Articles and Speeches

Chancellor is Architect of our Problems
23-Apr-07, Windsor Observer Article.

Most people are well aware that the Chancellor, Gordon Brown, believes in high taxes for people and high spending by Government. But we must never forget that business is the engine of the economy that creates all of the jobs, incomes and taxes that pay for the good causes we wish to support in a caring society.

Announcing that you are spending record amounts of money on schools and hospitals just isn’t enough. Patients must be treated more quickly and recover more quickly; young people must leave school with genuinely better grades than before and better equipped to take up jobs. And, if we really care about the least well off and most vulnerable in our society, it is vital that business is free to create the wealth required to keep our economy healthy and growing.

The Chancellor’s attempt to grab the headlines with a reduction in the income tax rate from 22p to 20p in the pound seemed at first glance like a big win for tax payers as the Chancellor appeared to adopt the Conservative position of sharing the proceeds of growth. But on further analysis of course it turned out that even this income tax reduction hid the Chancellor’s stealthiest tax yet – with the abolition of the 10p rate and changes to the national insurance contributions the Chancellor will actually rake in an extra £8bn to the Treasury!

The loss of the 10p rate will hit those on low incomes hardest and even increases to tax credits will not fill residents with confidence when they consider the mess caused by miscalculations and overpayments.

Doctors, nurses and teachers will find themselves paying more in tax, and their sectors are seeing little by way of new investment. Spending on education will hardly rise and the Chancellor’s announcement of an increase in spending on the NHS of £10bn is not new money, but money that has already been promised.

The Chancellor had an opportunity with this Budget to reverse the decline in our economic competitiveness but his announcements affecting business will hit smaller and medium sized enterprises (which make up 99% of all businesses) hardest, whilst business as a whole will pay £1bn more in tax in the next year.

The UK has fallen from being the 4th most competitive economy in the world in 1997, to a lowly 10th. Had the Chancellor announced measures which would have released productivity (now half the rate it was 10 years ago) and reduced the tax burden on business, our competitiveness could have been enhanced and our economy would look a lot healthier in the long term.

Given the robust and healthy economy which he inherited, we must not forget that the Chancellor is the architect of the problems it now faces. It will be interesting to see how he will argue that he holds the solution should he become the next Prime Minister.

Overall, this Budget is a tax con, not a tax cut!.