Gordon Clown .Com

Massive headline on the front of today’s Daily Express: Now The Big Tax Backlash. Not great news for Gordon - he’s gone from hero to zero in a matter of days. The cheers from the Labour benches on Wednesday as he announced his 2p tax cut now a distant memory, and replaced by the jeers and groans of the media and public at large over his con attempt gone wrong. Exposed as a liar and a spinner, robbing from the poor to give to the rich, all in a desperate attempt to win a few lousy votes.

Instead of a tax giveaway, taxes will go up by the equivalent of £100 a year for every household in Britain.

As the backlash began against the Chan­cellor’s blatant deception, experts poring over the Budget small print discovered that Mr Brown is raising taxation by £2billion a year by 2010. And at least one in five families will be worse off as a result.

Mr Brown posed as a tax cutter. But as the Daily Express made clear yesterday, his 2p reduction in income tax was more than offset by other tax rises.

The deception led some to question whether the Chancellor had made the biggest blunder of his career and is losing his political grip.

Surely there can no longer be any question - whatever “grip” Gordon may have had at some point has long since deserted him. Since it has become clear that he is unable to work with others due to his numerous mental defects and attitude problems, who knows how long he can last in number 10?

It hasn’t taken long for the real truth to emerge about Gordon’s budget on Wednesday. 2p off the basic rate of income tax and he doubtless expected to be showered with praise and win votes up and down the country. The abolition of his own 10% tax rate to fund this measure was a mere detail of course. Well thanks to a bit more in depth analysis, it seems that is not the case.

The BBC, probably the most visited news website out there, has an article giving a run down of the winners and losers of the budget, and surprise surprise it seems the poorest will be the biggest losers. So much for Gordon Brown, “man of the people”. KPMG have worked it all out for us, in fact. Firstly the losers:

Taking into account the effect of changes to income tax and NI - although not tax credits - in 2008-09, compared to this coming financial year (2007-08), then most people will be better off because they will be paying less money to the Chancellor.

The most obvious exception will be people earning £17,000 a year or less.

By having a slice of their income taxed at 20%, rather than 10%, they will pay more - £131 a year more, KPMG estimates, if their income is less than £10,000.

And now for the winners:

The biggest winners in this calculation will be those earning about £35,000 a year.

They will keep £353 a year more, according to KPMG.

The rise in the ceiling for the standard 11% NI contribution rate means that those earning about £40,000 a year will gain very little - just £24 a year.

They will now pay NI on the top slice of their income which was not subject to it before.

Meanwhile those earnings more than £43,000 will gain £196 a year overall.

So, typical Gordon it seems. Taking from the poorest and giving to the richest. In fact, as long as you earn more than £17,000 per year, you are ahead. Money taken directly from the pockets of those earning less. A very typical New Labour way of redistributing wealth it would seem.

Helpfully, KPMG have arranged a handy graph for us all to see where we fit in:

See if you can find yourself there. Luckily for Gordon, he’s well above the zero point, as are his friends and colleagues. So that’s all right then.

With today’s budget, Gordon has tricked the public into believing he’s cut taxes, when in fact he hasn’t. In fact, the removal of the 10% tax band and the cut of 2% on the next band up will hurt low earners, and only benefits high earners very slightly. But as ever with Gordon, the sting is in the spin, and the BBC amongst others have fallen for it hook line and sinker with headlines such as “Gordon Cuts Tax by 2p”.

One interesting thing about this measure is that, like a lot of measures in today’s budget, it doesn’t come into effect until next year.  This means, presumably, that whoever succeeds Gordon as chancellor in the next few months won’t actually need to announce a budget for a few years.  Gordon seems to be seeking to ensure his rules are followed even after he’s left office…
Other than that it was a fairly dull budget, unsurprisingly as Gordon is desperate to maintain the status quo to ease his passage into the house next door. Hopes for changes to Stamp Duty and Inheritance Tax went unfulfilled, and fiscal drag has been allowed to drag on in almost all cases, apart of course from the areas such as beer and fags where fiscal drag would be bad news for the treasury’s coffers.

Desperate to appear to be doing his bit for the green cause, Brown raised road tax for 4×4 “gas guzzlers” to £400, completely missing the point - as do most politicians - that global warming is far too large an issue to be solved simply through a few punative taxes on a small proportion of the public, and needs stronger measures to be affected at the multinational business level. Gordon took care of big business of course with a bit of corporation tax cutting - but simply passed it on to tax hikes for small businesses. Another nail in the coffin for entrepreneurship in Britain should ensure the ongoing brain drain continues.

Gordon Brown will clock up a century later this week in his budget speech as he announces his 100th tax increase since coming to office.  Gordon has already put up taxes 99 times as chancellor to pay for his public sector spending splurge, but more is likely to be on the way on Wednesday.

George Osborne, the shadow chancellor, said that on past form there would be “stealth tax rise number 100″ in the Budget, even though Britain already had the highest tax burden in its history.

“These 99 stealth tax rises have made our economy less competitive and hit family incomes hard,” he said.

“They are part of the reason people are feeling the pinch as our real living standards fall. Even more depressing is that so many people look at the state of our public services and ask: where has all my money gone?'’

The tax burden in britain is now 42.7% of GDP, up from 39.5% 10 years ago, one of the biggest increases in the western world, and yet our standard of living has barely improved.  The next big question is: can Gordon do as much damage from number 10 as he has done in number 11?

It appears that when Gordon vacates number 11 later this year, he will leave behind a legacy of tax-and-spend that sees the Government’s spending as the largest share of national income for nearly a quarter of a century. But it’s all alright for him, as when the house of cards collapses he can simply blame it on whichever sucker steps up to take his place. It seems as though Brown is planning to use Jack Straw, one of the biggest suckers around, as his sacrificial lamb. This Sunday’s Telgraph says:

Gordon Brown’s 10th - and final - budget is on March 21. In the run-up to his swansong, it is increasingly clear that the Chancellor has driven Britain onto the fiscal rocks.

New official figures suggest that this will be the seventh successive budget in which Brown is forced to revise his borrowing figures upwards.

Between April 2006 and January 2007, the central government current budget deficit - tax revenues minus day-to-day spending - was £11.6bn. That’s almost £1bn more than the comparable figure last year, despite Brown’s insistence that the deficit would shrink.

These numbers add to a growing sense that the Chancellor has spent too much taxpayers’ money, without securing a compensating improvement in public services.

Richard Jeffrey, the economist, calculates that government spending under Brown has risen by 98 per cent in cash terms, while the economy overall has grown by 69 per cent. That’s why government spending last year claimed its biggest share of national income since 1983.

The International Monetary Fund, the world’s most important financial watchdog, is now raising concerns about Brown’s “credibility”.

In its latest report on the British economy, published last week, the IMF said the Chancellor faced a “critical test” and called on him to rein in public spending after years of largesse.

Brown’s actions have led to “a sharp deterioration in the fiscal balance and rising net public debt”, said the IMF, while predicting that government borrowing would spiral beyond the Treasury’s forecasts.

And next week business leaders too will indicate how worried they are that this high-spending chancellor is undermining Britain’s ability to compete.

“We are at a fork in the road,” says Miles Templeman, the director-general of the Institute of Directors, in the IoD’s forthcoming Budget submission.

“There is nothing inevitable about a rising burden of taxation - since 1993 public spending in Spain has fallen by almost 11 per cent,” he says. “Perhaps the UK needs some Spanish lessons, as the current size of our state is not globally competitive.”

The IoD document highlights how “fiscally exposed” we are in the event of a sharp downturn. “There is no buffer in the public finances to absorb the impact of such an event,” says Templeman.

That’s true - even Brown’s repeatedly rigged “golden rule” shows a surplus of just 0.1 per cent of national income.

The Chancellor knows the fiscal crunch is coming. That is why he has deferred the tough decisions until the second Comprehensive Spending Review (which has itself been postponed from the summer to the autumn).

By then, of course, he will be ensconced in No 10. Brown can then blame the fallout on his successor as chancellor - his new friend, Jack Straw.

When the IMF starts sending out the warning signals, you know things are getting serious.

Desperate to save as much money as possible to balance the books, Gordon has announced that public sector wages will increase by an average of 1.9% in this years pay round. Given that RPI, the traditional measure of inflation used when calculating pay increases, is currently running at 4.2%, this makes a real terms wage cut of 2.3% for the public sector, or £38 a month for a civil servant earning £20,000 a year. Gordon is truly stuck between a rock and a hard place this time around - he is potentially throwing away the votes of over 6 million public sector workers - votes he cannot afford to lose if recent polls are anything to go by. On the other hand, he is currently about 20 billion pounds in the hole with public sector finances, so every pound saved is vital. The third aspect to the conundrum is the spectre of wage inflation that faces Gordon head-on. If wage inflation spirals out of control as some say it might, interest rates will eventually have to be risen to match, which would permanently destroy any remaining reputation of Gordon as a steady hand on the economic tiller. The only direct influence he can bring to bear on wage inflation is by setting the wages of his own 6 million employees, and praying the private sector does likewise. Some hope.

Trouble is already kicking off over this, and strike action may threaten at some point, as reported in the Guardian today:

Some union officials warned that the increase might trigger calls for industrial action in the NHS. Amicus said it understood the health sector’s pay review body had recommended a rise of 2.5%, but the Treasury had decided that the rise should be staged.

Health minister Lord Hunt, asked what he thought about possible industrial action by nurses, said: “I certainly hope that would not be contemplated, I do not see this as a pay cut at all.”

He added of the unions: “They may be disappointed about the staging decision, but the important thing to remember is that we have accepted the pay review bodies’ recommendations in full.”

His lordship’s comments about the unions must be like red rag to a bull. Implying they no longer have any power to influence decisions on wage bargaining may be something he later lives to regret.

The situation must be fairly serious for nurses and the NHS, as apparently they now have to rely on charitable donations from footballers, a few of whom have agreed to give a days wages to effectively help subsidise the NHS:

West Ham United captain Nigel Reo-Coker is one of several soccer stars to have signed up to the Mayday for Nurses campaign and agreed to donate their wages for May 13 to help nurses.

The campaign’s founder, Noreena Hertz, said she was hoping to sign up all 556 Premiership players, as well as managers, commentators and others in the football community. Any money raised will go towards a hardship fund for nurses who get into financial difficulties in the first few years of their career.

The campaign is also calling on the government to raise nurses’ wages to bring them in line with comparable public-sector workers such as social workers and police officers.

So there we go, not just the NHS but whole swathes of the civil service to be bailed out by the football industry. I wonder if this is what Gordon had in mind when sculpting the “miracle economy” we now bask in. The votes appear to have been cast, as witnessed by the number of sign-ups to the may day campaign.

Meanwhile, the economic miracle has been stuttering fairly severely in the city this week, with massive losses hitting the FTSE. Things seem to be turning fairly serious fairly quickly for good old Gordon.

Unsurprisingly this weekend we were greeted with the news that the National Debt has now passed the £500bn mark. In a “miracle” economy whose foundations are built entirely upon debt, debt and more debt, the news that the country owes more money than ever before can hardly come as a shock to anyone. Gordon has slowly but surely sunk us further and further into the mire, and it’s now anyone’s guess as to whether the house of cards can be supported long enough for him to make the switch nextdoor.

One of the gigantic pits in which our money appears to be gathering is the coffers of various Private Finance Initiative companies, who are seeing profits beyond their wildest dreams, just so Gordon can keep a bit of the countries mammoth debts off his balance-sheet.

One of the more recent symptoms of the whole spiral of debt beginning to unravel seems to have been the fact that even the grossly fudged CPI measure of inflation is hitting new heights, with the Office for National Statistics unable to tweak it any further to cover up the truth. This amazingly seems to have also taken people by surprise, but it appears the cat is firmly out of the bag on inflation now as traders in the City are betting that two more rate hikes will be needed to follow January’s “shock” rise, both likely to be before the summer. But for rates to hit 5.75% could yet prove relatively benign in comparison to the starker alternatives that the Bank of England may be forced into.

The Telegraph continues to admirably stick the knife into Gordon, their Sunday economics editor commenting that “Britain is heading for trouble - and it’s all Mr Brown’s fault”:

Could Britain get caught in a “wage-price spiral? Could our high-performance economy, “the most successful in the Western world” as Gordon Brown likes to tell us, get sucked into the kind of inflationary problems that did so much harm in the 1970s?

It is a horrifying prospect and, in the wake of last week’s price data showing the most important inflation index at a 15-year high, increasing numbers of analysts think such a disaster could happen.

So, in the coming months, as the interest rate rises bite and debt-soaked shoppers scream, the mood in the country will turn against Mr Brown. Of most immediate concern is last week’s news on inflation, and the related danger of a wage-price tailspin. But that is only the latest sign that Britain’s strong economy could soon go into reverse.

Were that to happen, millions of households and businesses would see a swing in their financial fortunes, just as Mr Brown moves into Number 10. His reputation for sound economic management, the centrepiece of his claim to the premiership, would be flushed away for good.

The supreme irony is that come early summer, just at the moment when he achieves his ultimate ambition, the fates have decreed that a toxic combination of rising interest rates, rising inflation, rising taxes and rising industrial discontent will rain on his coronation parade.

The Telegraph has an early christmas present for Gordon, reminding us all of how hopelessly debt-ridden his economic miracle has become. Highlights include the following:

The truth is that the “Iron Chancellor” has long shown a cavalier attitude towards fiscal management. Year after year, his borrowing has turned out to be much higher than his forecasts. Last week’s PBR – less an economic statement than the latest staging post in a remorseless political campaign – was a classic Brown performance. Drunk on ambition, he did nothing to acknowledge the true scale of his liabilities, or the fact that his fiscal rules lie in tatters. Yet the man who presents himself as our next prime minister is living in a never-never land of debt.

It has become painfully clear just how wrong Gordon’s predictions on debt have actually been:

In his budget five years ago, the Chancellor said he would borrow a total of £28bn between 2001 and 2006. He has, so far, taken on debts of £129bn during that period. His prediction was a jaw-dropping £100bn astray. Since 2002, borrowing has exceeded £30bn – more than Brown’s five-year total – every single year. That’s why “prudence”, Brown’s former mantra, wasn’t mentioned once in either his March budget or this latest PBR.

Last week we learnt that the Chancellor intends to borrow another £182bn on our behalf between now and 2012. So he will be taking on extra debts annually, amounting to one and a half times the UK’s total council tax receipts. And, on past form, even this vast amount could be an underestimate.

This borrowing binge has shattered the Chancellor’s much-vaunted “golden” rule, which requires government spending to be balanced over the course of the economic cycle. But Brown keeps moving the goalposts in an absurd bid to convince us it remains intact.

And when reality does strike, the results are likely to be surefire election-winners:

In fact, careful reading of the PBR suggests government departments may be in for a shock next June when Brown unveils his spending plans. Instead of 4-5 per cent, spending will rise in real terms by more like 2 per cent a year – which will feel like a serious cut. Expect the salaries of teachers and nurses to be frozen. Expect public sector strikes.

After years of high borrowing, this Chancellor simply lacks the political grit and judgment to exercise restraint. So he will be forced to raise tax even more. Brown has already raised the tax burden sharply since 1997, while our competitors have been moving in the opposite direction.

As others have said, the sooner this lunatic is removed from his position by whatever means, the better.

Seems dear old Gordon has been caught out fiddling the figures once again, this time it’s unemployment statistics that’s the area of deceit-du-jour. Notwithstanding the creation of countless non-jobs within the civil service as a result of his “record investment” in public services, the masking of official unemployment statistics using various forms of incapacity benefit, single parents etc etc etc seems to be running out of control giving this country a figure of 5.29 million true unemployed, or 16% of the working-age population. Gordon currently doesn’t count single parents or those caring for family members as unemployed, despite the fact that they are of working age and do not have jobs. These conveniently excluded millions (over 4 million to be precise) very nicely spin the unemployment rates down and make it look like Gordon and Tony are doing a far better job than they actually are. They often love to remind us of the 3 million unemployed under the last tory government in 1986, which at the time amounted to 10.6% of the workforce, whereas today their figure for unemployment is running at around 3%, a remarkable achievement if you ignore the facts that have now been brought to our attention. Anything to keep confidence up in the economy and keep consumers spending, it would seem.

The reported July budget surplus of £8.4bn appears to be another area where the figures are not telling the full story at the moment, although these numbers could probably be placed under the category of spin as opposed to outright lying. Seems like the press are becoming more careful when reporting figures that come from Gordon, at long last.

More stories in the press have appeared this weekend about the true rates of inflation being far removed from official government figures, with the Telegraph and the Daily Mail among others running a story stating that CPI is “meaningless” and true inflation for the British middle class is around 10%, which incidentally is 4 times the official CPI figures. A university professor, this time, has joined ever increasing numbers of other independant statistical sources, the E&Y item club etc, and worked out that Gordon’s measure of inflation is meaningless for most people because it excludes increases in council tax, household insurance and more alarmingly school fees and domestic help. Though whether private schools and nannies are exactly essential items for middle class Britain is open for debate. A pensioner near Cambridge has also referred to the CPI calculation as “beyond a joke”.

As if the above dodgy dealings were not pain enough for Gordon it seems that the housing market, which has played a large part in recent times in keeping spending in the economy afloat by way of large amounts of mortgage equity withdrawal on the back of high inflation in house prices, is suffering a small blip. In fact the front page of Rightmove is currently bearing the headline “housing market runs out of steam”, after a fall in their ever-noteworthy asking price index of 1.6% last month. Not exactly headline news in reality (although the Guardian seemed to think so), but sentiment is key, and any sustained downturn could make Gordon’s stay in Number 10 a very short one indeed.

Against all odds, the various corners of the press continue to come out of the woodwork with various comments and views on the 0.25% rate rise. Surely this is old news by now? A week after his deputy suggested that the bank’s rate rises could continue further than expected, and are designed to shock the markets, David Smith (economics editor of the Murdoch-owned Times newspaper) has come out with soothing comforting talk that rates will never go over 5%. Incidentally this is the same David Smith who has been predicting for the past year that the next move in interest rates will definitely definitely be down, so it’s probably best to take his predictions of a 5% absolute cap with a pinch of salt. Elsewhere, the Independent takes a more precautionary and sensible approach, warning borrowers that the August rise will probably not be the last, given the recent rumblings from Mervyn and Co. Interestingly they point out that a 0.25% rise is not the only option available to the Bank, something many commentators appear to have forgotten recently.

Roger Bootle in the Telegraph suggests that the US economy is in for a tough 2007, due to the US housing market (the “leading support for consumer spending”) hitting the rocks, but of course the same situation replicated over here would not apply to Britain in the same way would it? Apparently a couple more interest rate rises could see Britain following the US where housing is concerned, but I’m sure Gordon must have thought of this.

The Sunday Herald add an interesting wrinkle to the whole interest rates debate by correctly pointing out that around half of consumer and business debt is actually lent out on a fixed-rate deal basis at the moment. Presumably this means that the Bank will need to raise IR even higher before it starts to have the desired effect? The Telegraph asks numerous “city experts” to comment on whether interest rates have peaked at 4.75% and comes to the conclusion that they almost definitely have not.
Perhaps most surprisingly of all, the BBC have reported today that even though CPI has just fallen by 0.1 whole percent, to 2.4%, this may not save us from more IR rises. Shocking really, as the BBC would usually use such news to persuade us all into thinking that rates must be about to go down again!

On a separate issue, Channel 4’s Dispatches programme have shown themselves to once again be the true masters of stating the bleeding obvious by revealing that apparently the various Private Finance Initiative projects that have been dreamt up by Brown and Blair since 1997 have all been huge rip-offs and terrible value for the taxpayer. Given that the Government effectively has the ability to borrow as much money as it likes at the lowest interest rates known to man, it seems flabbergasting that so much of the running of the country has been handed over to the private sector, at many many times the overall cost as in the pre PFI days. Brown’s famous promise that he would “only borrow to invest over the economic cycle”, despite a couple of tweaks by redefining the length of said cycle, redefining the definition of “invest” and the definition of “borrow”, would still be met even if the PFI deals had been done entirely within the public sector, as surely these works would have come under the “invest” column. Then again, borrowing all the extra money may have rung alarm bells in some areas, and the Government already obviously need plenty of it to pay for all their wars etc. Once Brown and Blair dream up the idea of using PFI to pay for wars, then maybe they will really be onto something.

On a lighter note, aside from all the doom and gloom of impending rate rises that is floating around at the moment, the Telegraph gives us a fascinating glimpse into the psyche and inner frustrations of the Iron Chancellor by revealing that he has decorated the treasury with, amongst other paintings, Graham Sutherland’s “Expulsion and Killing of an Enemy”. Something for Tony to ponder, perhaps?