The OFFICIAL Hexus Pre-Budget Report (Nov 2008) thread

[Zak33]

In the words of Dad's Army's Frazier ..... "We're doooomed, I tell ye. Doooooomed".

I believe it should be "Don't tell them your name, Pike/Darling"

[Lanky123]

It's a hell of a plan as long as Brown doesn't win the next election. If he does

Surely I wasn't the only one to find that a bit farcical?

In the words of Dad's Army's Frazier ..... "We're doooomed, I tell ye. Doooooomed".

I can't help but feel a quote from the Dad's Army episode 'When Did You Last See Your Money?' would have been even more appropriate.

[j1979]

It's a hell of a plan as long as Brown doesn't win the next election. If he does, and if HE has to sort out the mess, then the blame that Labour get then could keep Labour out of office for a generation. It might almost be worth five more years of Brown.

The problem is, though, that if that happens, we get five more years of the incompetent muppet.

If it doesn't the Tories win, we then get to find out if Cameron/Osborne are anything better than the upper class PR men they appear to be.


In the words of Dad's Army's Frazier ..... "We're doooomed, I tell ye. Doooooomed".

i think some of the steps taken are steps in the right direction! but i think the prediction of being out of recession by 2010 seems like wishful thinking.

its almost like Brown and Darling are having "hair of the dog" after the credit hangover. And as anyone knows a second binge just prolongs the handover and makes you even more skint.. i wouldn't mind but they're asking "me n thee" to get the round in.

but i can't think of any viable alternatives.

[Saracen]

i think some of the steps taken are steps in the right direction! but i think the prediction of being out of recession by 2010 seems like wishful thinking.

its almost like Brown and Darling are having "hair of the dog" after the credit hangover. And as anyone knows a second binge just prolongs the handover and makes you even more skint.. i wouldn't mind but they're asking "me n thee" to get the round in.

but i can't think of any viable alternatives.

Some of the steps are in the right direction, but they would be regardless of the credit crisis and/or recession. For instance, addressing the impact of PA's on very high earners. that should have been done years ago, IMHO.

But many other aspects of it are smoke and mirrors.

For instance, pretending that turning the £120 one-off PA adjustment into a permanent one as of next April, and calling it a tax cut. The 10p tax band was removed permanently, leqving the lowest paid in society to pick up the bill, since anyone on more than £20k or so got it back in reduced tax from the 22p tro 20p cut, but the lower paid didn't.

So the £120 one-off allowance compensated them for ONE year, but after that, it would have been a tax hike on the very poorly paid again. So both social justice and political reality demanded he do something about that anyway.

So what does he do? Makes it permanent. But hold on .... PAs increase to keep their real value against inflation every (or nearly every) April anyway. So .... he's taken an increase that would have happened anyway, pretended in compensates for the 10p tax, which it doesn't since it's a regular inflation-proofing measure and then has the balls to call it a tax cut and part of a "fiscal stimulus". Rubbish. It's what would have happened in the regular course of events.

In effect, it's a tax rise nit a tax cut. Because he'll use it to get off the hook for the 10p band reduction, pretending it compensates for that. It doesn't.

Oh, and out of his £20 billion, £3 billion is bringing forward capital programs. That's money already allocated. It doesn't change what they spend, merely when.


But the whopper is VAT. The real question is, of course, will it work? We know it'll have a price. We don't know quite what it'll cost, because the £12 billion figure is based on existing VAT receipts, and they'll fall in a recession anyway as spending falls. By how much, we don't yet know. And, we never will.

Will it work? It'll put some money in people's pockets, sure. But is it a fiscal stimulus of sufficient size to kick off the recovery? I doubt it. For a start, some will undoubtedly be absorbed by businesses readjusting prices so that their margins go up and prices stay the same. That might help stave off business collapse, but stimulate spending? Nope.

Will the 2.5% reduction in VAT cause buying decisions to change, because that's the (stated) objective of the package - stimulate spending. The largely unstated objective is the psychological effect, hoping it'll increase confidence. I can't see it making much difference to either spending, or confidence.

Oh, and while I'm on about smoke and mirrors, cutting VAT with one hand and then slapping extra excise duty on alcohol, tobacco and fuel to compensate for the benefit with the other hand is crafty. And I hope people noticed .... the VAT cut is temporary, for 13 months. NOTHING was said about the excise duty increases being temporary. That will be part of the tax rises that'll pay for this.

So all we know is that there's a big price tag, and taxes are going up and borrowing is going to be even more huge than it already is. What we don't know is whether it'' help ease the recession, reduce the depth and shorten it. And we probably never will know. Labour will claim it did, and the Tories will claim it didn't, and either will know for sure, because nobody can know what would have happened without it.

Oner more thing we do know .... the next few years are going to be spent paying for this, and the binge of the last few years. j1979 is right, we've had the party. Now comes the hangover. But how bad a hangover remains to be seen. My guess? Pretty bad.

[Stewart]

I believe it should be "Don't tell them your name, Pike/Darling"

Nearly.

It's actually - 'Don't tell him, Pike!'

The classic line.

[iranu]

Oh, and while I'm on about smoke and mirrors, cutting VAT with one hand and then slapping extra excise duty on alcohol, tobacco and fuel to compensate for the benefit with the other hand is crafty. And I hope people noticed .... the VAT cut is temporary, for 13 months. NOTHING was said about the excise duty increases being temporary. That will be part of the tax rises that'll pay for this.

Oh they have believe me. This is absolutely scandalous. The fact that they drop VAT and increase fuel duty which can't be claimed back so therefore this is actually a tax rise for anyone that claims VAT back! At a time when business needs all the help it can get this is madness. Then of course when we are perhaps seeing a bit of daylight at the end of the tunnel he adds 0.5% to NI which taxes job creating businesses and actually increases the cost of employing someone.

2.5% VAT cut is not going to do anything, infact I think it's one of the worst things they could do because it's going to cost businesses to change the prices. It's the busiest time of year and shops will want to be serving customers not changing price tags. I can't think of the machinations that are going on behind the scenes with people changing codes, programmes and machines. If I was in business I wouldn't bother and keep the profit. In any case exchange rates will make more of a difference to prices and even M&S etc can't get customers through their doors and are cutting prices by 20% so 2.5% is worthless.

People have got to see this budget for what it is - a right dogs dinner.

[Saracen]

There's another inference to the balance of all this that I didn't see commented on either, even by the experts.

As a consumer, if you want to benefit from the tax cut phase of this PBR, you have to spend .... and be selective where you spend, to be sure prices have been cut.

But, in a couple of years, when the tax rises kick in, you just have to EARN to pay up.

The news tonight points out that there was a proposal, and it looks like it was serious and got canned very late in the day, that VAT would go back up to 18.5%.

Well, if it did, surely that would have the effect of suppressing spending? I mean, if a 2.5% cut is supposed to boost it, wouldn't a 3.5% rise reduce it. And wouldn't that clobber the recovery?

But more to the point, it'd be avoidable or, at least, people could mitigate against it, perhaps by making major purchases late next year, when it'd be too late to do much to help the recession be reduced (if Darling's hugely-optimistic projections are right).

But if you slap it on NI or Income tax rates, it's far harder to avoid and for most people, impossible to avoid.

The inference? You don't have to benefit from the cuts, and won't if you don't go on a spending spree. But you WILL pay for it afterwards, whether you benefited or not.

[iranu]

Yep, it's very, very sneaky. I'm willing to bet that the "tax cuts" theoretically amount to £20 billion but due to the nature of them won't actually amount to that much (primarily because people aren't going to spend when they are up to their eyeballs in debt and worried about losing their jobs) and that the tax rises in a couple of years time will amount to £40 billion. They will be stealth taxes too like the increase in Tobacco, Fuel and Alcohol duties.

The additional NI, the fuel duty increase and the proposed, but dropped VAT @ 18.5% as we came out of a recession would actually hinder that recovery.

It's a classic NL tactic, they aren't actually giving anything away it just looks like it.

Edit: Think of all the other things that aren't on the books; PFI, Northern Rock (which has just sucked another 3 billion), public sector pension liabilities. I'm sure there are more.