The April 2009 Budget

A Cheer for Alistair

Despite the fact that he doesn’t act on most of my recommendations, I like Alistair Darling. Crucially, he knows that ‘you cannot cut your way out of a recession’.

The measures the government has taken (fiscal and monetary) have not been bold enough. Nevertheless, it is likely that they will restrict the fall in output this year to around 4% (instead of 7 or 8%), and unemployment to around 3 million (instead of 4 or 5 million).

The Tory response is pathetic, dishonest and opportunist. Gordon Brown is right to call them ‘the do nothing Party’. They oppose government policies, without offering any of their own.

They are dishonest in blaming Gordon Brown, when the financial and economic mess we are in originated in the Thatcher years. New Labour’s mistake was to continue with the Thatcher policies (e g privatisation and low taxes for the rich).

Because they are the Opposition they cannot be blamed for opposing government policies. But their lack of any ideas of their own means they are not a credible alternative government.

Vince Cable and the Liberal Democrats are a different matter. They do have relevant policies, some of which Labour would do well to adopt (e g raising personal tax allowances to take the lower paid out of tax brackets).


A Missed Opportunity

However, sadly, the budget was a missed opportunity. The political context prevented the radical measures (requiring more spending) necessary for a speedy recovery.

Instead of apologising for the 50% tax on incomes over £150,000, it should have been accompanied by further measures: to raise revenue and to create a more equal society. For example:

(i) a wealth tax;
(ii) an increased capital gains tax;
(iii) a windfall tax on excessive profits;
(iv) a 55% tax rate on incomes over £200,000.

Such measures might, as vested interests claim, cause some to leave to reside in countries with lower tax rates. Why should we be concerned about this? The most likely to leave are the financiers who precipitated the current crisis.


Better Late Than Never

Such policies, along with cuts in expenditure (mainly on defence – e g Trident), must be matters for a late summer budget. The revenue raised must permit a credible strategy for repaying borrowing, and for further expenditure on:

(i) new jobs in the green energy sphere;
(ii) job support to keep people in work;
(iii) tax relief for the lower paid;
(iv) support for the housing market, especially first time buyers.

All of these measures require a political context which banishes any thought of returning to the capitalism which caused the crisis: instead, it must place the emphasis on creating a more equal, a more democratic and a more compassionate society.

DARLING'S LAST CHANCE

Budget 22 April 2009

22 April 2009 is Alistair Darling's last chance to:

(i) end the recession and drastically reduce unemployment;

(ii) take major steps to create economic and social equality;

(iii)convince people to vote Labour when the general election comes.

Ignore the reactionaries

Reactionaries, who are determined to defend the unequal society, are advising the government not to spend to ease the recession. It is notable that the most vocal opponents of government expenditure are in well-paid (mostly very well-paid)jobs.

They must be ignored. The unemployed, poor families, pensioners, the disabled are the priority.

£100 Billion To B oast The Economy

£100 Billion is the minimum expenditure necessary to:

(i) create jobs to get people back to work;

(ii) increase pensions and allowances for families, the unemployed,the disabled;

(iii) build houses and flats for the homeless,schools, colleges, hospitals.


Borrowing and Repayment

The government is nervous about borrowing because it is reluctant to take the appropriate steps for repayment.

These steps, as I have argued in earlier Blogs, are to:

(i introduce progressively higher income tax rates on incomes over £80,000;

(ii) tax excessive company profits;

(iii) slash expenditure on defence, especially by abandoning Trident.

Without these bold moves, in the budget 22 April, the recession will not end, we shall remain a grossly unequal society, Labour will not be elected.