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Diary Note /0044
Wednesday 24 April 2002
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Budget Dust Settles

Several weeks are usually needed, to get a Budget into proper perspective.  This time, the shattering victory of Le Pen in Paris has come to muddy the pool of perception.  Where stands the European debate, of Right versus Left?  Le Pen’s victory could focus the mind of “good people” throughout Europe, and help to counter growing ennui with politics and with public life [ Edmund Burke  Webnotes 01]  

It was definitely a Brownite Budget, reminiscent of those 1998 days when everyone was a Blairite, a Brownite or a Mandelsonite (remember him?).  It was good for the Labour Party, and for Gordon Brown’s perception as successor to Tony Blair, perhaps sooner rather than later.  The Party faithful (particularly the Scots and the Welsh, whose votes  will still be vital to Labour, in 2005) will have been comforted, even enthused.  Party membership will now begin to creep up again.   

It was a Brownite Budget, in that big business was pushed away a little from the embrace (they’re really Tony’s friends, not Gordon’s), small business supported (the virtuous self-employed given a warm Scottish cuddle) and public services enthroned as a Government investment priority.  And for the iconic National Health Service, coupled with The Bevan Solution, a massive vote of confidence – the NHS now has its very own spell in intensive care, no expense spared.  For my part, I want to see the money used to effect a fundamental shift, bringing in the nursing profession as an equal partner with the medical profession, in securing the good health of the nation [ see my Demedicalisation of Britain last week ] .  But however it is achieved, the political challenge is now defined.  Brown has endorsed Blair’s chosen electoral strategy, joining him on his chosen battle-ground.  They will stand or fall together.  

Just one note of caution.  It was also an old-fashioned, backward-looking Budget.  Gordon Brown is only tinkering with machinery that has already gone wrong.  And the Brownite approach remains flawed by its excessive dependence upon means-testing: means-tested benefits can never command long-term confidence, and are therefore flawed as a means of building confidence.  The Budget did nothing imaginative to relieve people’s fear of future unemployment or impoverishment, it did nothing for law & order or to relieve the fear of crime, nothing to relieve the pension anxieties of the young and middle-aged.  And these are the fears which are gnawing away inside my fellow citizens [ see my New Bevan Agenda ].  That’s what I think, anyway.  Labour still risks putting too many of its golden eggs into the medical basket…      

The Financial Times hit the button with its cartoons - both of these come from the Pink 'Un.  People take Budgets so seriously that it is difficult to find the right flavour for cartoons, even in the tabloids.  I happily and willingly acknowledge my sources, and hope that I will meet all legitimate royalty fees and charges by giving you this direct link to the Homepage of the most European newspaper of all, I give you the one-and-only Financial Times!

Cumbersome pages  

One of you, a regular reader from Hendon, has complained that my DiaryNote pages are simply too long, too unwieldy.  That’s not quite the same as the prolixity charge, made against me last month – but equally valid.  It is annoying having to scroll down and back up again – I will try to remember to insert a “Back to Top” button at the end of every item.  My second response is to relegate more commentary to “Footnotes” – a separate webpage which you can access if you wish [ see Webnotes ]  Let me know what you think of these “improvements” 

Try this  > Top        

Significant Fare
Increases for Rail

Pity Stephen Byers.  He is trapped in the accelerating whirlpool that is "Rail", with the waters rapidly disappearing down the plug-hole -  and he cannot find the plug.  The Government has pulled the plug on the system, and cannot get it back in.  Worse still, it does not know which plug to use.  Services are still deteriorating - I know that, because I travel by rail several times a week..

This week, Byers was pilloried for trying to get the the release of bad news (of railfare increases) balanced by some good news, which makes good political sense.  His problem is that he cannot face up to the solution, which is to let half the water run out, abate the strength of the whirlpool accordingly. And buy a new plug.

My advice to the Government is to close 1000 miles of track (about 40% of the network, as I understand it), retain only the InterCity and principal metropolitan commuting networks, abolish the two-class system, and double rail fares [ see my Plan for Rail ]  No society can afford the investment now needed to maintain a declining technology that was already out-of-date a century ago. 

Rocketing urban and suburban house-values prove decisively that city-dwellers are getting their rail-commuting on the cheap.  Invest in road transport, young Byers, in better buses and better roads, and win the eternal gratitude of a long-suffering driving, bus-riding public.  After a few squeals, everyone will also accept universal road-charging - you know it makes sense.  

Five times as many journeys are made by bus and coach as are made by rail.  Only 7% of all passenger journeys are made by rail.  Has your political nouse entirely deserted you?

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Across Europe

What is happening, across Europe?  Le Pen's victory in Paris poses the question, but does not give the answer.  In Hungary this week, the Socialists have re-taken power from a small-business/peasant xenophobic Right.  And in provincial elections in Saxony-Anhalt (a small federal state in former East Germany), the Schroder Socialists (SDP) lost power to the Christian Democrats, contributing to the build-up in the German General Election in September.  In the meantime, the French General Election in June will pose the Socialists (sans Jospin) with a new and dramatic political challenge.  And our UK politicians are all out on the stump, recognising that the 2 May Local Elections will be treated as a verdict on the Government.

What is happening, across Europe?  You will find my answer at Webnote 44/2


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Graduate Debt

The Government is edging towards an acceptable socialist solution to the problem of how to secure graduate contributions towards the costs of higher education.  But they have not got there yet.  This week a NatWest survey reported that the graduates of 2002 would leave college owing an average debt of £10,000 each.

The whole imagery of "debt" is misplaced.  That was a Tory configuration, and socialists should reject it.  Most socialists accept the principle that those graduates with adequate incomes should repay to the community part of the cost of their education.  There is nothing un-socialist about that.  But an entirely new mechanism is needed, to give expression to that requirement.  

Future undergraduates should receive a "repayable grant", receivable as of right up to determined limits, and repayable only through the tax system.  The concept is well-known as a mechanism of business support, where conditional grants are made.  Future graduates should simply pay an Income Tax Supplement, a small percentage addition to whatever Income Tax they would otherwise pay.  The Supplement would go towards repayment of the grant and would cease when the debt had been repaid.  And if the graduate never earned enough to repay the grant, the balance would simply be written off upon death.

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E-mailing is good
for you!  It's official!
   

Texas University researchers reckon that E-mailing helps you let off steam - "emotional writing produces positive health outcomes", they say.  They studied the aftermath of 11 September, and how people handled their feelings.  The E-mail process facilitated self-clarity, and helped cope with the stresses of life, they found.  And if E-mailing is good for you, I can commend weblogging, which is this business.  Has anyone else started a Weblog?  [ See Daily Telegraph ]

Budget Background

One of the great advantages of Budget time is that general statistics are published in comprehensible form.  You are reminded, for example, that only 29% of the tax take comes from Income Tax, although another 16% comes from National insurance, making 45% overall - still less than half.   

"Purchase taxes" (VAT and Excise Duties) account for another 24% altogether.  The principal business taxes (Corporation Tax, Business Rates) account for 14%.  The unpopular and controversial Council Tax (on domestic properties) raises just 4% of public income.  That leaves 14% in the Miscellaneous category - Insurance Tax, Airport Tax, North Sea Oil Levy, Landfill Tax, Stamp Duty, Capital Gains Tax - the lot.

  • Taxes on income                 45
  • Taxes on Goods/Services   24 
  • Taxes on Businesses          13 
  • Council Tax                           4 
  • Miscellaneous                     14 
  • Total                                   100%

Not many people know that...

How is it spent?

  • Social Security                    27
  • NHS                                    16 
  • Education                            13 
  • Defence                                6 
  • Law & Order                        6
  • Housing/Environment          5
  • Industry,Agriculture            4 
  • Transport                              3
  • Everything else                   15
  • Interest on Public Debt        5
  • Total                                  100%

I find that after Budget time, these simple statements are very hard to find...

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Spanish practices

The final word on the refined complexities of a Brownite Budget goes, as is fitting, to the Financial Times.  The greatest risk than Brown runs is that of over-complication - he has a complex and subtle mind.  Yet great simplicities can also be missed.  

This Budget introduced. for example, for small businesses a flat-rate VAT which will relieve them of the need for transaction-based tax-accounting.  When we were on holiday in the Pyrenees, I noticed that our restaurateur landlord did not use VAT invoices.  An emigre Englishman from Surrey by the name of Trevor, he explained that Spanish small-business VAT took the form of a single annual charge, negotiated with the tax authorities.  How sensible, I thought.  So much simpler, and need not involve any sacrifice of tax income.  But that was in April 1994.  I made a diary note of it, at the time.  In his search for supportive small-business initiatives, Gordon has just caught up...   

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