Monday, 20 April 2009

Darling set for the spin cycle?


Smears might be off the menu at Downing Street, but don't suppose for one moment that spin is.
Indeed, come Wednesday it may well reach truly dizzying proportions.
The Dark Art will be employed to dress up the contents of a Budget in which Chancellor Alistair Darling has very little room for maneouvre.
Government borrowing has entered orbit, tax revenues have crashed to earth and demands on state benefits are rising.
In other words, there's very little money to throw at a public which, come this time next year, could be only a few weeks away from a General Election.
So if Alistair Darling and Gordon Brown are going to find some money then it could come from three sources.
More borrowing, which is so high we probably wouldn't notice another billion here or there. This could fund training schemes which might keep a lid on unemployment
Efficiency savings in Government departments and agencies. This is a bit like robbing Peter to pay Paul, but all Governments do it. Next year, a national housing initiative is nicking £20m from the East Midlands Development Agency. Keep an eye on what happens to transport budgets here. They are meant to be helping pay for the extension of Nottingham's tram.
Last, and certainly not least, tax rises. A Government with a massive borrowing bill to pay has no choice but to increase taxes one way or another.
I'd attach a Spin Alert to any announcements about taxation levels, particularly with an election only a year away. Deferred tax rises will be the next Government's problem so they may be the preferred option.
That said, the Government has political room to soak the rich on taxes, as they are identified with the big buck, fat cat era. So it'll make noises about cracking down on tax havens and tax dodges.
But it's got to be careful with business: getting firms growing again holds the key to lifting us out of recession. Crafty taxes on companies won't help people looking for a job.
The Budget may be on Wednesday but it could be days before we really understand what the Government is – and isn’t – doing. So prepare for a prolonged spin cycle...