The BBC's 6 o/clock News savaged his proposals.
I have rarely seen the Corporation more hostile to Labour.
Now the FT joins in!
xxxxxxxxxxx cs
========================
FINANCIAL TIMES 24.11.08 at 19:15
Extraordinary optimism for extraordinary times
A new top rate of income tax at 45 per cent, a temporary cut in value-
added tax and government borrowing of £118bn in the next financial
year: we knew the eye-catching parts of Alistair Darling's statement
on Monday before he stood up. What was missing ahead of the
chancellor's words was the most important element: where the money is
to come from to put the UK public finances back on a credible
footing. Even after he sat down this question lacked a full and
compelling answer.
Calling the autumn financial statement the pre-Budget report is
always something of a misnomer. This year it is spectacularly so. Mr
Darling's announcements are in no sense a curtain-raiser for the
Budget next spring. Instead, they represent a show-stopping emergency
budget that sets out tax plans for years ahead.
Mr Darling's two tasks were to plot a believable course for restoring
the public finances and to produce a programme to help the economy
through the looming recession.
For the first, he relied on those traditional stalwarts of optimistic
growth forecasts: implausible public spending efficiency savings and
higher national insurance contributions.
Mr Darling was delighted that the Bank of England had lowered
interest rates, but did not seem to share the gloomy outlook that
influenced the Bank's decision. Mr Darling's forecasts are notably
sunnier. He says that the economy will shrink by between 0.75 per
cent and 1.25 per cent next year, although he flatters himself that,
entirely thanks to his actions, recovery will be under way by the
summer. In 2010 he expects the economy to grow by up to 2 per cent.
Few other forecasters expect such a brief recession and such a robust
recovery.
He is optimistic also in expecting "value for money savings" of £5bn
a year from 2010-11. These always loom larger in prospect than in
reality. The slower real increases in public spending growth - 1.2
per cent on average for 2011-12 to 2013-14 - also look unlikely.
The tax increases are sizeable. Changes to national insurance should
produce about £4bn in 2011-12, while rises in alcohol and tobacco
duty contribute another £1bn. The 45 per cent top income tax rate
contributes a mere £670m, confirming its status as a redistributive
smokescreen rather than a significant source of revenue. More
important is the restriction of personal allowances for higher
earners, which takes the extra amount raised from richer taxpayers to
£2bn.
After tax cuts elsewhere, the government expects to raise an
additional £2.55bn in 2011-12. This will be painful for individuals,
but is still tiny against the sheer scale of the borrowing. Mr
Darling estimates that he will need to borrow a total of almost
£200bn across this fiscal year and the next, more than £3,000 for
every man, woman and child.
Tucked away in the small print is one of the assumptions needed to
make Mr Darling's numbers add up: a cut in capital investment in
2010-11, and then a permanent freeze in nominal terms. So much for a
government that borrows to invest - but Mr Darling seems to think
that, like the climate change targets stretching out to 2050, this
will be some other chancellor's problem. He may well be right.
Nor can Mr Darling look to the government's fiscal framework to
bolster his credibility. Conveniently the last economic cycle
included no recession. His assertion that it would be "perverse" to
stick to his own rules misses the point: they have already lost their
meaning and he has now missed the opportunity to put them on an
independent basis. That would have been the only way to restore their
purpose.
Mr Darling's second task was no easier. The decision to provide a
fiscal stimulus was the right one. It is still difficult to do this
effectively. The 2.5 per cent cut in VAT from 17.5 per cent to 15 per
cent until the end of next year costs £12.5bn but the impact will be
lost in the price cuts that retailers are introducing anyway.
The package of measures for small businesses is welcome. But ensuring
that banks lend appropriately to businesses and home owners is still
a long way away from being achieved. More promising for unfreezing
the home loans market is a plan, put forward in the Crosby review of
the mortgage market, for government guarantees for securities backed
by new mortgages.
It is clear that the current strangeness in British politics of
Labour proposing tax cuts while the Tories oppose them will be short-
lived. The battle lines for the next election will again see Labour
accused of increasing taxes to pay for its profligacy, despite the
restraint implied in yesterday's figures, while the Conservatives
will face charges of slashing public services.
Mr Darling's reputation as a dull, managerial minister is in tatters.
The Government talked yesterday of extraordinary measures for
extraordinary times. Sadly, the most extraordinary aspect was the
scale of the borrowing. The route back to financial sustainability
was unconvincing - both as individual measures and taken as a whole.
We must hope that Mr Darling's extraordinary optimism about the
economy is justified, but that is largely out of his hands.
==========================
Sky News at 18:48
Hammond: "We do not support the huge additional borrowing"
Philip Hammond, Shadow Chief Secretary to the Treasury
Mr Hammond said the Conservatives do not support the scheme of
borrowing announced in today's pre budget report.
He said: "we do not support the huge additional borrowing."
He claimed that there were more problems with the report. "There's
also some pretty heroic assumptions underlying even those numbers.
They've also assumed a huge increase in revenues which is another
£100bn black hole that will have to be filled with more taxes.
"We've had a national debt for hundreds of years, but in the course
of five years Alistair Darling and Gordon Brown will double it."
======================
CONSERVATIVE HOME Blog 24.11.08 at 17:45
Reaction from the blogosphere to the PBR and George Osborne's response
Here is a round-up of some of the initial reaction from bloggers to
this afternoon's Pre-Budget Report and the response given by George
Osborne, which we have already hailed as oustanding.
Iain Dale says that this is the day that Labour "blew it big time"
and describes George Osborne's performance as "really strong". He
also quotes a non-Conservatve MP as having told him: "This wasn't
George Osborne. It was Ozzy Osborne - drawing blood!"
Janet Daley at the Telegraph says the PBR was "more of a take-away
than a give-away Budget", given that the tax increases outweighed the
fiscal stimulus. She says that in his response, George Osborne "did
very well".
Her colleague, Iain Martin, is a very angry man, describing the scale
of the Government's mismanagement of the economy as "breathtaking"
and "a gross moral failure by this government".
The observations of Alex Singleton, meanwhile, concentrate on George
Osborne. Saying that he came across as "a powerful and effective
shadow chancellor", he concludes that "his performance will have done
much to restore faith in his position".
Matthew Elliott of the TaxPayers' Alliance, welcomed the immediate
VAT cut, but said the prospect of large tax rises in the future was
"very worrying". He called for "permanently low taxes, not a
crippling debt mountain and higher tax to come. It is unfair that the
Chancellor is not going to make the public sector share any of the
pain of the recession. If the Government cut out wasteful and
unnecessary public spending, we could have larger tax cuts, less
borrowing and a faster recovery."
Harwich MP Douglas Carswell blogged live from the Commons, expressing
exasperation at the Speaker for not taking Labour MPs to task for
heckling George Osborne, whilst he did admonish a number of Tory MPs.
xxxxxxxxxxx cs
========================
FINANCIAL TIMES 24.11.08 at 19:15
Extraordinary optimism for extraordinary times
A new top rate of income tax at 45 per cent, a temporary cut in value-
added tax and government borrowing of £118bn in the next financial
year: we knew the eye-catching parts of Alistair Darling's statement
on Monday before he stood up. What was missing ahead of the
chancellor's words was the most important element: where the money is
to come from to put the UK public finances back on a credible
footing. Even after he sat down this question lacked a full and
compelling answer.
Calling the autumn financial statement the pre-Budget report is
always something of a misnomer. This year it is spectacularly so. Mr
Darling's announcements are in no sense a curtain-raiser for the
Budget next spring. Instead, they represent a show-stopping emergency
budget that sets out tax plans for years ahead.
Mr Darling's two tasks were to plot a believable course for restoring
the public finances and to produce a programme to help the economy
through the looming recession.
For the first, he relied on those traditional stalwarts of optimistic
growth forecasts: implausible public spending efficiency savings and
higher national insurance contributions.
Mr Darling was delighted that the Bank of England had lowered
interest rates, but did not seem to share the gloomy outlook that
influenced the Bank's decision. Mr Darling's forecasts are notably
sunnier. He says that the economy will shrink by between 0.75 per
cent and 1.25 per cent next year, although he flatters himself that,
entirely thanks to his actions, recovery will be under way by the
summer. In 2010 he expects the economy to grow by up to 2 per cent.
Few other forecasters expect such a brief recession and such a robust
recovery.
He is optimistic also in expecting "value for money savings" of £5bn
a year from 2010-11. These always loom larger in prospect than in
reality. The slower real increases in public spending growth - 1.2
per cent on average for 2011-12 to 2013-14 - also look unlikely.
The tax increases are sizeable. Changes to national insurance should
produce about £4bn in 2011-12, while rises in alcohol and tobacco
duty contribute another £1bn. The 45 per cent top income tax rate
contributes a mere £670m, confirming its status as a redistributive
smokescreen rather than a significant source of revenue. More
important is the restriction of personal allowances for higher
earners, which takes the extra amount raised from richer taxpayers to
£2bn.
After tax cuts elsewhere, the government expects to raise an
additional £2.55bn in 2011-12. This will be painful for individuals,
but is still tiny against the sheer scale of the borrowing. Mr
Darling estimates that he will need to borrow a total of almost
£200bn across this fiscal year and the next, more than £3,000 for
every man, woman and child.
Tucked away in the small print is one of the assumptions needed to
make Mr Darling's numbers add up: a cut in capital investment in
2010-11, and then a permanent freeze in nominal terms. So much for a
government that borrows to invest - but Mr Darling seems to think
that, like the climate change targets stretching out to 2050, this
will be some other chancellor's problem. He may well be right.
Nor can Mr Darling look to the government's fiscal framework to
bolster his credibility. Conveniently the last economic cycle
included no recession. His assertion that it would be "perverse" to
stick to his own rules misses the point: they have already lost their
meaning and he has now missed the opportunity to put them on an
independent basis. That would have been the only way to restore their
purpose.
Mr Darling's second task was no easier. The decision to provide a
fiscal stimulus was the right one. It is still difficult to do this
effectively. The 2.5 per cent cut in VAT from 17.5 per cent to 15 per
cent until the end of next year costs £12.5bn but the impact will be
lost in the price cuts that retailers are introducing anyway.
The package of measures for small businesses is welcome. But ensuring
that banks lend appropriately to businesses and home owners is still
a long way away from being achieved. More promising for unfreezing
the home loans market is a plan, put forward in the Crosby review of
the mortgage market, for government guarantees for securities backed
by new mortgages.
It is clear that the current strangeness in British politics of
Labour proposing tax cuts while the Tories oppose them will be short-
lived. The battle lines for the next election will again see Labour
accused of increasing taxes to pay for its profligacy, despite the
restraint implied in yesterday's figures, while the Conservatives
will face charges of slashing public services.
Mr Darling's reputation as a dull, managerial minister is in tatters.
The Government talked yesterday of extraordinary measures for
extraordinary times. Sadly, the most extraordinary aspect was the
scale of the borrowing. The route back to financial sustainability
was unconvincing - both as individual measures and taken as a whole.
We must hope that Mr Darling's extraordinary optimism about the
economy is justified, but that is largely out of his hands.
==========================
Sky News at 18:48
Hammond: "We do not support the huge additional borrowing"
Philip Hammond, Shadow Chief Secretary to the Treasury
Mr Hammond said the Conservatives do not support the scheme of
borrowing announced in today's pre budget report.
He said: "we do not support the huge additional borrowing."
He claimed that there were more problems with the report. "There's
also some pretty heroic assumptions underlying even those numbers.
They've also assumed a huge increase in revenues which is another
£100bn black hole that will have to be filled with more taxes.
"We've had a national debt for hundreds of years, but in the course
of five years Alistair Darling and Gordon Brown will double it."
======================
CONSERVATIVE HOME Blog 24.11.08 at 17:45
Reaction from the blogosphere to the PBR and George Osborne's response
Here is a round-up of some of the initial reaction from bloggers to
this afternoon's Pre-Budget Report and the response given by George
Osborne, which we have already hailed as oustanding.
Iain Dale says that this is the day that Labour "blew it big time"
and describes George Osborne's performance as "really strong". He
also quotes a non-Conservatve MP as having told him: "This wasn't
George Osborne. It was Ozzy Osborne - drawing blood!"
Janet Daley at the Telegraph says the PBR was "more of a take-away
than a give-away Budget", given that the tax increases outweighed the
fiscal stimulus. She says that in his response, George Osborne "did
very well".
Her colleague, Iain Martin, is a very angry man, describing the scale
of the Government's mismanagement of the economy as "breathtaking"
and "a gross moral failure by this government".
The observations of Alex Singleton, meanwhile, concentrate on George
Osborne. Saying that he came across as "a powerful and effective
shadow chancellor", he concludes that "his performance will have done
much to restore faith in his position".
Matthew Elliott of the TaxPayers' Alliance, welcomed the immediate
VAT cut, but said the prospect of large tax rises in the future was
"very worrying". He called for "permanently low taxes, not a
crippling debt mountain and higher tax to come. It is unfair that the
Chancellor is not going to make the public sector share any of the
pain of the recession. If the Government cut out wasteful and
unnecessary public spending, we could have larger tax cuts, less
borrowing and a faster recovery."
Harwich MP Douglas Carswell blogged live from the Commons, expressing
exasperation at the Speaker for not taking Labour MPs to task for
heckling George Osborne, whilst he did admonish a number of Tory MPs.
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