Wednesday 3 December 2014

A very political mini-budget

 For the Daily Record, reaction to the Autumn Statement
To the Autumn Statement, delivered as weird Commons convention dictates, on a cold day in December.
These occasions are more about the political theatre than hard economics and this mini-budget was Osborne’s last chance to use his office to set the weather before the General Election
But if was a concert hall piece and he’d asked us what we thought of the show so far, we’d all have shouted back: “rubbish”.
Bullish as he might be, there is no disguising George Osborne as a failed chancellor. 
He has missed just about every target he set for himself four years ago.
Growth not rising as fast as he needed, spending more than he budgeted for, deficit not paid off - fail, fail, fail.
The main message from Osborne has to be if you think that was bad, just wait for the next four years.
The independent Office for Budget Responsibility, that assesses what the government’s plans mean for public spending, say 60 per cent of the cuts are yet to come.
Gulp, and gulp again if you are a public sector worker on an effectively frozen pay grade, or if you are someone who relies on public services because you are old, a child or a patient.  
For Scotland there are mixed messages. True, there is more than £200 million more at the drop of a hat into the Scottish budget because of the Barnett consequentials.
Surely that is shovelled straight into an NHS creaking because of under-investment on the SNP’s watch?
There will inevitable nationalist anger over devolving Corporation Tax to Northern Ireland when the idea has been rejected for Scotland.
Several reasons are proffered for this tax anomaly: Northern Ireland has a land border with another EU country and the deal is dependent on the Peace Talks and the Northern Irish Executive getting it’s finances in order.
Also Northern Ireland is much poorer than the rest of the UK with a huge over-reliance on the public sector, so private corporations have to be encouraged. 
Add that no compelling case was made to the Smith Commission to devolve corporation tax to Scotland, other than the SNP wanting to start a cross-border spiral to the bottom. Glad to see the STUC endorsing that view yesterday.
The real reason though for tax devolution to Northern Ireland is that David Cameron might need Democratic Unionist Party MPs to shore up a minority Tory government after the next election.
Like I said, nothing to do with economics, everything to do with politics. 

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