PLAIN awful. That is the only way to describe yesterday’s government borrowing figures, which saw the deficit jump to another record for August, dashing hopes the public finances were improving of their own accord. Revenue growth was tolerable at 6.3 per cent. What was shocking was that government current spending jumped 11 per cent year on year in August. Yes, that’s right, in the midst of a supposed period of austerity, the government has seemingly lost control of the public finances. In part, this is because of the higher costs on index-linked gilts, pushed up by our excessively high inflation; but nevertheless these figures smack of a government and civil service which are failing to get a grip.
Meanwhile, instead of trying to make the UK a better place for global firms to invest and base their staff and operations (and hence pay tax), and encourage a private-sector based renaissance, the Lib Dems are not only banker-bashing again but actually extending their attack on the whole of UK Plc. Vince Cable’s speech tomorrow will be remarkable in its virulence and disdain for the companies and entrepreneurs that create all the revenues the government raises; the speech could have been made by a Labour politician of the socialist 1980s. He wants to impose new rules on corporate pay, make it harder for firms to be taken over, crack down on company directors and so on.
Cable, who used to work for the Labour party in the 1970s, evidently despises modern capitalism, especially the financial and business services industry which is London’s biggest employer. Take this quote: “Why should good companies be destroyed by short term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors forget their wider duties when a fat cheque is waved before them? Capitalism takes no prisoners and kills competition where it can.” The clear implication is that mergers and acquisitions are barely legal (“accomplices”); the argument about destroying competition is semi-Marxist (yet, empirically, the biggest barrier to competition is the government); money making is inherently dodgy; the metaphors are violent. It’s an ugly speech.
Part of the reason for the rekindling of the war on the City is the continuing collapse in Lib Dem and Tory support. YouGov has the Conservatives and Labour equal on 39 per cent; the pollster reveals a growing anti-cuts mood, despite the deficit. Although 40 per cent of those polled think the cuts are “good" for the economy, 43 per cent view them as “bad”. Only 30 per cent think they are “fair” against 21 per cent who see them as “unfair”. At the time of the emergency budget in June, 45 per cent thought the spending cuts were “fair”. The coalition believes that a bit of populism will help rectify this.
But Cable’s comments will outrage business leaders, entrepreneurs, the City and much of the Tory base. Nick Clegg’s view yesterday that all accountants and tax lawyers are engaging in immoral behaviour when they help their clients legally pay less tax is an attack on millions of middle-class folk – including everybody who puts money in an Isa or a pension.
The coalition’s gratuitous bashing of business and the City has gone too far; it is now endangering our reputation as a place to do business and is beginning to cost jobs. Enough is enough.