The politics of the Budget

I think Mike Smithson is overstating the case for Balls' heckle being a monumental cock-up a bit here. I think it is unlikely Balls has just cost the Labour Party the next election. It seems more likely that, and his other silly heckling, has ruled him out as a potential Chancellor. That's important. There aren't many other candidates who could succeed Darling and it might mean he is more likely to remain in post. Given how thoroughly Darling's reputation for competence is being trashed that could be very significant.

Now, the bigger issues in yesterday's Budget:

1) A hike in taxes on alcohol and cigarettes


I really can't improve on the magisterial treatment of this subject by the Daily Mash (particularly the second post). Their graphic sums it up:






More than anything this will start to create for Labour the same kind of problem the Tories used to have. They risk being thought of as a nasty, no fun, party.

2) More complexity in the benefits system


The announcements yesterday had all the problems of Labour's benefits policy over the last decade. Plenty of money and good intentions. Unfortunately, far too little thought is given to incentives and there is every indication this Budget will trap a lot more people in dependency on the State. This is more of the same and, while it appeals to parts of the Labour base, isn't going to persuade anyone.

3) Punishing tax increases on motorists

The delay in the Fuel Duty rise is good news. With petrol prices rising so sharply and petrol so heavily taxed already any breathing room for motorists is good news.

However, the VED changes are absolutely hideous. A majority of Britons already think that when politicians call for green taxes they are really after revenue and not really out to save the planet. Darling will, rightly, not get the benefit of the doubt. Now he introduces VED changes that will see quite ordinary little cars paying significantly more excise duty, and new quasi-Showroom Taxes, and tries to pass that off as an attack on "gas guzzlers".

To see just how bad this is, or how your car will be affected, go and take a look at the database I created for the TaxPayers' Alliance.

This could well be a political catastrophe. Unlike taxes that are concealed in a product price, like Fuel Duty or the Renewables Obligation, people have to pay Vehicle Excise Duty directly themselves. People of modest means with old Mondeos, for example (any car registered since 2001 will face the new duties), will find themselves facing demands for hundreds of pounds in excise duty where they had paid significantly less before.

Living in London it is easy to forget that outside the city the vast majority of people drive to work and rely on their cars. They don't want to cram their family into too tiny a space to go away for the weekend and the new bills will be about as welcome as a kick in the nuts. When they pay those bills they will hate the Government. Brown has to hope that hatred fades before the election.