The Budget Part 2: our increasing debt

We all know of the government overspend, and how it’s adding to the total debt that we owe to people who’ve lent the nation money. It’s worth looking at the data in the Budget document. There’s an easy to read online version of the budget, if you you’re not interested in downloading each chapter.

Anyway, two key tables are what the nation is budgeted to spend in the year, and what it expects to collect in taxes. Spending for 2010-11 is £697 billion, while income is £548 billion. That’s a £149 billion overspend. Absolutely ruinous. Here are the two tables from the Budget Red Book:

 

 

The Budget Part 1: Quick overview

I watched George Osborne deliver his first budget. I thought it was a confident performance from a much underrated man.

The standout item was obviously the increase in VAT by 2½%. Seems to me that this was a sensible tax rise, far better to tax consumption than earnings. I’m not certain I fully understood the fuss created by the likes of ConservativeHome and others who were arguing against a rise in VAT. It’s an easy tax to collect, and continuing not to add VAT on food, children’s clothing or books, is also sensible.

I liked Osborne’s candid approach to the listening public. Osborne is an astute politician, can it be that I don’t recall hearing the words cuts or Gordon Brown.

You might like to read what these columnists have to say about the budget:

I imagine that’s enough to digest. I watched BBC News after the budget and found Stephanie Flanders comments to be both lucid and intelligent, but switched over when Robert Peston began speaking, my is his delivery irritating. Final point, I was surprisingly impressed by the LibDem Chief Secretary to the Treasury, Danny Alexander.

Dress code on City trading floors

Nope, I’ve no experience of City trading floors, other than that I see on TV. Prompted by the background activity in the BBC News Budget coverage at a City trading floor, I asked my memsahib if the frenetic action and dress were normal. 

My wife worked in IT for a large bank in the City. She said, yup, pretty normal. Although she said she’d seen traders stand up more from their chairs, while on the telephone or shouting to colleagues. 

Also on TV on budget day – not sure which channel – was one young City economist-trader-type, fashionable facial stubble, wearing a dark suit, white shirt, and a tie. Fine, but, his shirt collar button was undone, and his tie was partly undone and hanging down loosely. It looked untidy and unprofessional to me. Had I been appearing on TV, I might’ve taken a moment to pull my tie up to my shirt collar. Again, I asked my wife if this was normal? Her reply, “That guy’s smart”, continuing, “They mostly don’t wear ties, and a good number of them have their shirt tails hanging out.”

I suppose I shouldn’t complain. When I worked in the world of computer software development, we were lucky if the developers weren’t wearing sandals without socks.

Budget impressions: Part 2: The numbers & politics

I know I said I’d prepare a response to the Budget and the politics around it. Two things, probably a little impertinent on my part, and I forgot to say a goodly part of it would be to point to what respected others have said. 

My view was that the Budget could have been much worse. It was surprisingly devoid of shocks, if anything it was almost boring. The Budget has introduced a number of small measures, on stamp duty on home sales, and crackdown on tax evasion [e.g Belize], clearly designed to create political dividing line between Labour and the Conservatives. This was a political budget. 

As for its value to solving our ballooning debt, and the enormous government budget overspend, this budget was a failure. These problems remain to be solved. Measures to improve our national competitiveness were sadly lacking. Enough of my somewhat shallow analysis. Here’s what the serious commentators are saying:

  • Deloitte’s: The accountants view
  • Paul Waugh in the Evening Standard: The Polo budget
  • Lorna Burke in Citywire: Wealthy bear burden in Darling’s phoney budget
  • Jon Craig in Sky’s Boulton & Co: A ‘stuff the Tories’ budget
  • Iain Martin in Wall Street Journal: That was barely a budget
  • Fraser Nelson in the Spectator’s blog: A reassuringly dull budget
  • Stephanie Flanders, BBC’s Economics Editor: The count-yourself-lucky budget

There, that should keep you going for a while.

Cameron’s humour in his reply to the Budget

I know humour delivered in Parliamentary debates is mostly of the political kind, and therefore only funny according to your political leaning. However I did find these lines in David Cameron’s response to the Budget [from Hansard], highly amusing. I’ll not explain them if you don’t see the joke:

“Labour Members are leaving. The taxis for hire are on their way out of the Chamber.”

“Let us have a look in detail at the appalling mess that the Prime Minister and Baldemort seem to find so funny.” [Refer to Guido for the Baldemort quip].

“Let us take the mortgage support scheme, which was announced in December 2008. The Government said: “This is real help for homeowners”. So how many households did it help? Fifteen. That cost £66,000 per household helped; or, to put it in currency that the Cabinet can understand, that is about 13 days of Geoff Hoon’s consultancy fees.”

“To be fair to the Prime Minister, there is one forecast that he got spot-on. He told an audience of bankers: “What you as the City of London have done for financial services, we as a government intend to do for the economy as a whole”. That is a pledge he met in full.”

“Having been fourth in the world for tax and regulation, we are now 84th and 86th. We have gone from the top of the premier league to the bottom of the conference in 13 wasted years—and we say that it is time to sack the manager. No wonder “Match of the Day” did not want him.”

“This Prime Minister will never get a medal for courage—although it has to be said that most of his Cabinet get mentioned in “Dispatches”.”

There was one other on ‘sticking with Gordon’, but it’s a bit too long. Never mind, that’s six corkers delivered in his speech. Always good to mix humour into a speech, but it ain’t an easy thing to do well. Cameron succeeded.

Budget impressions: Part1: Performances

Budget day in Parliament is part finance, part politics, and part theatre. I didn’t set out to this, but after having watched the performances of the main players on TV, and by channel hopping I’ve decided on a two-part analysis.

Part 1 is on my impressions of individual performances, politicians and TV media, leaving to Part 2 my two analysis of the contents of the budget and politics.

Right, straight to it, while the impressions in my mind are not lost:

  1. Alistair Darling: Delivery – flat and dull; Content – thin and no shocks; Analysis of nation’s finances – poor;  Overall marks 5 out of 10
  2. David Cameron: Delivery – energetic; Humour – matchless: Content – rich; Analysis of nation’s finances – very high; 10 out of 10
  3. Nick Clegg: Delivery – trying too hard & boring; Content – thin; 5 out 10
  4. Huw Edwards: Laboured, needed to be snappier: 6 out of 10
  5. Stephanie Flanders: Clear authoritative and analytical; 8 out of 10
  6. Nick Robinson: Solid, dependable analysis; 7 out of 10
  7. Robert Peston: Irritating, too slow to make the point; 2 out of 10
  8. Andrew Boulton: Incisive – but, get rid of sandwich board man; 8 out of 10
  9. Lord Mandelson: Irritating, a serial interrupter, weak; 4 out of 10
  10. Iain Duncan-Smith: Sharp, landed good punches on Mandelson; 9 out of 10
  11. Charles Kennedy: An empty vessel: 2 out of 10 [lucky to get 2]
  12. Jackie Smith: Tough – but oh that hair-do; 7 out of 10
  13. Ed Davey: Weak; 3 out of 10
  14. Michael Fallon: Clear and authoritative; 7 out of 10

Note: my impressions of the bottom three were based on not much viewing.

On the day, the clear winner, by a country mile, was David Cameron. Sure I was expecting a good performance from him, but this was excellent. Where Alistair Darlings speech lacked the numbers, Cameron’s was number and analysis rich. I’ve not heard a better speech from him. It was the difference between Cameron, and Darling, and Gordon Brown in the earlier Prime Minister’s Questions that prompted this subjective analysis of individual performances.