Tuesday, 28 February 2012

Show them the door, George

The budget will be held on the 21 March. But now is the time when pressure groups get their campaigns going to try to influence the Chancellor. 
One of these that are pressing the Chancellor are the Free Enterprise group of MPs. Membership of this right wing group consists of many of the new intake in 2010. One of those from Wales in membership is Alun Cairns formerly an Assembly Member and now MP for the Vale of Glamorgan.
What case are they pressing on Mr Osborne you ask? Wait for it, even deeper public spending cuts. 
Not happy with the draconian cuts already visited on the economy by the government. They want more. They’re calling for the Spending Review to be reopened to see if more savings can be made. Why? In order to deliver more tax cuts for the rich.
The group are working in tandem with the right wing think tank the Institute for Economic Affairs on a ‘wish-list’ to present to the Chancellor. This list includes a cut regulation for businesses, to merge national insurance and income tax, and to reduce the 50p top rate of income tax over two years. All this will be paid for by further cuts.
If the Chancellor was to listen to the group and public expenditure was cut further, then undoubtedly Wales would suffer. For these cuts  would likely reduced the amount the Assembly receives, courtesy of our old friend the Barnett formula.
This kind of medicine is exactly the opposite of what the economy needs. Indeed such a move would add further to the country’s woes. What the economy needs is confidence. It needs people to start spending. They don’t start spending if they think their jobs are under threat.
In Wales over 30 percent of the population are employed in the public sector. Making more of their number unemployed would make no sense at all. What is needed is more confidence, this doesn’t happen when the dole queue beckons.
There are signs that gradually the economy is beginning to pick up. 
Estate agents are indicating there has been a slight increase in activity and signs that the housing market is on the turn. There was an increase in average house prices in Wales and England of 1.1% in January. OK, some of this might be explained by first time buyers trying to buy before the stamp duty exemption on cheaper properties ends towards the end of March.
But accessing mortgages is getting slightly easier. Some would say not before time. But the fact is, the last four years has seen a very depressed housing market. Housing is a good indicator of the state of the economy if the housing market is depressed the economy as a whole is also down. So activity in housing, bodes well for the economy. But this could all be sniffed out if  the Chancellor falls into the trap that his own party’s right wing are urging on him.
His budget should be based on stimulating growth with more public investment not less. Let’s not kill the small shoots of growth that are appearing. So show the door to Cairns and his new chums, George.


  1. Gareth the UK's problems (yes including Wales) were caused by an orgy of irresponsible public spending. There are no cuts as borrowings increase year by year.

    Canada demonstrated that cut early, cut hard works. Alun has the correct prescription unfortunately Ozzie is not for turning.

  2. How is cutting regulation and merging income tax and NI going to lead to further public sector cuts?

  3. They are looking for more spending cuts the other items are also part of their agenda

  4. You say that what is needed is confidence. I could not agree more but the way to give business confidence is to reduce regulation and to take less tax from them so that they have more money to reinvest. You may not like to hear it but business holds the key to recovery not the public sector. If the tax burden is reduced this will mean more cuts. You can either have sustainable growth or less public spending but to call for both seems unrealistic.

  5. Much better if the government leaves the matter of business to business and just concentrates on reducing tax for all; corporate, personal, VAT, NI, etc..

    We need less not more government, less not more public servants, less not more public services.

    And we need to be allowed to keep more of our own money to spend on things that we wish to spend this money on. Rich, poor or impoverished, we are all the same and we should all be allowed the same choices.