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I was torn between calling this essay, “Buddy can you spare a dime ?” and “Move Over Darling” but decided against both because they were far too light hearted. Following today’s blatantly political “do nothing Budget”, the situation is far more serious, things have got worse.

Like most political lobby journalists who get too close to their “prey”, I have little time for Nick Robinson of the BBC but to be fair he made a very good point today. He called this an historic Budget because of the circumstances but, if Darling’s rather optimistic growth assumptions don’t materialise, the next Budget will be truly Historic !

An Act of Political Cowardice

If the Labour Party had any true courage and belief that they can win the next election, they would have grasped the nettle and presented a major austerity Budget designed around keeping the economy ticking over but mainly aimed at paying down Government debt.

Instead, Brown and his placemen have accepted that they will lose the next election and want to leave the Conservatives with a totally poisoned chalice in the vain hope that a Tory Government having to introduce measures that will in one 5 year term, make them so unpopular that after 5 years, the Labour Party can bounce back and take power once again – not even in their wildest dreams I would suggest !

The Real Problem

How Governments deal with debt is by issuing “Sovereign Debt” instruments of one kind or another, in the UK we call them Guilt Edged Securities and in fact, when you buy Premium Bonds, you are just buying UK Government debt.

The real problem lies in the fact that whilst the UK Government thinks that it can “re-finance” past mistakes by issuing Government Bonds which will be redeemed in the future under certain guarantees of value/returns, what if every other Country in the World is doing the same at exactly the same time which they are ?

The “Investors” who will buy this debt will only buy from the most credit worthy countries, the AAA Rated ones but these countries are those that are dealing with the problems in a realistic way. Gordon Brown and his Government running away from dealing with our problems, diminishes us all in the UK as well as devaluing the Pound Sterling immediately.

Immediate Actions

It comes in two parts, reducing expenditure and raising taxes, it is as simple as that.

We cannot keep 10,000 soldiers in the field on active duty and yet since 1997, we have seen an increase in Government employment of at least 800,000. Whilst not applicable to all, you cannot have half a soldier in Afghanistan for example but, it is likely that many Public Sector jobs could go to a “job share basis” which is far better for the individuals involved and, the public purse. Just sacking people puts them on the “Dole” whereas just half of their previous income is better for them than “signing on” and better too, for the public purse.

Cut expensive projects like ID Cards, decimate Quangos and Special Advisers, start winding up all State Final Salary Pension Schemes and converting them to money purchase only, this has to be done anyway whoever is in power. There will need to be cuts in Health, Education but the Defence Budget, whilst realigned such as dumping the two aircraft carriers and their aircraft plus, the Trident replacement, should be left alone. Reduce the number of MPs and make cuts to local government, most of all abandon the “Target Culture”.

Intermediate Steps

Create a favourable tax and trading environment for small businesses and the self employed with turnovers of £100k or less. Leave the EU and repeal all the red tape employment burdens introduced by this Government that strangle small businesses becoming big businesses, we need to become fleet of foot and get rid of the lead boots.

Most importantly, in reducing the number of MPs – maximum 500, less would be better, make them all self employed. Pay them their costs gross (£300,000) and let them settle with the Inland Revenue exactly what their deductible expenses are and who they employ for what, it might make them draft better legislation particularly when it comes to the “real self employed”.

What they Should Have Done

Raising taxes on the rich specifically is stupid, far better to stick with 40% as the top band. The current thresholds for tax and NI should have been raised dramatically, +£10,000 (?), thus taking most of the lower paid out of taxation. Then immediately raise the basic rate of tax plus VAT immediately up to 16% and +1% each year until it reaches 20%.

All the content of Alistair’s Budget amounts to a nothing, a failure to communicate ? No, just a total failure at every level from a dying Government.

My previous view was to just let it play out but now and after this, a General Election tomorrow would be a day too late, this lot (Labour), are totally finished.