Chancellor Alistair Darling insisted today that the new 50p top rate of income tax for high earners was a fair way of addressing the big hole in the public finances. Speaking at the Institute of Directors convention in London, Darling said that it was ‘fair to ask those with the broadest shoulders to shoulder some of the strain, because every one of us has an interest in making sure that as a country we have sustainable public finances.’ Unfortunately for him, the IoD – and many others – beg to differ…
Last week’s Budget saw the Chancellor increase the top rate of income tax on those earning at least £150,000 to 50p in the pound from next April – a move that’s been widely condemned as politically regressive and/ or financially pointless. Darling insisted today that he still wanted Britain to be seen as an aspirational country, but that the ‘extraordinary circumstances’ demanded ‘difficult decisions’. Clearly the Government needs extra cash. But that’s partly its own fault; and many business groups (including the IoD) believe this particular tax hike sends out the wrong message about Britain as a place to do business.
The IoD’s Miles Templeman suggested today that that a 5% cut in civil service jobs would be much more sensible (why not do both?). Darling wouldn’t be drawn on that, but he did insist that the Government would work hard to hammer down costs in the public sector. ‘I don't think there's a single item of government expenditure that you can't say: let's have a look at it, do we need to spend this money, can we spend it better and more efficiently?’ he admitted. ‘And that is something that we are going to have to do.’ However, he neglected to explain why the public sector is operating so inefficiently after 12 years of Labour Government, or why this brilliant cost-cutting idea hasn’t occurred to the top brass a bit sooner.
In today’s speech, the Chancellor also reiterated his claim that the UK economy will return to growth at the back end of this year, a view that appears to be shared by absolutely nobody outside the Treasury. And his Budget forecasts haven’t got off to a great start: he predicted that the economy would contract by 1.6% in the first quarter of this year, but official figures released a few days later showed that we actually suffered a 1.9% slump. If he can be £1bn out on a GDP figure released in the same week, what chance has he got of making a decent fist of predicting fourth quarter output?
In today's bulletin:
Suck it up, Darling tells top-rate taxpayers
Wheels about to fall off at LDV
O'Leary weighs in to swine flu debate
'It's not the glass ceiling, it's the sticky floor,' says Rebuck
SMEs give big thumbs-down to Budget