Chief Secretary to the Treasury Liam Byrne has been repeating that the Government will not announce new taxes in next week’s Budget, so much so that it sounds like it’s been imposed on him as a penance (“5 Our Fathers, 10 Hail Marys, Assert that there will be no new taxes in the budget every time you see a microphone, and 3 Acts of Contrition. Go forth and sin no more. In the name of the Father …”). That’s hardly a surpise, with the expectation that VAT will rise to 20% gaining increasing currency. Which Chancellor in his right mind would announce tax increases a fortnight before the Election is called with the Government consistently behind in the polls? Liam Byrne’s blog includes an extract from his speech on the pre-Budget report setting out that £19bn of tax increases have already been announced, and they don’t see the need for any more at the moment. I stress “at the moment”. Those of us who have been around long enough will remember John Major and Norman Lamont saying again and again that they had “no plans to increase VAT” in early 1991 while the rest of us wondered how they would make up the shortfall from the abolition of the poll tax. Sure enough, on Budget Day, Lamont announced a 2.5% increase. Had he been lying before? Of course not. When he said the Government had no plans to increase VAT, they didn’t. But then their plans changed. That reminded me of the comment of one of Lamont’s predecessors, Roy Jenkins, on hearing Leon Brittan’s defence of his conduct over the Westland affair, when he said “the more he protests his innocence, the faster we are minded to count the spoons”. Next week’s budget will be all about electoral positioning. Labour Party strategists think the Conservatives economic policies are all headlines and no substance, and they want to show this up by setting out the detail of what they will do to tackle the deficit and revive the economy to flush out their opponents’ weaknesses. There will inevitably be criticism from the commentators who will say it’s not enough or the sums don’t add up. But the main audience for this budget is not the policy wonks who read the Red Book from cover to cover. There may well be gaps and questions; better to deal with those after you’ve got another mandate than worry about it before the Election. Meanwhile, if the Conservatives win, George Osborne has says he expects to present an emergency budget in July. Chances are, if that happens, the March 2010 budget will be an irrelevance, of interest only to those historians who like to write “what if” counterfactual articles in their spare time: “What if … Gordon Brown had won in 2010?”.
