Monday, 24 November 2008

Pre-Budget; Labour's pre-election pitch

. One of the great things about politics is that numerous leaks mean you can actually write about something before it happens. Interestingly, for those of us who have been saying there will be an early election, Mike Smithson on Political Betting says today;

"is the start of the general election campaign with Labour setting out its stall and the grounds on which it wants to fight."

I think it is fair to say that both parties have been setting their stall out for the last couple of weeks. Moving onto the substance, my first impression is that this report is full of headline grabbing measures (as you would expect an election pitch would be) but not an awful lot of substance.

  • Temporary 2.5% cut in VAT is patently a waste of time. Colin Ross has a list of the practical effects of this cut. Hands-up who now is desperate to buy a £199 X-Box 360 because it costs £4.23 less?
  • 5p on income tax for top earners 'after the next election'. Here is the clincher; here is the golden giveaway that a 2009 polling day is defiantly on Gordon Brown's mind. Who thinks Gordon Brown will go to the polls in 201o with a PSBR possibly as high as £100 billion, 3 million unemployed and a slogan of tax the rich?? You can go the polls with the last of those 3 and leave the middle-classes and Labour's core vote content in the knowledge that it won't have to pay any more taxes. Or at least so they think, Brown might not be able to confidently claim that in 2o10. Hopefully, we will criticise these proposals on the grounds that far from eating into public debt these proposals don't cover the costs of the other measures made in the PBR. Our overall package is far superior, far more truly redistributive and should be the focus of our campaign especially with Labour's 'core vote'.
  • Extension of 10p tax rebate. Again, this is political positioning, a direct appeal to the core vote. The actual effect is so minimal as it is unlikely to make much difference. A 2009 polling date however would mean that the extra money would still be there in peoples pockets when they go to the polls.
  • Postponement of corporation tax rises. Seemingly, to me, this means that the government has effectively abandoned it's attempts to stimulate lending and decided that instead it will postpone tax rises which will be forthcoming after Labour has been to the polls.

The only way these measures actually make sense is in the context of preparation for an early election. So, all hands on the pumps people because the real message of this afternoon is that there is going to be a general election next year...

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