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Playing with Fire

PoliticsPosted by Christian Mark Taylor Fri, May 17, 2013 06:54:26

The IMF say the Chancellor is ‘playing with fire’ by continuing with his policy of temporary tax cuts, spending cuts and infrastructure investment. Labour certainly love this statement as it supports their view that the Government is on the wrong track by cutting too deep too fast.

What I fail to see is what credible plan Labour have in return! All I seem to hear are the same two arguments, raise the top level of tax to 50% and have a temporary reduction in VAT to stimulate consumer spending. But this will not work so why are they saying it.

Raising the top level of tax to 50% will encourage those individuals to move away, and lets face it, if you were the likes of Madonna earning £220m what would you do? Pay 50% tax or move abroad to somewhere like Monaco where the tax is cheaper and the cost of moving and buying a multi-million pound house would still work out cheaper than staying in the UK with its 50% tax rate! Tax revenues would therefore decline making the whole policy a complete and costly waste of time. It is also rather hypocritical of Labour when they say the Government is only interested in giving tax cuts to the wealthy, when they were in government for 13 years and they set the high rate of tax at 40%. They only raised it to 45% in the last 3 weeks of their term, so Labour actually gave the wealthy a 13 year tax break!

The other proposal is a reduction in the VAT, the last time this was done was in 2008 when it was reduced from the then 17½% to 15%. This temporary reduction lasted for just over a year and was at the height of the UKs economic bust. The evidence that this stimulated growth was minimal at best. The reality is that businesses across the UK said it cost them millions in implementing the changes, twice, first the reduction just before Christmas 2008 and then returning back to the normal rate in January 2010 when the Christmas sales were on. The last thing businesses need is to have a change of VAT just prior to their busiest period of the season!

If the policy that the Chancellor is following is so wrong why does it appear to be working? Even though the IMF have reduced our growth forecast to 0.7% the Bank of England had upgraded its forecast for this year to greater than 1%, now expecting a larger than predicted growth and inflation to be back at 2%, the first time since the financial crisis started in 2008.

Compared to the Eurozone, who are going to be in recession for the rest of the year . This is backed by the latest figures from France who are now officially back in recession with rising unemployment. Yes, the UKs unemployment has risen by 17,000, but those claiming benefit has reduced. This implies more people are now back in work, mainly in part time or self employment.

With the Eurozone in such crisis I am surprised that our economic outlook is looking as positive as it is. The EU in/out referendum is gaining weight for the ‘Out’ supporters.

The name, reputation and political future of the Chancellors all rest on his economic plan coming to fruition before the General Election of 2015!

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Local Election & Queen's Speech 2013

PoliticsPosted by Christian Mark Taylor Thu, May 09, 2013 13:58:03
It has been so busy over the week so lets start with last Thursday as that was the day of the local elections. With 35 councils, 2 Mayoral Elections and a Bi-Election all being contested, it was certainly going to be interesting to see what the results would be. It just so happened that I was working that night, running a dinner at the National Army Museum. What a fantastic venue to hold a dinner in, the Art Gallery was superb. A five course meal for 24 people with a string quartet playing. I had guests from a wide variety of backgrounds such as academia, health, police, sport, industry, charity and the civil service.

The dinner did over run and the Boss told his driver to take me to Waterloo, which meant I didn’t get home and to bed until about 1.30 am, it could have been later if I hadn’t been dropped off at the station. Because it was so late I was told to have the Friday off, good news for me as it meant I could watch the election results on TV. My wife thinks I was particularly sad for spending most of the day watching the results, but I found it interesting. I certainly wasn’t surprised to see the Coalition parties getting a bloody nose and I think I predicted on my Twitter the day before that the Tories would lose 325 seats. As it turned out they lost 335 so I wasn’t far off. It was a shame to see the independent Peter Davies lose the Mayoral election in Doncaster to Labour after 2nd preference votes.

The main surprise was how well UKIP did in the elections and they certainly stole Labours thunder. I know Labour did ok, but it certainly wasn’t as good as they had hoped or even expected. No matter what Ed Miliband says, he will be disappointed with the results. The reason why is simple. Normally in these elections, the governing party will take a beating with the protest vote going to the other two major parties. However this time Labour should have done exceptionally well because the protest votes were against both the Tories and Lib Dems and Labour should have been the beneficiary of these protest votes. Unfortunately for them they hadn’t taken into account the UKIP factor and that the country in economical difficult times tends to lean more to the right. Coupled with the fact that we are still 2 years away from the General Election and Labour will not go firm on any policies, they also suffered at the hands of UKIP. Yes Labour are correct by saying UKIP took votes and seats directly away from the Tories, but they also indirectly took votes and seats away from Labour. If UKIP had not existed then Labour would have had probably have gained over 100 more councillors than what they did. They therefore indirectly lost seats to UKIP.

What remains to be seen is will UKIP be a force at the General Election. With the way our voting system works, even though they ended up with a national projected share of 23% they still would not get many MPs. This is the argument the Lib Dems have had for years. What is certain is this has to be a defining moment for David Cameron, who has tried to own the centre ground, only to discover the country has moved to the right slightly. Are we going to see the same thing happen to the Tories that happened to Labour when the ‘left’ split and the SDP formed in 1981? I doubt this is going to be a split of that calibre.

The real issues that won UKIP votes were the EU and Immigration. The Queen’s Speech yesterday announced new bills on Immigration and if the Coalition can get tough on immigration over the next 2 years, then those UKIP votes may well come back to them. The easiest but riskiest way to gain back votes is for David Cameron to bring forward the ‘EU In/Out’ Referendum to April 2015. The problem at the moment is there is a trust issue, people think if the Tories win then they will change their mind and cancel the referendum or delay it 4 or 5 years. Be brave call it referendum early, you may not like the result but you could win the General Election off that back of it.

I did briefly mention the Queen’s Speech and there are some interesting Bills such as Immigration, Anti-Social Behaviour, National Insurance and Defence Bills. I was very interested to see the Communications Data Bill had been vetoed out right by Nick Clegg. Cutting your nose off cliché comes to mind. This bill has to be very carefully put together because our civil rights are sacred, but the intelligence services do need to have the tools available to them to monitor and gather intelligence on terrorist and major criminal networks. We all know there is a fine line between our civil freedoms and public safety, but to veto the bill outright is stupid. The Bill should have been kept and then Nick Clegg could have fought to ensure it was created correctly so that civil liberties were at the heart of it. As it stands now, the Lib Dems are unlikely to be in Government again in 2015 and then they will be able to do nothing about it in the future. After listening to Alan Johnson the former Labour Home Secretary it seems like there is general support within Labour for the Bill, as long as it is structured correctly. To make changes in Government you have more power if you are on the inside!

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The Budget 2013

PoliticsPosted by Christian Mark Taylor Wed, March 20, 2013 18:41:15

I watched the Budget with interest although I am not entirely sure why, as it is obvious that there will be nothing but doom and gloom. As expected the growth figures have been downgraded again, for 2013 they have been downgraded by 0.6 to 0.6%, 2014 growth was downgraded by 0.2% to 1.8% and years 2015 and 2016 remain unchanged on 2.3% and 2.7% respectively. But lets face facts, in the budget next year these will probably be downgraded as well. As 40% of UK exports are to the EU our growth is partly linked to the prosperity of the euro zone and with the current Cyprus issues and the fact that the OBR believes the euro zone will remain in recession for all of 2013 I can’t see our growth gaining very much in the next couple of years.

It was good to see Corporation Tax reduced to 20% but you have to wait until 2015 for this and the Employment Allowance help reduce the National Insurance bill, which will really help small and medium businesses assuming they have full time employees. The personal allowance threshold being lift to £10,000 is welcomed on two fronts, firstly because it affects everyone especially those on low and middle incomes and secondly because this has been brought forward by a year and will now be implemented in 2014. I for one will welcome the extra.

The fuel duty rise in September has been scrapped and this again is welcome and about as much as you could do. With a fiscal neutral budget cutting fuel duty was not an option. The beer duty cut of 1p again is welcome but seems to be more of a good will gesture rather than having any real impacts on public houses. It would have had more impact if supermarkets were targeted for their cheap booze offers. Why pay £3 or £4 for a pint when you can buy 72 cans for £20 in supermarkets.

After hearing the budget I decided that I would be better off, but only just and I will have to wait a few years for the full impact. The personal allowance will help, I don’t drink that much so the 1p cut will not affect me that much. I live in private rented accommodation so the Mortgage Guarantee could be a huge benefit, because like many people as a first time buyer I cannot afford the current 20% deposit.

I was hoping for more but then you have to be realistic and think what more could actually be given. The best line I heard was when the Chancellor said labour wanted to bring back the 10p tax rate, but this budget has done is better than that they have introduced a 0p tax rate.

In response I thought Ed Milliband was utterly pathetic! For the leader of the opposition I was expecting a slightly more mature response. Going on about how the Chancellor was booed at the Olympics and how he better not go to the Cup Final was insulting to the general public who are worried about their futures. He spent nearly 5 minutes going on about how the government is attacking each other, gesticulating widely at the government benches asking them to ‘put your hand up if the 50p tax cut affects them’. Then going on about Twitter and how the chancellor could say the budget in 140 characters ‘growth down, borrowing up, families hit, millionaires laughing all the way to the bank #downgradedchancellor’. I think there is only one twit here! Why doesn’t Ed come up with alternatives? If the government is so wrong tell us what policies should be implemented. How can we vote for a party that just seems to spend all its time lambasting everyone else and not coming up with any policies itself. At the moment they say everything put promise nothing. They are no better than what we already have and in some cases worse.

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