The only other Darling I can recall was Wendy in Peter Pan. She and her brother were taken off to Never Land and now a Darling is about to take us off to Never-Never land where our debts will not get paid off in the foreseeable future. So-called experts have been queuing up to tell us that we are in the worst recession since the Second World War/the reformation/the peasants' revolt (delete as appropriate). Of course, the more that the experts say this, the more those of us not already out of work will believe it and act accordingly. It follows that consumer spending is not going to increase until those out of work are back in work and those still in work start to believe that the recession is over. In Peter Pan, Tinker Bell is poisoned by the evil Captain Hook and will only recover if all the children declare that they believe in fairies. Similarly the economy will only recover if people start to believe that it is recovering.
Alistair Darling tried hard to give some sign of that belief despite
the fact that he is wading through the slough of despondency. He put on
a brave face but there was little to be optimistic about. Of course, it
would have been highly inappropriate if he had said
If your income drops, you need to cut your expenditure. It is highly irresponsible for an individual to increase expenditure and run up massive debts that cannot be repaid out of that reduced income. Such principles do not, however, apply to governments. Although Darling is proposing a cut in public spending of £15bn, he is also increasing spending in the motherhood and apple pie areas of housing, the unemployed and child tax credits and increasing borrowings to over £178bn this year. How is he going to repay these loans? It can only be by increasing income. Governments have one major advantage over the rest of us; they can increase their income at will by simply taking more of ours.
Cigarettes, booze and fuel are all to be taxed more heavily and of course
we already know that National Insurance is to be increased from April
2011, a significant date which occurs after the next General Election.
However, the real pain seems to have been reserved for the
A Budget without anti-avoidance provisions is like Hamlet without the
balcony scene. Given the Government's need to increase the tax take, it's
not surprising that it is seeking to increase its revenue by taking action
against schemes reported under the disclosure regime and consultation
to widen the scope of the scheme itself. Additionally, the senior accounting
officers (presumably the Finance Directors) of large corporates are to
be made responsible for ensuring their reporting systems are
An interesting development is the plan to publish the names of all tax defaulters where the tax lost is £25,000 and over. A taxpayer may avoid such publicity by making an unprompted disclosure or a full and timely disclosure when first prompted. It is therefore a form of legal blackmail. Particular legislation would be needed to get around taxpayer confidentiality and it will be interesting to see what challenges are made under the Human Rights Act 1998. Whilst this proposal may also please the taxpayer on the Clapham omnibus, there is also a proposal that defaulters in cases where the tax lost is £5,000 or more will be subject to more detailed reporting requirements for the next five years (although this is referred to in Press Notice 3, there is no specific Budget Note relating to this proposal.)
One bright spot on the enforcement front is the lack of any mention of
And then, of course, we have the green issues. It may be considered
easier to raise taxes by claiming they will benefit the environment, but
surprisingly there is no move in this direction. There is, however, over
£500m of assistance to be given to build offshore wind-farms (hopefully
off the coast of Wales or Merseyside), £400m to encourage
I was clearly wrong when I said in earlier articles that there would be a General Election this spring. Gordon has obviously decided to tough it out in the hope the 5th Cavalry, in the form of an upturn in the US economy, will arrive just in time. It looks as if Alistair Darling is stuck with this job for another year.
Trevor Johnson is a senior technical editor with CCH.