The Budget

Written by Colin Breed on Fri 26th Mar 2010

Unfortunately because of the usual press deadlines I am not able to comment upon the last Budget of the Government with the knowledge of what it contains. I shall therefore have to make some assumptions on what we might expect, based upon the pronouncements in recent weeks.

The Government in recent years has adopted a strategy of announcing measures in one Budget for implementation the following year. This has given an illusion of tax changes which, because they are not immediate, and are then factored into calculations for a year's time, feel somewhat more palatable. We therefore know of some tax increases and other measures which were announced last year and I expect them all to be confirmed but probably not significantly referred to in the Chancellor's Speech. It will be interesting to see if he adopts the usual practice to indicate changes for next year in the unlikely event that he would be there to implement them.

I expect it to be a highly political budget with lots of new initiatives. Look out for a so called "Infrastructure Bank" which was first put forward by Vince Cable, but is likely to be pinched by Alistair Darling. There could also be a new Social Investment Bank, but I expect both to be funded by the big banks or financial services companies as some sort of pay back for their bailouts. There could be lots of little give-aways or even a deferral of fuel duty increases bearing in mind current pump prices.

Very little will address the long term needs of the country. There will be no attempt to re-balance the economy away from over-reliance on Financial Services or measures to introduce a fairer tax system to relieve those very low earners from tax. He could of course mess around with National Insurance in order not to compromise promises on the standard ratio of income tax.

These are only best guesses, because with an election only a few weeks away very little of what will be announced could make any immediate difference to citizens, businesses or the country. If it is too "give-away" or "gimmicky" it will be seen as a cynical last ditch attempt to win back votes. On the other hand, if it is too honest and really tries to address the huge deficit in a responsible manner, it might be too frightening to contemplate.