Budget Result in a Nutshell

Osborne's budget did not go far enough on the spending cuts side nor in reducing the destructively high rate of fuel duty. He did not go far enough either in cutting the 50p rate but if the stories are true he wanted to reduce the rate to 40p and would have accepted a Mansion Tax in order to get LibDem approval to do so but Cameron vetoed the Mansion Tax and so Osborne agreed to limit the cut to 5p instead. Cameron was right to veto the Mansion Tax leaving the Tories to shave a further 5p off the rate another day. Osborne also reduced Corporation Tax by 1p now and 1p again both next year and the year after. Pensioners will be worse off as will banks, those who buy houses of more than £2million and those who buy houses through offshore companies. Osborne says the government will do something to improve our transport infrastructure and broadband, something to help our science facilities, something by providing enterprise loans to students who want to set up new businesses rather than go to university, something by improving planning regulation and something by introducing four new enterprise zones. The one cut he should have announced was to our contribution to that unelected organisation which holds us back at every turn by introducing more and more regulation without ever having worked out the consequences. You have no doubt guessed which organisation I'm talking about, yes, it's the EU. Apparently when the leader of the recent Chinese delegation to Germany, France and the UK was asked why they had not extended their trip to other countries in the EU he responded by saying that they could learn all they wanted to know about engineering projects in Germany, culture in France and new ideas in the UK. It is good that we are still thought good for new ideas but a pity we are no longer regarded as of the highest calibre in engineering. As to culture I would say that we were the equal of France and that Italy is of equal value too.        

Budget Demands and Shame

If Osborne is going to cut the 50p tax rate he should cut it out altogether rather than reduce it to 45p. Better to be hung as a sheep than a lamb and the reduction to 45p will be seen as an irritating halfway house arrived at in part through fear rather than as a clearcut statement against Brown's purely political increase in the tax rate at the end of his term - something to stuff the Tories with. Labour know that this was the reason for the Brown increase and that its usefulness in raising revenue is nil and possibly a factor in revenue falling as I'm sure Osborne's commissioned research into the 50p effectiveness will show. With  Labour vacillating about whether they would oppose the reduction or reverse it Osborne should go for the jugular. Osborne, despite Tim Montgomerie's desire for a Mansion Tax, should have nothing to do with it.  Where is someone without the income going to find the money to pay for this tax on his/her mansion? They would be forced either to borrow to pay it or to sell their house. That is an outrageous outcome making the tax confiscation or theft rather than a supportable proposition. Osborne should have nothing to do with a Tycoon tax either, nor should he increase the Non-Dom tax both of which would see many of our successful entrepreneurs and Non-Doms leave these shores for less tax greedy ones. There has already been a flight of Non-Doms following the introduction of the Non-Dom tax. We want as many Tycoons and Non-Doms living here since they not only pay taxes but more importantly spend their money in our shops, employ people directly and indirectly and are otherwise a Good Thing. Osborne should though increase the amount at which individuals pay tax and reduce the fuel duty. To pay for these he should withdraw the subsidy paid to windfarms and for solar panels, confirm he is going to stop national pay settlements, reform the planning laws and cut all manner of regulation. There should be an attack on EU regulation as well. Let's show some backbone and stick up for ourselves and let's get rid of the awful Ashton and replace her with someone who will think a little more before opening her mouth about the tragedy in Toulouse. The Israelis have every right to be upset by the statement she made. As Downing Street well knows she made no reference to Israeli children killed by Palestinians. She mentions the murdered Jewish children in Toulouse, the Belgian children killed in the bus accident and children killed in Gaza as a result of retaliatory action taken by Israel but not the Israeli children murdered by Palestinians. Shame on her and on us for supporting her.

UPDATE: Apologies to Ashton. Apparently in her speech she did also refer to the deaths of Israeli children as well as those of Palestinian children in Gaza. The transcript of her speech however omits the reference to the Israeli children and for that she must take the blame.        

Capitalism in Tooth and Claw or not

James Delingpole, in my view, is on the more hysterical right side of arguments about capitalism and the environment but I have to say his blog on The Commentator today is absolutely spot on and a must read. His criticism of Shell in supporting green 'solutions' cannot be faulted. It is a pity though he doesn't mention BP and its production of biofuel. Biofuel is the ultimate mad scientist's solution to a perceived problem which in reality is not a problem at all. It is like a cure that can be said to succeed because eventually you no longer need it as it's killed you. You can catch up with Delingpole's essential piece here. There is some glimmer of hope on the fuel front though as I see that the company with a licence to explore for shale gas in the North West has been allowed to continue its assessment of its find. This must mean that it will be allowed to extract the gas in the not too distant future. If Osborne is clever he will say something about this in his budget. The mere mention by Cameron that he is considering releasing some of the oil held in reserve for strategic reasons has had a downward pressure on crude prices so the mention by Osborne that we are going to exploit the shale gas reserves under Blackpool should have a similar effect. I hope the rumours that Osborne is going to lower the 50% tax rate back down to 40% are correct and I hope the rumours about the introduction of the jealousy mansion tax are incorrect. The government still needs to cut expenditure, cut regulation as well as repeal such absurdities as the Child Poverty Act which is an expensive folly as so ably argued here by Fraser Nelson in his article in the Telegraph today.      

Osborne and Oborne

There have been calls for Osborne to clarify his position on tax. Does he believe in low taxes or is he in favour of higher taxes for the wealthy? He was at one time interested in a flat tax, has this interest been discarded and why? There have also been criticisms of the increase in regulation rather than cuts and of course the announcement that Fitch has put us on negative watch is, though understandable, a disappointment. There are supposedly some signs of some very small green shoots, for example amongst the gloom of yesterday's unemployment figures it was shown that there has been a tiny increase in the number in employment and from what I understand Manpower UK to be saying they have indications from employers that they are considering taking on more staff in the next few months. We desperately need a strategy for growth and Osborne would do a lot worse than listen to the Adam Smith Institute on the issue here for advice on what principles such a strategy should be based. Taxation takes money out of the economy and government spending does not result in growth as has been made demonstrably clear by Brown's disastrous economic policies, the policies of a con artist. There is speculation about why Osborne was taken by Cameron on his visit to Obama. Chancellors do not normally get included in these types of visits. Was Osborne there to learn something specific or perhaps to meet the Republican contenders for Presidential Candidate since Cameron couldn't or wouldn't meet them? I suppose it's fair to assume Cameron didn't have the time to see them all and couldn't see only one or two of them for fear of being seen as favouring one contender over another. As to Cameron's meetings with Obama, Peter Oborne in the Telegraph has an interesting take on them here. I have to agree that it is sad Cameron is not taking a different line from Blair with the USA and does not object strongly to US policy on assassinations and the continuance of Guantanamo. Oborne should though be more understanding of the US army's problems with murderers, Koran burners and the like in its ranks. All armies have such people and strong discipline is needed to keep these elements under control. I feel sure the troops concerned will be dealt with in the appropriate manner but if I am wrong then Oborne's strictures will have been well made.       

Ken the Cobra

Ken Livingstone has always been a nasty piece of work. Those of us who are old enough well remember how when Labour won the GLC elections under whichever leader they had at that time, that in a move of which Stalin would have approved, Ken and his cohorts immediately called for a leadership election. He won the election and thus replaced the then Labour London leader to take over as the GLC chairman. Like many politicians he weaves good stories which are to say the very least greatly exaggerated. Factcheck on Channel 4 have found some of the claims he makes to be dubious to a degree but yet he still attracts followers. One wonders how he does it but his whine is somehow fascinating rather like the movement of the cobra that mesmerises its victims before it strikes them dead. This time though his hypocrisy has been exposed as has that of his leader, Ed Miliband. That Ken should be so arranging his affairs like any sane person to pay only that amount of tax he needs to is not only his right but very sensible but his attacks on others for doing just that are of a high order of hypocrisy that has shocked even some members of his party. Not Ed Miliband though who has been defending Ken by saying he is no worse than Boris. Boris though has categorically denied using Ken's tax avoidance scheme as can be seen here. Cameron will be licking his lips and is bound to throw Ed's charge in his face at next week's PMQs.  

Cuts and Taxes

There is a piece on ConservativeHome by Paul Goodman here setting out various cuts that can be made to fund cuts in taxation. I would agree wholeheartedly with the withdrawal of all subsidies for wind farms and solar panels, the capping of maternity leave at £800 per week, cutting NHS staff and reducing the cost of childcare regulation and indeed regulation generally. Matt Ridley wrote a great piece on the uselessness of wind power in the Spectator last week which you can see here. He also produced an interesting statistic about carbon emissions in the USA which fell 9% in 2009 as a result of the switch to shale gas burning power stations. This is something we can do ourselves having had the good fortune to have discovered a considerable quantity of shale gas waiting to be exploited in the North West. It is to be hoped that Osborne will cut spending in order to cut taxes in the budget and promote the exploitation of our shale gas deposits. The use of shale gas will reduce the cost of energy and encourage a virtuous growth cycle. This is exactly what the doctor ordered and frankly what could be better. Matt Ridley calls himself the 'Rational Optimist' and although I hope he's right about the beginning of the end of wind I somehow remain doubtful that Osborne will deliver.          

The Dead Italian Hostage

It is unsurprising that the Italians are unhappy with us after the death of one of their citizens in a failed rescue attempt by the SBS and the Nigerian Army. According to reports we received intelligence that the hostage takers were about to move the hostages and possibly kill them. A decision had therefore to be taken at great speed to mount a rescue mission and the Italians were only informed after the mission had begun. The Italians had been kept informed of what was going on over the months since the hostages were kidnapped but realistically who was going to expect the Italians to be involved in an operation in which their troops could be killed. After all the Italians were known to have paid the Taliban not to attack them in Afghanistan and who knows what deal they might have been trying to set up to free the Italian hostage in Nigeria. It is also quite clear from an operational point of view that the fewer people who knew about the mission beforehand the better for the prevention of a leak. Unfortunately the Italians do not have a properly elected government and it tells that their Prime Minister is not a politician who, if he were, would have been far more sensitive to the need to be supportive of an operation being undertaken in part on their behalf. An operation moreover that could not have been guaranteed to be successful. The response to the complaints of the Italian bigwigs by both Hammond and Hague has been both measured and diplomatic. We are obviously deeply sorry for the loss of life of the two hostages particularly as one of them was a Brit but as far as any response Cameron makes to the Italian President's demand for an explanation he should make it clear in the politest possible way that the loss of life is regrettable but hostage rescues often fail and it would not have been efficacious to have involved the Italians in the decision knowing their predilection for different methods. Perhaps he should also point out that the Italians have still to resolve their issues with India over the killing by Italian marines of two innocent Indian fisherman and that this trigger happy behaviour was also taken into account in deciding when was the appropriate moment to inform the Italian government of what was going on.