Britain Needs a George Bush Style Growth Package Not a George Osborne Tax Simplification Package

Later this morning Osborne will deliver a speech on tax simplification. Guido looks at the economy and sees real trouble ahead, it needs decisive action, not hand-wringing words from politicians about tax simplification. The property market is seized up and consumer confidence is draining away. A massive pro-growth tax package is required now, the earlier the better.

George Bush is pushing a bi-partisan growth package targeting $150 billion in tax relief at individuals and businesses to kick-start private sector spending. That is a stimulus equal to 1% of U.S. GDP.

In the U.K. the equivalent amount would be a £13 billion, a quarter of what the government has used to prop up one insolvent bank to protect a mere 6,000 jobs in Labour’s North East heartlands.

A growth package should include two simple elements of action:

Housing market – stamp duty should be abolished for two years to help resuscitate the property market. House builder shares have slumped as demand expectations have plummeted, this is a relatively cheap way to boost sentiment and help young families in particular.

£500 per taxpayer flat relief – no matter what your level of taxation. This would disproportionately favour those taxpayers on lower incomes, boosting high street spending at a difficult time for retailers. It is simple and easy to implement, would be populist and would let individuals, rather than Whitehall, decide their own spending priorities. The receipt of a cheque for £500 by millions of taxpayers would boost economic growth from the bottom up in a healthy, decentralised way.

Greenspan says today the U.S. is teetering on the edge of recession, Mervyn King has said the same of the U.K., the cost of not acting now will be higher later…

UPDATE: Just read Osborne’s speech and am reminded that it is is already Tory policy to lift the stamp duty threshold for first time buyers to £250,000, taking nine out of ten out of the tax altogether.

Osborne’s Non-Dom Policy Now Worse Than Darling’s Policy

Polly Toynbee is wailing in her column this morning about the Chancellor’s U-turn. She reckons it is the “FT Wot Won It” and that Digby is Jones is the Thatcherite vetoing policy in Brown’s Big Tent. On one point Guido is in agreement with her; Labour claim they will take £650 million from non-doms, while the Tories claim they will squeeze them for £3.5 billion. Labour will tax them only after they have lived in Britain for seven years, whereas the Tories will tax them from day one.

So won’t the Tory policy drive more globally mobile wealth creators out of London? Isn’t Osborne’s policy worse for the City and more punitive?

Repossessions Surge :Remember this 2005 Labour Party Poster?

Repossessions are up 94% since Labour ran this election advert…

Mervyn King : “We Are F**ked”

Yesterday Mervyn King said the Bank of England’s predictions for growth in yesterday’s inflation report were “not inconsistent” with two quarters of zero or negative growth – the economist’s technical definition of a recession. For a central banker, that is strong language.

Meanwhile on planet Brown the Chancellor, Alistair Darling, claimed yesterday that “the fundamentals of the British economy are strong because of what we have done over the last 10 years. They will remain strong…. because of the robustness of our economy, I am confident that we can return to growth and we can keep inflation down to target.”
In reality inflation is now higher than in 1997 when Gordon took over, the ballooning budget deficit is 2.8% – the largest in Western Europe and nearly triple the pan-EU deficit average of 1.1%. Real incomes are now falling…

The Citizens Advice Bureau has just released a report which says “The number of county court actions for mortgage and secured loans has also risen steeply over the last few years. Between 2004 and 2006, the number of mortgage possession claims has increased by nearly 70% and the number of possession orders actually made by 94%. The number of possession actions in 2006 is now similar to that seen at the beginning of the mortgage repossession crisis in 1990.” Somebody should dig out that old Labour Party general election poster which blamed house repossessions on Hague and Portillo, changing the pictures to Brown and Darling. So much for an end to boom and bust…

Arresting Position

Too little, too late…

The Labour Party is seeking to recruit a Compliance Administrator to work in our Compliance Unit in our London Head Office.

The successful applicant will work with the Compliance Unit Manager to ensure that the Labour Party complies with its obligations under the Political Parties, Elections and Referendums Act.

Hat-tip : Tory Radio

The briefing against Alistair got a little heated in the last week – “Why Darling is a menace to Britain” – William Rees-Mogg; “Darling’s confidence seems misplaced” – Anatole Kaletsky; Knives out as Alistair Darling loses trust of City in the Sunday Times and various other City scribblings. It had the feel of the briefing before the non-election, the authors of which were to varying degrees Ed Balls and Douglas Alexander.

Ben Brogan has been briefed on the Brownies’ hotline to throw a bucket of water on all this – the Brownies would say that wouldn’t they?

Since taking office Alistair has presided over lost data disks containing millions of mum’s bank account details, the capital gains and non-domicile U-turns plus the first run on a bank in living memory. Not good when Alistair has in truth already been dealt a very bad hand by Gordon; public and private debt is an albatross around the economy, consumer inflation is over 4% making it hard for the Bank of England to cut rates which is the orthodox solution to a credit crunch. In any event the tsunami of liquidity thrown at the markets so far has not removed the fear in them. Guido’s friends in the City all say it is bad with a capital “B” – we are seeing only the tips of the credit crunching icebergs.

Contrary to what Gordon endlessly repeats Britain is not well placed to weather the turmoil. We have a worse balance of payments situation than the U.S., we have a worse government deficit, the golden rule has been shattered, loss of confidence in sterling and the consequent fall is fueling import inflation. Stagflation is returning. The omens in the property market are very worrying.

So if Brown’s heir apparent, Ed Balls, wants to become Chancellor he would perhaps be wiser to bide his time, let Alistair take the blame for the coming 2008/9 slowdown / recession, then take the Chancellorship in early 2010. Putting him in a position to go for the leadership following a Labour general election defeat or claim glory for “rescuing the economy” if it goes well. Is Balls wise and patient enough to wait?

Labour Donor Non-Doms Up In Arms

So it looks like the Ditherer-in-Chief is going to back down on non-doms and it may well end up as a flat-rate £30,000 charge, no further questions asked. City uproar was not the reason for the change of heart. The billions that the Square Mile brings to Britain were of no consequence to our ruling clique of politicians without a drop of entrepreneurialism* in their blood.

Lord Paul, the Indian-born steel billionaire, Gordon Brown’s biggest backer, says Labour is proposing an “unfair levy” which risked undermining him the economy. Sir Gulam Noon, who gave Labour £450,000 for a peerage (undelivered) says “everybody is against” the Government proposal.

When did the Labour Party first realise this policy would jeapardise millions in donations?

UPDATE : Osborne is gloating already – the Treasury is spinning the climbdowns as a clarification of “what the Government’s intention has always been”

Osborne is giving Darling a kicking for good measure

“In times of economic uncertainty, people need a Chancellor who can demonstrate strength of leadership and consistency of judgement. With Alistair Darling, we have neither. In his time at Number 11, he has gone from one retreat to another and his economic incompetence, whether on Northern Rock, Capital Gains Tax or now non-domiciled taxation is doing real damage to the real economy. The question for our dithering Prime Minister is how long can he keep someone at the Treasury who is clearly not up to the job.”

That will please Ed Balls…

Don’t know why Osborne is laughing, his policy now looks more punitive than Darling’s new version of his own policy. Doh!

*Except when it comes to making up expense claims, then they display the most imaginative entrepreneurialism.

“Politics Home” Beta Snapshot

“Politics Home”* is the beta working title of the still-under-wraps site that aims to be the Bloomberg News of politics – it certainly looks a little familiar to the users of the financial newswire service. No original editorial as far as Guido can see, more rolling news headlines from not just the blogosphere, the entire English speaking online political universe. The rolling news feed will take headlines from mainstream media sites and video feeds as well.

It looks like it will kill off the ailing ePolitix site, which has now taken to cutting and pasting stories from Guido. Rumours of staff losses including the abrupt leaving of the finance director might explain the 80% drop in Huveaux plc shares. (Huveaux is the parent company of the House Magazine, Dods and ePolitx). “Content is king” is the view of Guido and Rupert Murdoch (originally). Convenience is cool too, could this overcome the info-overload tsunami that political junkies now suffer?


*They say that is not going to be the final name.

Sad ex-SpAd Slacker

Matthew Burchell, Hain’s former special adviser, is finding the pace outside of the public sector a little bracing. A month after becoming unemployed he has yet to get round to writing his CV if this status update on Facebook is anything to go by. If you are hoping Matthew to return by the side of a vindicated Hain, forget it. It seems that it is getting very messy for the Tango man…

Working for Peter Hain is going to be something you would rather not have on your CV, so it can’t be easy for Matthew. Let this be a warning to all uppity snotty SpAds…

Guido finds those huge 4×4 faintly ridiculous outside the school gates. The only hazardous road surfaces they navigate are the speed bumps. Clearly Ken thinks they are popular with the Boris-Voting-Classes and sees them as a chance to hike taxes and indulge in a little Bash-the-Rich populism. All par for the course with Ken.

Later this morning Ken will announce that big-engine cars in the centre of London are so grave a threat to life as we know it, that they will be charged £25 per day to exist. The new congestion-cum-enviro-cum-spite charge will be called the Emissions Related Congestion Charge – ERCC

However, it has been established that the massive jams and diesel-fired pollution seen in East and North London does not actually exist. So there will be no need for any extension of the charging zone….

Non-Dom Policy Damned By Tory Treasurer

Michael Spencer, the demi-billionaire Tory treasurer and boss of the City money broking powerhouse ICAP, had an article in The Times criticising Brown and Darling’s plans to drive foreign businessman out of London to Monaco.

Guido suspects that Spencer doesn’t think Osborne’s own plans for non-doms are so brilliant either, he implausibly says the Tory version of the policy was “broadly welcomed” when he took City soundings. Broadly welcomed by whom?

Phil Hammond is defending the plans rather meekly, whereas Michael Fallon, a Tory member of the Treasury Select Committee, tells the FT bluntly “Chasing non-doms out of London is a huge mistake … Why do we want to lose all that business to Luxembourg or Dublin or Geneva?”

The US Embassy has made their view known and is lobbying hard to persuade the Treasury to change the wording of its legislation to ensure the charge falls within the scope of the double taxation treaty. The Chancellor’s plans will actually cost the Treasury money, according to a study by the Society of Trust and Estate Practitioners: the £30,000 annual levy will cost £2.1 billion a year as many residents will leave the country. The 116,000 non-doms are mostly not tycoons but bank, hedge fund and private equity staff who bring investment and prosperity. The problem for the Tories with having their policy stolen by Gordon is that they can’t attack his even worse version without highlighting the problems with their own. The Treasury and Osborne should realise that the elasticity in the Laffer Curve applies even more to foreigners.

What is the “Forward Risk Horizon Scanning Unit”?

Could a Downing Street lackey leak to us what this new unit is all about? Guido is a little uncertain if the unit’s name he has been given is precisely correct, sounds like a PR man’s creation doesn’t it? Is Stephen Carter the father of the unit? Does it actually exist as more than a coffee and doughnuts meeting?

Is it part of the not-another-relaunch “Brown Phase 2” that Riddell is waffling about this morning? Is it just a “There May Be Trouble Ahead, Lets Figure Out Our Excuses Unit”? Enquiring bloggers want to know…

Gordon Jinx Hits Manchester United

Every international football and rugby match Gordon has attended since he has become PM has led to a defeat for England or Scotland. His Jonah-like jinx now seemingly extends to club matches. On a day of high emotion at Old Trafford, in front of survivors of the Munich crash and the families of the victims, Brown turned up. The result? Manchester United lost at home for the first time against City in 34 years!

Is this a good sign for the blues?

Rich & Mark’s Monday Morning View

Sunday Sleaze Round-Up

Due to the quantity of political sleaze being reported Guido is introducing a Pigs in Shit rating system for guidance on the misdemeanors of porcine politicians.

Politically motivated mud throwing, technical reporting error / potentially honest mistake.

Definitely dodgy, unethical rule bending

Potentially fraudulent or criminal activity

Wee Wendy in New Funding Row

Wendy is facing another investigation by the Electoral Commission into a claim that she channelled £12,000 through the Scottish Industry Forum (SIF) a Labour front organisation to fund her constituency office. A Scottish Conservative party fundraiser, claims he was misled into contributing to her office at a fundraiser.
Purnell Fiddles Primary Residence to Dodge Tax

This is the classic property trick by politicians. Claim the mortgage subsidy allowance by saying your London home is your second home and the constituency home is your primary residence. When the MP comes to sell the London property this is a problem, only primary residences qualify to escape capital gains tax. Guido highlighted the primary/second home trick in December 2005 (see Four Lords a Fiddlin’). Guido is not going to give Purnell three pigs for fraudulent misrepresentation because he is so slippery he probably would escape prosecution.
David Davis Campaign Donation Declared by Lieutenants
A businessman who gave £20,000 to “essentially” support Basher Davis’ bid for the Tory crown had his donation declared by Andrew Mitchell and Nick Herbert. They say they used the money to support a researcher who worked on the Davis campaign.
Multi-Millionaire Paxman Pays Staff Below Minimum Wage
Well, well, well – according to his ex-staff he paid them £200 for a forty hour week, gave them no payslips, no contract and no agreed holidays. He treated them with his characteristic arrogance and high handedness. Answer the question Paxo – Did you pay tax and national insurance on their wages? The Screws story also re-hashes some of his affairs.
Peers Fiddle Tens of Thousands in Allowances

Labour peer Baroness Billingham, who has a flat in Hampstead and a country house in Suffolk claimed £26,983 in 2006-07 in overnight allowances inexplicably. Another Labour peer and former senior trade unionist Lord Brett, who lists his address in Who’s Who as a flat in Dolphin Square declares his main residence as his home in Cumbria allowing him to claim £27,887 last year. This scam is outright fiddling which Guido pointed to years ago.
Michael Ancram Claims £20,000 to Paint House
Yet more piggery, the multi-millionaire 13th Marquess of Lothian and Earl, Michael Ancram explains that the taxpayer had to paint his property and remove moss from the garden. Why?

Derek Draper’s Missus is Tangoing With Someone Else

Woolas Warns Against “Inbred Muslims”Cryer Says Pakistanis Have “Medieval Culture”

In comments that sound like BNP propaganda, the Environment Minister Phil Woolas blamed immigrants from rural Pakistan for a rise in birth defect rates due to the inter-marriage of cousins. Researchers say that the NHS is seeing 9 times the rate of abnormalities from Pakistani children.[…]

+ READ MORE +



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