The latest report from the cross-party Treasury Select Committee – which is dominated by Labour MPs – is fairly scathing about some of the measures introduced by Darling last month. It points out that his economic growth forecasts are all higher than virtually every other prediction under the sun, and suggests that the Treasury ‘may have given insufficient weight’ to the current economic risks. Which is something you’d hope the department tasked with safeguarding the UK economy would be pretty hot on.
The committee suggested that some of the strengths of the UK economy in recent years – rising property prices, the strength of the financial services industry, our links to the US – were actually likely to exacerbate the impact of the current global financial crisis in this country. So it reckons the Treasury must have been wearing its best rose-tinted glasses when it dreamed up its latest economic predictions.
And the committee’s report wasn’t finished there. It also raised concerns about the Government’s efforts to reduce child poverty; it criticised Darling’s non-dom tax hikes for not giving enough consideration to those foreigners who weren’t filthy rich private equity execs; and it suggested the crackdown on income shifting would increase the burden on small businesses (who will probably bear the brunt of it).
In other words, it’s exactly what the Government didn’t need at a time when half of its MPs appear to be in open revolt about the abolition of the 10p rate of income tax – a ‘simplification’ that will largely affect childless adults with an income under £18,500 (who won't exactly have much spare cash for a tax hike). As the select committee (which, believe it or not, also opposes the move) said this morning, ‘the group of main losers from the abolition of the 10 pence rate of income tax seem an unreasonable target for raising additional tax revenues’. When you consider that Labour traditionally gets a lot of votes from this particular demographic, it’s not surprising the Government’s own MPs are getting twitchy.
And as far as UK plc is concerned, a report like this won’t inspire any confidence that Darling and co know what they’re doing – or that our economy is actually as well placed to weather the current storm as he keeps claiming. Although to be fair, we get the impression that particular ship has sailed a long time ago...