Tuesday, 18 March 2014
Pre-Budget Tory choices
So what could the Chancellor do to make this different and what strategy to take. There are only 3 roads politically to choose:
One is to make some headline grabbing tax cuts or benefit rises as a blatant voter bribe. These though don't come in for a year and then that is very near the next election, probably too close for people to notice in their pay/benefits cheques. Still, it might make Labour squirm a little as they will be left having to argue for higher taxes over and over which is boggy ground from which to try and advance.
Secondly, to take the long-term approach, realise that the deficit is still out of control and the macro-economy is still in a mess. Make a few changes, but with a neutral at best tax impact on the public finances. Some big announcements about things far in the future like HS2 etc that have no real impact on today's figures because there is no major spend this Parliament.
Thirdly, to start laying pure political traps for Labour now, really cutting back on Welfare and merging National Insurance into payroll taxes or changing the name of Employers NI. Make huge investment promises on airports, roads and rail that will need funding next Parliament but not major funding now, however jump-start them to begin in earnest in 2015. Move pensions and benefits back into line with RPI instead of CPI. Cut subsidies for Energy companies starting next year. Lower the headline tax rate and move the 40p threshold to £45,000. None of these ideas make much sense for the long-term benefit of the Country in terms of balancing its books (or even coming close), all though will prove anathema for Labour to reverse when they get into power and will make their 5 years very hard to make a success of economically.
So these are the 3 options, what will the Chancellor do? One, two or three?