Budget some first thoughts.
17 Mar 2004
After sitting through a number of budgets in which Prudence had a star role, and where her well-being was "locked in" by a number of rules - golden, fiscal and other - this appeared to me to be the Budget at which Prudence was locked out.
It is difficult, sitting in the Chamber and listening to the Chancellor rattle out a lot of figures, to get an exact view of what was going on; but the borrowing figures struck me as rather high, at a time when the economy is doing quite well. Surely, if we have had such a strong economy since 1997, we should not be borrowing a figure north of £30 billion and not apparently coming down very fast. The impression I got was that the Chancellor's munificence was moving ahead at a faster pace than the economy. Every independent commentator is of the view that the trajectory is unsustainable unless he raises taxes or borrowing - and they all tell me that interest rates will have to go up anyway.
He is planning to pay for part of his munificence by eliminating large numbers of Civil Servants. I will believe that when it happens, and I am not sure how sensible it is to spend the money in advance.

And when the Chancellor said that he had some money in reserve for "the Nation's priorities", I took that as meaning that he believes there is still some slack, to be used in the run-up to the next election.

There was one statement - yes, the one at the end - which deserves some thought. Because of the rise in the Council Tax this year, for which central Government is primarily responsible, those over 70 will get an extra £100 to soften the blow. I know this will be welcomed by the many pensioners in North West Hampshire who will find the Council Tax a real burden. But what has happened to council tax benefit - a scheme that is meant to help those on low incomes, of whatever age, with their council tax? Has the Chancellor not admitted, by introducing this new scheme, that the principle which underpins nearly all his social reforms - means-tested benefits targetted at a particular problem - is flawed? His benefits are too complicated and people don't claim them; or they claim them and don't get them. Or they get them, and then the Revenue asks for its money back. So why should a 69 year old person on modest means not get this extra £100 help, while a millionaire 70 year old does? Where is the logic or social justice in that? And will people over 70 get the £100, even if they don't pay the Council Tax? Apparently.
There was one dog that didn't bark. What was the one statement that would affect every taxpayer that the Chancellor did not refer to - nor was it easy to find it in the mass of paper that accompanies the budget? The personal allowances. Normally we are told what it happening to them but we weren't. The answer is that they are going up, but not by very much.
I could, after Michael Howard sat down, see the ground on which the next General Election will be fought. The Labour Party will be accusing us of savage cuts in Defence, Home Office, Transport, Higher Education, Overseas Aid etc. (Indeed, a chunk of the Chancellor's speech wasn't about the Budget at all - it was attacking our spending plans).For our part, we will be accusing them of spending now and taxing later.
Have we really got to put up with this for the next fourteen months?
 
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Copyright Sir George Young Bt. 2015