etc. It simply makes no sense at all; it costs tons of money, yet doesn't stimulate demand or give retailers much of a boost either profit-wise.

It's quite mad; they obviously didn't speak to any small/medium size retailers about it, or potential customers. It just makes no sense.

Today's London Evening Standard has a pop at both Nick Robinson and Peston for bias in favour of the government.

London Evening Standard


On the subject of the VAT issue they are relatively gentle with Nick:


"The BBC's political editor Nick Robinson rushes to the defence of the Treasury."





....but far more damming about Peston:


"IS Robert Peston spinning for the Government again?

In the wake of the pre-Budget report, the BBC business editor took to the airwaves yesterday explaining that the FTSE 100 was up 9.84 per cent because the City liked the PBR.

As an avid reader points out, "the Germans must have liked it more because the Dax was up 10.34 per cent and the French Cac 40 was up 10.09 per cent. In fact, around the world stock markets were up... nothing to do with the bail-out of the world's biggest bank Citigroup by the Yanks?"

Even Gordon himself likes to blame all our economic fluctuations on the Americans."

@52

Well spun Mr Barker, you've sucked it up hook line and sinker just as you were expected to.

No plan blah blah blah, How many times has it been calculated you need to say that for it to become true. You must be well on your way.

Tax Bombshell on the way

#22 the-real-truth

It looks like the Bundestag is blessed with a government with more than 10 brain cells between them unlike the UK's current government.

The Germans are of course absolutely right. Keynesian stimuli didn't work in the 1970s and thay won't work now. All we are doing is delaying the inevitable which will be more severe the longer we put it off.

At least this will stop stupid Labour MPs saying all the world opinion is with them and only the Tories don't think a stimulus is needed. What utter rubbish.

"52 - Yes indeed labour working for the whole nation, while the tories with the NO PLAN play politics in a very serious time."

Derek, I guess you believe anything if gordon says it enough time.

Labour are only working for their core voters.
As an IT consultant they've just shafted me for around £1000 a year with their vat giveaway, by dropping 2.5% from what I charge but only dropping 1.5% from what I pay due to the flat rate scheme.

Labour don't care about the economy, only about getting simple people to vote for them.

#58 phaetonflanflinger

..don't forget abolishing ID cards...!!

I'm sorry Nick, but your rather strange comment below does not hold:

"However, since it is a regressive tax - the poor spend a greater proportion of their income than the rich - it would not fit into Labour's "fairness" agenda. It was, after all, Margaret Thatcher's policy in 1979 to cut income tax and raise VAT."

So, if the glorious Labour goverment were so progressive with their taxes why indeed have they time and time again NOT taxed at the margin and instead added duty on goods left right and centre and indeed the worst of all, the removal of the 10p basic rate, how regressive do you want to get exactly? I find your quite blatant bias somewhat amusing and also very dissapointing from the BBC.

#55

Juggler, maybe your not to cosy with the EU
however I'm sure you could look into the borrowing rates of Italy, France, Spain and even states such as Norway, it might just surprise you how big their GDP rates are?

Look if your going to quote figs then get them right, jeez, talk about spin!

So do you consider people with cancer and sever disabilities as a waste of time and funds, Wow! brave little trotsky.

Hard work! Ha, what tosh and utter Blah you speak, WAKE UP! twinkle toes!

#63 jonno

The Germans are of course absolutely right. Keynesian stimuli didn't work in the 1970s and thay won't work now. All we are doing is delaying the inevitable which will be more severe the longer we put it off.


Labour probably know they will lose the next election. I think this is why Gordon and Alastair are delaying the inevitable - which will become severe once the Conservatives have taken over.

If anyone is in any doubt over the shameless cynicism of this Labour government how about this from the New York Times (and it's on the free tibet site as well) that Brown has changed Britain's position on Tibet in exchange for China giving more money to the IMF.

https://www.nytimes.com/2008/11/25/opinion/25barnett.html

The rich will pay the "lion's share" of the tax rises.

Do you believe this as well, Nick?

The 5% hike takes in £650m out of a £118bn debt!! Where's the rest coming from?

#64

O' the brainS of I T is confused on VAT.

Try three card Bragg, you might like it and lighten up a tone on your ego.

Do you seriously believe that Osborne has any credit as a leading political figure?

A 3 hour debate on VAT, would the tories not be better spending that time on finding a "PLAN"

Whether it's VAT or taxation this huge borrowing is going to have to be paid back somehow.

At least with VAT you can choose whether to spend or not.

With taxation there is no choice..

I guess with this rather stupid drop in the rate of VAT just introduced GB is trying to soften us all up that VAT rates can be moved up and down which makes me think the VAT rate will be used at a much higher rate in future

Or perhaps both as the projected figures he has used for the economy over the next few years are hardly realistic.

How much can you squeeze the poor taxpayer. Those that haven't left the country by then I mean?

I have just compared the OECD forecast for UK growth in 2010 (0.9) with the Government's PBR forecast (1.5-2). This suggests the Government's forecast is at the upper end of outcomes for growth. It would be interesting to know what simulations were run through the Treasury computer, and what the projected borrowing figures would be if the OECD projection is correct. Of course the OECD forecast is itself a central projection, so again one could publish a third projection for public debt (based on lower growth).

Iraq WMD dossier. PBR.

# 56 machinehappydays

"Darling and Brown are a double act, good cop bad cop."

Actually, it's a triple act; Brown, Darling and King

And they are all 'bad cop'.

Gordon must be weeing his pants with joy about being able to say the word Obama every now and then.

The next G20 will be in London on April 2nd. Gordon will be re-reading yesterdays PBR the day before.

G20 Summit in London

Well, if Gordon now says that they won't increase VAT to 18.5%, we can all breathe a sigh of relief. After all, he'd NEVER put up taxes if he promised not to, would he?

Maybe we'll find that VAT stays at 15% and then in a couple of years time they introduce 3.5% Value Added National Insurance on top.

"However, since it is a regressive tax - the poor spend a greater proportion of their income than the rich - it would not fit into Labour's "fairness" agenda."

Sorry, but without wishing to get into whether VAT increases are a good thing or a bad thing, I'm not at all convinced about the premise that VAT is regressive. It's often said that VAT hits the poor harder than the rich, but I just don't believe it. When I was younger and at the very bottom of my career ladder, I had very little money. Such money as I had almost entirely went on food and rent, both of which are VAT, so I paid hardly any VAT.

Given that VAT is charged mainly on inessential items, I remain deeply unconvinced that VAT is regressive.

To: derekbarker - and all the other staunch Labour supporters

As you are all gloating that Gordon and Alastair have put some money in your pockets, I wonder how long it will be before you all rush to the shops to help kick-start the economy?

69 Ghanimah

Now that is amazing - and if true disgraceful!


That'll surely even have Labour voters spluttering into their soya milk lattes.


Seems to me that Brown knows he could well tip Britain into bankruptcy and has lined up the IMF to bail us out with what will no doubt be branded as a "fiscal stimulus" in these "extraordinary times".



Roof not fixed. Tibet sold down the river.


Thanks Labour.

This comment was removed because the moderators found it broke the house rules. Explain.

Who is this idiot derek barker? Is he a comedian?

Whoever he is (or isn't) ,he clearly is completely ignorant about Economies or Economics (not the same delboy).

I guess that even the most diehard Government apologists here must be squirming with embarassment.

derek stop twisting my words. Typical lefty. I did not say the genuinly needy did I? It amazes me how barefaced you guys are in twisting people's words. But then.. You are someone that considers Gordon Brown a good leader. I cannot expect much.

I have a friend working at the benefits office. She gets claims in for period pains! For ADD, for depression. Yes. And you know what the latest memo said: Sever backlog, award all cases.

Look you can keep your socialist state. 6 more months... and I will be living in a better country. You and your pathetic lot can have this "no work but we still want pay" state. You dream it will be like Scandinavia where as when I sent that to a friend in Stockholm who has frequently travelled to the UK I got a reply back that was mostly made up of laughing. We are the poor man again. Get used to it and don't be smug.

Obama intends to cut out all wastage from the public sector

He intends to spend billions of dollars on job creation.

Sounds positive to me.

Doesn't sound like he's taken any notice of Gordon Brown then

7. Agree. The 10p tax has been repaid in half. No mention of how the other half is to be dealt with or are they thinking £25 increase on the winter fuel payments which apparently all received yesterday will appease them?

The tax rises announced in the PBR go nowhere near paying off the massive debt being accumulated under this Government. It is clear that taxes will have to go up considerably in the future to bring the PSBR back under control - increasing VAT to 20% is just one of the requirements - I anticipate the basic rate of income tax will also have to increase. Gordon Brown has trashed the country's finances - that is clear.

As an aside, here in "socialist" Denmark, VAT is levied at 25%.

71. David IS the man with a plan but why should he tell you??? ROFL

# 78 shellingout

"As you are all gloating that Gordon and Alastair have put some money in your pockets, I wonder how long it will be before you all rush to the shops to help kick-start the economy?"

A good point, but let's not forget whose money they are giving us...

Gordon is borrowing from our future and lending it back to us now in the present.

In other words, we are spending our own money that we haven't earned yet. So when we do earn it, we will find we have already spent it - and have to pay interest.

It's like a plot from Dr Who, with Gordon as the Master, intent on wrecking the world as we know it.

And people wonder why the country is in a mess!

We do we put up with this guy commenting on the news on the BBC?

Why can’t the BBC just report the news?

#22 unreal

Germany have a bigger national debt than us (60% of GDP - what "Irresponsibility Brown" proposes debt will rise to in the UK).

With this bigger debt they are obviously in a far better position to increase it further.

It's like 'economies of scale' or something I guess?

#87 distanttraveller

I know - I'm sorry, I was being sarcastic.

This is an interesting thing which the media, or at least those parts of it I've seen, have never bothered to mention: Mr Brown's continual failure to predict borrowing figures accurately. Suggest you check out

https://dizzythinks.net/2008/11/why-shouldnt-you-believe-brown-on.html

Just to extract a small part:

- In 2003 Mr Brown said: "borrowing for this year and future years is therefore £27 billion (2003), £24 billion (2004), £23 billion (2005), £22 billion (2006) and £22 billion (2007)."

- In 2004 he said: "borrowing for this year will fall to £34 billions (2004) and in future years fall further to £33 billions (2005), falling again to £29 billions (2006), then falling to £28 billions (2007), £24 billions (2008) and £22 billions (2009)."

- In 2005 he said: "[it] will be £34bn (2005) this year falling to £32bn (2006) next year, then falling again to £29bn (2007), falling to £27bn (2008), then to £24bn (2009) and then £22bn (2010)."

- und so weiter.

I don't have the forecast and actual figures for economic growth, but I'm reasonably certain they've always been wildy and inaccurately optimistic too.

So if Mr Brown has never managed to get the figures right before, why should we believe him (or Mr Darling) this time? I can't help feeling that borrowing will be far higher, and economic growth far lower, than the figures supplied in the PBR.

And how exactly did Mr Brown get this reputation for economic genius?

- He's never got his figures right (see above).

- He fiddles the balance sheets (PFI, Northern Rock, etc).

- He's unable to work out the effects of tax changes (abolition of 10p tax rate = no-one worse off ... err...)

- He sold off gold after making sure that the market fell as low as it could possibly get by advertising it well in advance.

- He claims he didn't see the global economic crash coming (I'm no economist, but I could see the UK was going down the pan a couple of years ago).

- Pick your own example.

My personal feeling is that Mr Darling's statement that we were in the worst state for 60 years was the pure unvarnished truth. It was very brave of him to step out of line and be absolutely honest for once. Alas, that day is long gone; it's back to "Britain is best placed to get through this recession", and other blatant lies.

52 Derek Barker



This video will explain in an easy to understand way who is going to pay off the trillion pound debt.

Click here

#73 John Harris

I posted this on a previous blog so apologies if you have already read it. If you have yet to read it, don't if you're suicidal.

Worth getting past the intro which summarises the PBR and getting into a critique of the borrowing projections.

The OECD forecast could be optimistic!

https://seekingalpha.com/article/107818-uk-government-debt-will-double-and-tax-rises-will-follow-tax-cuts

I am seriously worried that Labour have bartered reason for political survival.

If they have, may they never be forgiven.

It is pointless to complain about the eventual tax rises that are being planned.

We're in a recession. Taxes would have to have been risen even if Government did NOTHING to stimulate the economy.

It's incredibly annoying for politicians to gain popularity by attacking tax rises. Even more for those that fall for it.

Once our economy is back to strength, the taxes will be affordable anyway. Their revenues will help pay for things and once we're back in good growth, we'll start saving like everyone here should have been doing the past 10 years.

Also, for this silly sentiment of "what our future generations will pay". Look at what this current generation is paying for. That's right, the past. It will be a common staple until we have wiped out all national debt, in which interest rates can be 0 and free to borrow in relative safety.

So New Labour is dead.

What has surely died during this economic crisis is Thatcher/Reaganomics.

Remember Financial Services Act and the rush to sell off boring mutaual building societies?

I got my first mortgage with the Bradford and Bingley and a few years later got some unwanted shares. So what happened to the dynamic bank that was so created. They have had to be bailed out by the taxpayer.

Rember the inefficient nationalised industries that were sold to a public that already owned them?

The likes of British Gas and the energy and water companies are ll busy ripping us off by exploiting their monopoly positions.

In fact the irresponsible and unregulated greed that Thatcher and Reagan unleashed and embraced has caused this crisis.

The truth is that the Tories still think this is the way to run an economy. Labour have belatedly woken up to the need to regulate and tame private greed and realised they have been far to timid in tackling the abuses.

Better their instincts however timidly implemented than those of the Tories.

Nick, this piece is an excellent example of why so many of us now read Guido and Ian Dale. At least they are open about their bias.

Nick,

Maybe you could consider an article/blog on todays publication of political donations.

Once again I believe the LAW has been broken -is it or is it not illegal to accept a donation from a non-domicile resident outside of the UK NOT subject to UK Taxation?

In which case you or one of your colleagues may like to investigate a donation of £650,137.00 made to the Conservative Party by a company called Bearwood Consultancy Services -who are apparently based in Wokingham in Berkshire.

It appears from Company records that this is a shadow company set up merely to make political donations on behalf of an individual called Michael Ashcroft - who is non-resident in the UK?

#2

To be fair (and as a Conservative I must be fair!) Nick is actually right. The luxury rate of VAT was cut from 25% to 12.5% in 1976. Geoffrey Howe's first budget in 1997 indeed harmonised the two tax rates, increasing the standard rate from 8% to 15% and the luxury rate from 12.5% to 15%. He reduced income tax in the same budget.

#82

Bettlejuice or juggler, whatever! didn't you know that employment is at record levels compared to the last tory government.

I take it you found out some scandinavian states have GDP growth of over 60%

So what is your prize goal here, to have interests rates at 15% mass unemployment
Local schools closed, ever state schools to opt out of LEA's public services to be slashed.....ect...ect...

Is that the silent PLAN.

By the way, do you just bail-out when things dont go your way, sad little kid, Eh.

Re: 94. At 2:31pm on 26 Nov 2008, Hiddenranbir wrote:

"It is pointless to complain about the eventual tax rises that are being planned.

We're in a recession. Taxes would have to have been risen even if Government did NOTHING to stimulate the economy."

Up to a point. The point being that about a third of the tax revenue Brown has been squandering these past few years, has been generated by the City of London. That source of revenue has dried up and will never return to its previous levels (new banking regulation will see to that).

So, in order to attempt to balance the books, there are going to have to be hefty tax rises for all, combined with spending cuts. People have to understand - given where we are, standards of living and public services have only one way to go - down!