At the TaxPayers' Alliance, we've spent the day going through the Budget. It's still early days yet but it is already clear that the rhetoric in Alistair Darling's speech - and even some of the figures presented in the report - don't remotely represent the reality of the position we're in. We've found a number of critical problems with a Budget not even a day old:
- After the Pre-Budget Report, we exposed how - even adjusted for RPI inflation - the Government were planning to borrow twice the amount borrowed during the First World War. Even if we accept the new figures announced in the Budget as legitimate, borrowing is now set to be more than was borrowed during the Napoloeonic Wars, the First World War and the Second World War put together. William Norton sets out the details.
- Ruth Lea points out that the growth projections that the Budget's borrowing estimates are based on are "simply not credible". If those start to fall apart, even the dismal borrowing figures outlined by the Government will turn out to be far too optimistic.
- While the £15 billion of spending cuts announced by the Government is a welcome sign that they don't want to heap the entire burden of tackling the public finance crisis on the public, the savings might not be reliable. Mike Denham discusses how there are a lot of similarities between the plans they're outlining and policies that, when tried as part of the Gershon review, actually increased spending.
- Equally, it doesn't look like they've honestly accounted for the cost of the banking bailout. Mike Denham sets out how, while the Budget report might insist that it includes a high end estimate of the cost of the bailout, its estimate is actually "extraordinarily optimistic". William Norton argues that the Treasury is hiding the full cost of responding to the financial crisis using exactly the same accounting tricks the banks have been accused of.
- Maria Fort exposes how the car scrappage scheme creates an exposure of up to £14 billion and will mostly be a transfer from ordinary Britons to the shareholders of foreign car companies. I discussed how an academic study examining the record of attempts to create "green jobs" in Spain suggests the 400,000 green collar jobs that the Budget hopes to create will come at the cost of 880,000 jobs in the rest of the economy.
- As our initial response made clear, this Budget shows that ordinary people and the poor are going to pay for the huge debts announced in this Budget, people are going to face higher taxes on everything from driving to work to a pint at the end of the day. Susie Squire argues that the new 50 per cent tax rate will send the worst possible message to those thinking about investing in Britain, drive a brain drain that will leave Britain much worse off and lose the Government money, according to estimates from the CEBR. Finally, William Norton notes that, while the Treasury has now decided to treat shifting income into pensions as a tax dodge, the HMRC website explicitly advises people on how to make use of "salary sacrifice".