The Prime Minister finally called a General Election today - a piece of news that's about as shocking as the Pope announcing his Catholicism, bears coming clean on their sylvan toilet habits, or Ricky Martin Twittering his sexual preferences. What's more interesting is that this Election battle may be won and lost on the Government's economic record, so two things have caught our eye this morning. The first is the new tax hike for top earners, which kicks in today (it being the first week of the new financial year), supposedly as part of the effort to tame our bulging deficit. And the second is the state of public sector pensions - which the CBI reckons are now a one trillion pound liability...
Gordon Brown fired the starting gun on five non-stop weeks of Election coverage today by formally naming the May 6 date. And the language he used was interesting: flanked by his entire Cabinet (presumably to deflect the Tory 'no more Brown' message), he talked a lot about his ordinariness: 'I come from an ordinary family, in an ordinary town'. It's hard not to see this as a reference to the poshness of the Tory front bench, and suggests that Labour won't be afraid to make class/ privilege a dividing line in the Election.
So perhaps it's appropriate that the PM launched his campaign on the day that the new 50p tax band kicked in for those earning more than £150,000 (plus the abolition of personal allowances for those earning over £100,000, which actually creates a 60p tax band). This has gone down like a lead balloon with business groups, although so far there's been no sign of the threatened exodus of the rich. Then again, with the Tories promising an emergency Budget if they win (which could reverse some or all of Labour's recent moves), we are in rather a state of limbo.
However, a potentially more difficult nettle for any incoming Government to grasp is public sector pensions. The CBI reiterated its call for an overhaul of the area today; apparently its latest research suggests that contributions are now so far out of kilter with payouts that there's an annual funding shortfall of £10bn - while the total liability has 'mushroomed' to £1trn, equivalent to a nose-bleeding £40k per household. That's just not sustainable, it argues. So there desperately needs to be a move away from defined benefit schemes, and an increase in the default retirement age.
This may be true, but as the CBI's John Cridland admits, it's a 'difficult and emotive area'. Since civil servants make up about a fifth of the electorate, we can't see any politicians addressing this thorny issue before the Election. But they'll have to do so in a hurry afterwards.
In today's bulletin:
Brown calls Election - on the day tax hikes kick in
Jilted MPs slam Kraft over Cadbury Somerdale closure
US billionaire backs Virgin's crack at UK banking market
Fit notes help the economy return to full health?
A Traveller's Tale: Jordan - A Land of Milk, Honey & Phosphates