John Redwood

|

RT HON JOHN REDWOOD MPBUSINESS POST 11.04.07

There was some good news in the budget. The standard rate of income tax fell to 20p in the £1, and the Corporation Tax rate on profits to 28p in £1. It’s just a pity that other tax changes claw back more than we gain from the cuts.

If the Chancellor had presented it as tax simplification he might have had better reviews than by implying it was a tax cut. If he had grappled more valiantly with the inefficiencies and waste in his bloated administration, we would all have something to shout about. The truth is that after the budget, as before, the same waste continues. The government trundles on with the massively expensive NHS computer programme, with the  wildly wasteful Identity register, with the endless reorganisations and “reconfigurations” of health care, with regional government and with the liberal use of consultants to do what civil servants used to do.

Pity the next Chancellor. He will arrive in office with the main measures for his 2008 budget already set out by Gordon Brown before he departed the Treasury building. The big moves on Income Tax and Corporation Tax, taking with one hand and giving with the other, are for 2008, not for this year. He will find the purses and pockets of the nation have been ransacked to find every last penny to spend on the public sector. The pensions tax, the airline tax, the rubbish tax, the Council Tax, the extra National Insurance, the aggregates tax and many others besides have all crept in and up to try to swell the coffers. The new Chancellor will be left with the necessity of reducing the growth in spending.

The position has been made worse by the government preferring to borrow on the never never through expensive Public Private Partnerships, Private Finance Initiatives and “private leverage”. The balance sheet of the UK understates government debt by a big margin, as the Treasury declines to place the public pension fund deficits on the accounts, and leaves out  PFI, PPP and Network Rail borrowings which the taxpayer guarantees. The balance sheet may look better for this unusual accounting – something no director of a private sector company would get away with – but the reality is the taxpayer has to meet the bills for years to come and will ultimately have to repay the debts incurred.

In 1989 Gordon Brown wrote an interesting book entitled “Where there is Greed”. It was a diatribe, a trenchant attack upon the weaknesses of the economy as he saw it. Whilst there was little positive in the book about how he would change things for the better given half a chance, no-one who reads it can be in doubt about what he wanted to do.