Thursday, April 23, 2009

Trampolining zombies: budget analysis II - the revenge

Our next Prime Minister, David Cameron, was certainly waxing poetic over the budget and, to my untrained eye, seemed to be scoring hit after hit after hit on the insipid, lacklustre budget that Alistair Darling presented to us. Although if you read some of the right wing press this morning you'd have thought he'd announced the formation of a government of workers and peasants soviets.

Continuing his theme that the government is dead on its feet Dave declared this is a "zombie government" although what brought the analogy to mind when facing the sprightly and animated figure of Alastair Darling heaven knows.

He then mocked the scrappage scheme, wondering whether this government could be hauled off to the knackers yard instead of the nation's bangers. This was one of a number choice barbs that will certainly have hurt despite having any real specific content.

My favourite was when he poured scorn on the over optimistic Treasury prediction saying they were less like a "U shaped recovery" but rather they seemed to be predicting a "trampoline recovery". Ouch. I'm awaiting cartoons of trampolining zombies as we speak.

Cameron's attacks certainly have a lot more purchase on reality than sections of the press who seem to think that a modest increase in taxation will lead to a "brain drain" (back to the zombies) and is evidence that New Labour is over, something Cameron seems far less inclined to shout from the roof tops.

This could be because it's hardly credible.

A 50% top rate of taxation (which is breaking a Manifesto commitment by the way) is pretty standard across most European countries whilst others have a far higher rate (like Denmark 63% and Sweden 59%), all countries we should note who often seem to do public services rather better than we do here. None of these countries are exactly hostile to business and they seem to be in a rather better position to weather the economic storms than we are at the moment.

Anyway, it's not that long ago that Labour proposed the abolition the 10 pence bottom rate of tax so I'm yet to be convinced of their Robin Hood tendencies (as seen in the Mirror, right) or Leninism (as seen in the Telegraph, below). It's also difficult to interpret the tax system we have in this country as actually progressive (see Dave Osler for some numbers).

But whilst Cameron is scoring easy hits on Labour's floundering battleship it might be worth considering what his alternative is, as it's not long before he'll be setting the agenda. It can be difficult to know because, understandably, he's been reluctant to provide the opposition (the government) with ammunition and so has confined himself mainly to tearing down proposals rather than painting an alternative vision.

It seems to me that the Tories have a very different economic approach to Labour, which is a big departure from a few years back when it would have been difficult to get a fag paper between them. Labour proposes big borrowing and big spending on schemes for economic recovery (coupled as I noted previously with cuts in public sector jobs, which could not happen at a worst possible time).

The Tories though seem to be going for the fiscal responsibility angle. Cutting public spending, public debt and taxation proposals which, if turned into an actually existing budget would lead to a massive "trampoline" curve of human misery.

Never mind George Osborne's description of the budget as the "death rattle" of the government - what about the genuine death rattles that the 'let the market sort them out' approach that a low tax, low spending budget could create. Starving our way out of a recession is all very well for the Etonians, not so great for those who've been laid off and desperately need the opportunities to get back to work.

But whilst Labour's instincts have been head and shoulders above the Conservatives I'm afraid that's setting the bar far too low when we are facing an unprecedented economic crisis and a critical point in the war against climate change - a war that we seem to believe we can ignore when it's out of newspaper headlines. This budget was a disastrous missed opportunity and Labour's lack of vitalism demonstrates that we need to look to far more radical alternatives in a time of crisis.

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