Wednesday, March 21, 2007

Happy Budget Day

The big day today, as Joe Stalin, AKA Gordon, our next Prime Minister, announces new and interesting ways to remove more money from our wallets.

The Times predicts that he will announce an extra £80 million for the security services, about £400 million for Iraq and Afghanistan and as much as £1 billion for child poverty. Going to war seems to be costing us rather alot of money these days and that's just the tip of the iceberg revealed in Parliament. Much of it, we never see.

If the Chancellor has any sense, he will announce a cut in corporation tax before we lose any more large businesses. Locally, we don't need to be reminded of the size of the Pfizer estate which used to be called Sandwich. Pfizer has already cut a chunk out of its UK workforce and pharmaceutical companies are increasingly looking elsewhere for cheaper operational bases with a good supply of skilled graduates at lower costs than are available here in the UK at present.

In our thriving economy, with the tax burden at a record high, prices of goods and services are now climbing at an annual rate of 4.6 per cent. The last time they were so high, in 1991, interest rates were above 11 per cent and the housing market was in the midst of a severe crash.

Pensioners are being hit worst with some retired households facing inflation of as much as 9.1 per cent, a figure higher than for any other category of household because of the comparable amount spent by pensioners on heating and water charges, which have risen sharply over the past year.

Without much doubt though, this budget is going to hurt you and me somewhere, either directly or indirectly and through stealth, Brown's favourite ploy. "Vote Tony - Get Gordon" because it's what we're going to get, like it or not.

10 comments:

Anonymous said...

If this likely to be his last budget we can only hope that Buggins Brown aka Stalin Brown decides to go to the country early. The only problem I have is that David Cameron's Tories have said very little about Pension Theft and Council Tax levels and how they intend to redress the huge tax burden placed on the law abiding, home-owning, pension saving majority of 50+ year olds in our society who march towards poverty in the near future.

DrMoores said...

If I'm honest, which I try very hard to be and which isn't always a good idea in politics, I would say that the next government of any colour faces a massive problem involving pensions and the size of the public sector spend/workforce.

From an economic perspective we are watching a slow motion train crash unfolding over time, as the population ages and the tax revenue starts to decline. The decision for the voters is on the choice of medicine to take and whether invasive surgery is required on the patient.

sue said...

From BBC Business news.

"The company (Pfizer) earlier reported a sharp rise in full-year profits to $19.34bn in 2006, from $8.9bn in 2005."

Cut corporation tax? You are joking. Do you think that will make any difference? Corporations are interested in cheap labour.
Losing large industry has much more to do with the culture of greed than with taxation levels.
Why pay even the minimum wage when you can pay next to nothing in Asia.

DrMoores said...

Quite right Sue. Someone was telling me on Monday about a conversation he had with the CEO of one of the other drugs giants about moving to China. It's al about profits. The problem they have in China though is that the Confucian system of education dooesn't encourage the same level of innovative graduate development as the West. So it's great for low to middle end production at reduced cost.. higher profits but doesn't yet offer the whole package in regard to R&D

Anonymous said...

If the Chancellor has any sense, he will announce a cut in corporation tax before we lose any more large businesses.

Agreed, but given the way that both main parties seem to want to deliver the greenest agenda. I think more likely is an increase in fuel duty and higher road tax for bigger engines.

Slightly off topic but I see now the government is including satellite navigation devices in the rpi. Since these have become cheaper in the past few years I suppose it's hardly surprising since it gives the impression that inflation is falling. The reality as most working people are all too aware is that most things are going up in price.

Brown has run the treasury for ten years now and what do we have to show for it? £175 billion spent on the NHS and education. Are they any better than when he took over? Not in my opinion. If the economy is so rosy why does he have to keep borrowing such vast sums and ultimately who will pay it? Not the hugely increased public sector. They are just a drain, and not the 2.7 million people on "incapacity benefit"

A slow train wreck indeed but who will clear up the mess?

Old Codger said...

It is interesting that Stalin Brown will hit the headlines whilst Sir Michael Lyons'Council Tax Report, with the conclusion that the present system is essentially unfair and impinges too greatly on the elderly, will be lost. I talked to a KCC Budget Officer this morning and interrupted his reading of the 600 pages the report contains to ask him how much of KCC expenditure is on pensions.

An interesting thought for those struggling on the risible state pension and any small paltry private pension provision they made that puts them just outside the benefit system; KCC(including TDCs) pension costs are approximately 10% of budget; Police pensions cost 12.4% of their budget and Fire pensions cost 2% of budget.
So if you are an impoverished pensioner having trouble meeting your ever increasing Council Tax Bill (100% increase since 1997)be consoled that you are at least helping to pay out of your Council Tax for a large number of better of index-linked ex-public service employee pensioners to the tune of:

KCC(including TDC): £208,000,000
Kent Police: £32,151,000
Kent Fire: £1,360,000

Will we see the Tories do something on Council Tax to be based on ability to pay? Don't hold your breath.

Eastcliff Richard said...

You say: In our thriving economy, with the tax burden at a record high, prices of goods and services are now climbing at an annual rate of 4.6 per cent. The last time they were so high, in 1991, interest rates were above 11 per cent and the housing market was in the midst of a severe crash.

So, the economy by your own admission is thriving, but things are as bad as 1991. Hmmm. 1991? Just remind me which party was running the country at that point. Oh, and hadn't we just seen one of the worse currency crises ever? Now who was the chancellor responsible for that? And 14% mortgage rates, forcing thousands of people onto the streets.

Ah, thems were the days!

DrMoores said...

*** comments don't work properly today!

It's not quite as simple as that ECR.

"Thriving" is an expression of cynicism, given the figures.

1991.. no excuses but a little more complicated and the legacy of teh ERM et al. Government very sensibly handed the wheel to the Bank of England which is responsible for inetrest rate stability and not Gordon.

Anonymous said...

An economist this morning on BBC argued that the Uk economy and world economy went into a stable period from 1992 onwards and the Tory case that Stalin Brown was handed a strong economy in 1997 was valid. He then went onto to say that this is no longer the case and that Brown has stored up a mess for his successor and that if world economy has hiccup, we will get violently sick!

Eastcliff Richard said...

I take your point Doc, and after all that Norman Lamont is actually a lovely chap, I interviewed him many times. He used to like a glass or two of Shardy in the green room afterwards, I recall.