Reaction from the blogosphere to the PBR and George Osborne's response

Here is a round-up of some of the 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". In a later post, Iain heaps praise on George Osborne, whom only a couple of weeks ago he was asking to be moved from the shadow chancellorship. He describes Osborne's performance as "absolutely blistering and his best Commons performance to date", concluding that "it was seriously impressive and strengthens his position enormously."

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.

The Burning Our Money blog describes Alistair Darling's expectation of a mild rececssion as "pie in the sky" and concludes that it is a "a bad news budget that's actually even worse than it looks".

Peter Hoskin at Coffee House wonders whether Alistair Darling's gamble will pay off. Pointing out that "the Treasury's tax receipt and net borrowing figures always tend to be optimisitic", he wonders whether this time they're even more optimistic than usual.

Menawhile, his colleague, James Forsyth, writes a post with the alliterative headline, "Labour fails to get bang for its borrowed buck". He predicts that Darling has potentially set himself up for a fall by predicting growth in Q3 next year and also describes George Osborne's performance as "his strongest ever Commons performance", adding: "Today was the day that Osborne proved that he is up to the task of being Shadow Chancellor at a time when the economic question is once more dominating politics".

And Fraser Nelson's reading of the figures is that the debt bombshell "is not due to explode until 2015/16", concluding that "this is not just an ecnomic failure, but a moral one".

In a post entitled "Osborne Wows", Guido writes that his co-conspirators were hugely impressed with Osborne's performance. He also cites Tom Clougherty of the Adam Smith Instititue as describing the shadow chancellor's performance as "the speech of his life".

Comments

[YMT]

This is such a huge gamble by Labour that if it doesn't work I dread to think what's going to happen to the country after 2009. Time to order those Muzzy language disks for Mandarin and Hindi.

[mtrcricket]

If high street price reductions of 30-70% don't stimulate the economy what chance does a 2.5% VAT reduction have.
Labour will sink to the depths of the ocean from this. Horribly, they might take us with them.

[Cleethorpes Rock]

mtcricket, Ann Main MP made a similar point in the Commons debate. I think our response to this has given us a fighting chance of getting off Brown's sinking ship.

[Felixstowe Fiddler]

BBC East has just done a live piece from outside the Commons stating that CCO had banned all Tory MPs from speaking to the media "until the line to take had been formulated."
If this is true, it reflects very very badly on the Tories. Labour MPs were keen to appear to talk up the Chancellor, while there was no balance from any Conservative MP.
As an exercise in media and PR relations, this Look East regional programme from the BBC was an utter disaster.

[duncann]

'If high street price reductions of 30-70% don't stimulate the economy what chance does a 2.5% VAT reduction have.'

I couldn't agree more. I'm replacing a kitchen - yesterday on price comparison sites I found every appliance I want (like a £2,200 US fridge/freezer) at more than 50% off - yet I'm thinking if I wait, they will come down more! VAT doesn't even enter into it, 2.5% is a pathetic fraction of what retailers are already offering. You can even get cars BOGOF in some places! So this may help biz cashflow but it won't send shoppers into the stores or online.

[Dorian the Englandism]

Meanwhile, back on my Excel speadsheet, I am re-doing my re-doings of my price list.

Gosh, VAT down 2.5% and I simply must pass this onto my customers, pronto, Gordon tells me so via his sock puppet and if I fail to obey then resistance will be futile.

Oh, my import costs have just gone up by 20% but I must hold my prices. Share the pain and that.

Does Gordon have even the vaguest notion of what a margin is? This 'rescue' is pissing into the wind, straight into a force ten.

[Malcolm Dunn]

Tom Bradby on ITV news was very harsh with Brown and Darling. He compared his discussions with various finance ministers from around the world who were able to afford stimulus packages without borrowing as they had a budget surplus.

[michael mcgough]

"CCO had banned all Tory MPs from speaking to the media "until the line to take had been formulated."

Who do Dave and Gideon have to refer to to get guidance in formulating a response ---their sponsors?

[Votedave]

Yes, Malcolm. To my surprise ITV and even the BBC didn't seem to indicate that the Pre Budget Report had gone down very well - and with good reason.
Gordon Brown has risked bankrupting our own country because he chose to put his party before his country.

[YMT]

We need someone to get a debt clock sorted out! Like the one they have in New York placed somewhere high profile central London showing the UK national debt and it increase every 5 seconds of so and each persons share.

Someone at CCHQ should be able to sort that out, maybe in the shape of the Debt Bomb but with the clock in the middle.

[Happy Tory]

I'm rather intrigued as to what the clothing retailers will do about the VAT reduction, given that they are all very firmly wedded to pricing with a .99 at the end (£4.99 etc). They might manage the odd .89, I suppose, but when it's not going to end up with a consumer-friendly final price tag, then they might be quite tempted to sit tight and wait for the VAT reduction to pass... Whatever they say in public, they'll probably allow themselves a bit of a lag anyway, due to the general cost and trouble involved in re-labelling and the very long forward ordering cycle for clothing.

[Sam R]

Had the Chancellor announced that all Government Ministers were to take a 10% cut in their hefty salaries there might have been a little less cynicism in his words. Come to think about it, we haven’t heard any of the top people from any Party suggest doing what the Irish Government and Opposition did some weeks ago.
Maybe next week Gord will try to convince us that he is leading the world in such a magnanimous gesture.
Wonder what 10% of His Nobleless’s salaries, pensions, etc. amounts to.

[christina Speight]

Darling’s done it! He's wrecked the country. He followed the Brown pattern of bludgeoning everyone with statistics, percentages and figures plucked out of the stratosphere. In the torrent of such a smokescreen there can be no time for consideration or calling for justification. It just pours out. Brown did this in every budget and one must wonder if HE wrote the speech. It was full of micro-managment of everything (a Brown speciality) and if I ran a small business I would be tearing my hair out at the thought of the bureaucratic jungle that would be needed to access all of the small benefits proposed.

Firstly Darling chucked out some utterly lunatic projections for fantastic growth in the economy which nobody in their right mind could possibly trust. It’s all going to come right next summer, he says, and to believe that requires suspension of one’s brain functions.

He’s doubling the national debt. Now at present we pay interest on the national debt which debt costs us each year double what we pay on the NHS! If its double now it will cost us in future 4 times the NHS cost just to service the national debt. Not once did he acknowledge the monstrous burden it places on the citizens of the future - the very near future!

He had some temporary give-aways to win the election of which the biggest was the reduction in VAT (when both Germany and France have rejected such a move as being ineffective). These will lumber the next government into making savage permanent increases to claw the over-borrowing back.

He made climate-change expenditure sacrosanct when, in fact, it is a total waste of resources and when in other countries - notably in Germany and Poland - pressure is building to scale the whole process back.

He showed no sign of being willing to alter a single policy even when many of them are either failing, failed or detested.

Osborne, speaking without a prior view of the speech, was scathing as well he might be , though he too evaded any question of scrapping policy sacred-cows. His response was tough but effective.

The FT and the BBC 6 o'clock both disliked the package and pulled it to pieces.

[nadds]

What continues to amaze me is Brown’s complete lack of understanding of price elasticity.

I used to do a lot of work in retail, looking at the impact of price changes. Across all sectors, price changes of less than 5% have virtually no impact on sales, be they up or down movements, unless they move a price from a crazy price point to a sensible one eg 102p to 99p will work quite well, but 99p to 96p will have no impact on volume.

As the world of retail knows this already and has everything at round £’s or 5’s or 9’s, the 2.21p in a £ reduction a 2.5% point VAT reduction delivers on an item by item basis, which is afterall how most people buy things, will no impact on sales at all.

As we are supposed to be a nation of shop keepers, one would have thought the government would know this.

[MrB]

Just watch all the rabid Osborne haters crawl back into their troll caves. Nevermind ey? I'm sure there'll be a minor gaffe in a few months you can use to try and take the party back to 1997 again.

[Shaun Bennett]

If David Cameron had an ounce of complacency in him, tonight must surely be the time for him to start drawing up his next government! As has been said, Labour has really, really blown it this time. Now we will see what damage a real reckless Labour government can do when it is not constrained by Tory ideas.

I agree that Osborne was superb, although I do wish that he had talked a little slower. I was on the edge of my seat that he was going to say a wrong word, or lose his thread at any moment. In the end it all came good and he was shown for the fantastic speaker that we all know he is. Its a pity there aren't more parliamentary occassions like this to allow him to shine. Neverthless, I feel very reassured that we have in Osborne someone who will be a competent next Chancellor of the Exchequer.

[David]

Can I point out that you get more benefit from your Tesco clubcard points than from the VAT reduction.

Spending £1000 gives you 1000 points, redeemed into £10 voucher - which you can scale up to £40 if you apply for their deals.

This compares to a £25 reduction if the retailer cuts back the retail price.

Now, if only Labour would BOGOF...

[Brian W]

Christina @20.29 - I have just filled in Iain Dale's poll on the PBR and made exactly the same points as mentioned in your first two paragraphs. I thought perhaps that Brown had written it and Darling was delivering what he was given!

[jamie]

If George Osborne's response was so fantastic, why did the FTSE close up nearly ten per cent after the Chancellor sat down? Why didn't it bounce back down during Osborne's riposte?

[Matt Wright]

The FTSE moved up in line with other markets because of the rescuing of Citibank in the US. This shift began before the PBR. Pay attention and stop the spin.

[Cleethorpes Rock]

FTSE tends to follow New York, where shares have been up following Obama's announcement of his economic team. The news on Citigroup and New Yorks close on Friday will also have had their impact.

I think the fallout from this may go the way of the 10p debacle- incredulity will turn to anger once people read the smallprint and realise what a ride they're being taken for.

[YMT]

@Jamie

Because Citigroup was given a massive bailout by the US today, if you look at all the major markets they are all up by quite a lot. The real indicator today was the trading on credit, which for the UK down i.e, the UK credit rating is dropping. i.e, the markets think the UK is developing more and more risk.

[resident leftie]

If the City had any doubts about the budget, you would have seen the FTSE tumble. Instead, it climbed steadily during his speech.

[A Cllr]

jamie

Citigroup was saved. Even the BBC says why.

[Raj]

MrB, I'd like to think that some people are big enough to admit when they're wrong. We shall see.

[Malcolm Dunn]

I wouldn't count your chickens Reident Leftie. The growth in the FTSE was less that the Dax, CAC or Dow. If it's still up in a week then perhaps you have a point but don't take any comfort from today.
Anecdotally most comment I've heard in the City today regarding the PBR has been entirely negative.

[Peter]

Not wishing to be too pedantic, but my secondary modern education tells me that reducing VAT from 17.5% down to 15% is in fact a 2.13% reduction in prices not 2.5%.

Whatever VAT reduction, it won't make a scrap of difference.

[christina Speight]

Re FTSE everyone else has said why - I personally expect much of that gain to vanish tomorrow!! You could see it coming and it was the right moment to sell those shares which you've been trying to do for weeks.
And look a the £ v euro rate. Gone well above 85p a euro. -TODAY! That'll add point to the business man who said a piffling cut in VAT didn'\t remotely match the 20% rise in his re-orders of imported items.

[B.Garvie]

KAMAKAZI POLITICS: Unless there is a General Election in the Spring, this pre-budget report will be Labour's LONGEST FINANCIAL SUICIDE NOTE IN HISTORY.

[Matthew Reynolds]

QUANGO's should be told to cut their budgets by 50% within four years or face having their public funding taken away meaning that they would have to sink or swim on their own merits by charging fees to service users.

To stop this adding to the dole queues the New Deal & other pointless training schemes should go while JSA & IB are replaced by one payment designed to slash economic inactivity. All this would be phased in between 2010-11 and 2013-14.

This would cut public spending & borrowing by £50 billion by 2013-14 while in 2009-10 all basic rate taxpayers should get a £500 check in April 2009. An extra £11 billion boost in 2009-10 would fuel a tax cut induced recovery while big cuts in public spending & borrowing would restore fiscal sanity from 2010-11. Future generations & economic stability will suffer if action is not taken.

[pp]

Osborne has shown what he can do (a damn good job) -- however he needs to realise how stupid the public are - especially presenters of the today program on radio 4.

Osborne was (I beleive) talking about 'insuring bank loans' (some form or guarnetee scheme to reduce bank risk, so encouraging lending; whereas the presenter was talking about 'ensuring bank loans' are made, by forcing the banks to make loans.

A counter to the chancellors endless 'help' thing needs to be thought out -- most people don't want government help, and if they hadn't taken so much off us in the first place wouldn't need it!

[Wearside Tory]

Good strong performance by Osborne....however, he better get his thinking cap on as Darling has just scattered land mines and trip wires all around HM Treasury....

[pp]

The whole budget needs to be read backwards.

Tax on fuel, alcohol, cigarettes up - permanantly.

A temporary reduction in VAT so you don't notice for a while.

A standard brown tax time bomb - announce stuff, do the 'nice' bits now, leave the nasty bits to kick in when noone is looking and everyone has forgotten about them.

This is a very nasty practice that I hope the tories will not duplicate.

[mproctor]

Instead of using £12.5bn to tinker with VAT what about underwriting loans to first time buyers at a low or nil interest rate to enable them to put down a 10% deposit and secure a mortgage for their first time purchase (the banks have noticebly deserted first time buyers and anyone who doesn't have at least a 10% deposit. Infact all the best mortgage deals are only to be had with a 25% deposit). This would provide the badly needed stimulus for the housing market and all the other markets which it affects, at least slowing the slide into recession