Magazine article The Spectator

Budget Battles

Magazine article The Spectator

Budget Battles

Article excerpt

For the past couple of months, government business has been bogged down in the detail of taxation policy. Higher personal tax allowances, a lower top rate, more stamp duty for £2 million mansions, a tycoon tax - all have been batted across the coalition ping-pong table at dizzying speed.

While engaged in this game the government has refused to consider the other side of its ledger: the spending side. This is seen as a great untouchable, thus considerably reducing George Osborne's room for manoeuvre.

This is why this was a Budget that laid the foundations for an economic recovery, rather than starting one in itself.

The tax cuts which the Chancellor did make were welcome, as far as they went.

Raising the tax threshold, and giving relief to the low-paid was a timely and effective gesture. It would be churlish for any Conservative not to thank the Liberal Democrats for their pressure in ensuring this policy was implemented. The Tory leadership has had a mild allergy to income tax cuts for years:

it took Nick Clegg and Danny Alexander to argue to cut the burden. This ought to have been financed by extra savings found in state spending, not yet another tax on property and pensioners.

George Osborne claimed this was the largest single tax cut for years. This, alas, is not saying much. We are just recovering from an audacious expansion of the government machine in Britain, the scale of which is still not properly understood. Over the course of the last decade, state spending surged from 37 per cent of economic output to 51 per cent. No other country has staged such an expansion of government, with the exception of those preparing for war. The Chancellor and the country are still straining under the burden of a government that has grown out of all proportion to its usefulness. The surest way to recovery is to shrink the size of the state.

The government is making savings, but at the smallest possible pace - just under 1 per cent a year, according to this week's Budget. Everything in the Budget is deemed up for grabs, apart from spending reform.

This is why, to pay for the tax cuts, we are having the new stamp duty. Britain already has the highest property taxes in the developed world. They have just become higher.

And while cracking down on tax avoidance is welcome, it ought to be an everyday task of government. New loopholes are sure to open as fast as others are closed. …

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