They say the eye of the hurricane is remarkably calm, and if you looked straight up you would see a beautiful blue sky, all the while knowing that damaging 100 mile-an-hour winds and rain were just around the corner.
This is the same feeling I had listening to Alistair Darling’s Budget.
Far from battening down the hatches, he intimated it was business as usual with no need to worry, as the wealthiest 2% of the population will pay the extra tax to solve our problems.
It would have been naive to expect a “proper” Budget so near to an election, but even I was surprised at the tone of the speech.
To be quite smug about the level of government borrowing being £11bn less than anticipated, but still at £167bn takes some doing. However, there were glimpses of what lies ahead.
The announcement that the Inheritance Tax (IHT) threshold will be frozen for four years will mean a significantly higher percentage of the population will have an IHT liability. Given the popularity of the Tory pledge to raise the level to £1m, this came as a surprise, but at least we now have clear water between the parties on the issue.
It is also clear that this government believes that National Insurance (NI) is the preferred way to raise revenue. This is all well and good but it means the burden falls on the working population, and that future generations will have to work far longer than their parents. However, how long will it be before NI is extended to pensions and other income?
As for savings, the confirmation that the ISA limit will rise to £10,200 for all age groups from April is welcome.
However, it would be wise to remember that it only took three years for pension legislation that allowed contributions of up to £245,000 a year to, effectively, be revoked so I would not bet the house on the ISA rules not changing that soon.
Which brings me on to the crux of the matter. In the last year Ireland has had three emergency budgets. Each one increased income tax by 2% and the most recent halved benefit payments and cut civil service salaries across the board.
None of the budgets were greeted with joy, but there was an understanding the party was over. As a result, it is forecast that Ireland will be in far better shape financially than the UK within two years.
Here in the UK however, the Government believes the best way to avoid a hangover is to have a “hair of the dog”, which as I know to my cost does not remove the pain, only delays it. So the country keeps staggering on, the only one left holding a bottle of wine and singing karaoke, while the rest of the world is at home taking its medicine, and believe me it is saying something when the Irish leave the party before you do.
Article courtesy of The Herald
Friday 26 March 2010
