[Re: Careful chancellor: there is good austerity and bad austerity, Friday]
George Osborne does appear to be slowly realising that his measures aren’t working, but my worry is that it’s now too late. All the international evidence shows that fiscal retrenchment only works if cuts happens quickly, take place across the board, and are combined with a clearly explained narrative. Osborne has failed on all three counts. The public won’t support perpetual austerity. The government is still too fearful to tackle the real spendthrift departments (health and aid spending). And strange U-turns and deficit/debt confusion now mean the public don’t know what they’re tightening their belts for.
The government often talks about empowering the private sector and charities to help deliver public services more efficiently and cheaply. But it doesn’t seem to follow through with much action. Take capital expenditure. There’s been no fresh thinking on who (or how) it could be funded in the future. France and many other countries have operated toll roads and motorways for decades, with no huge disaster. Why isn’t this being considered? Further, although free schools are an excellent idea, the fact they can’t make profits (like in Sweden) means the government will continue to be lumbered with the bill for creating the buildings and furnishing them with equipment.
The Starbucks situation is getting ridiculous. Some complete misunderstandings of the tax system are being flouted as facts.
The government needs to change the tax laws. Targeting Starbucks is fine, but the company is a symptom not the cause.
According to David Cameron, Britain needs to be more likely Germany. The Germany that’s heading into recession.
Nigel Lawson cut the top rate of tax to 40 per cent for earnings over £21,905. If allowance increased with earnings, it would be £60k.