Tuesday, November 25, 2008

Well done, George!

It's not often I find myself in agreement with George Osborne, but today is one of those days. Responding to the government's budget (whatever they want to call it - it was a budget) on BBC Breakfast this morning, Osborne said that when consumers aren't being enticed to part with their cash by sales promising 20%, 30% or more off prices then what difference will a 2.5% cut in VAT make?

He's spot on. It won't make a bit of difference. He was also right to say that a freeze on council taxes would help more people than any of the announcements made by the chancellor yesterday. The thing is, when times are tight, people - unlike this government it seems - look more closely at their budget. The biggest worry is not knowing how much their regular bills are going to change - this is why, at times like this, so many people look to fix their mortgage payments so that they don't get any nasty shocks.

One of the biggest monthly bills many face - especially pensioners - is the council tax bill. After my mortgage, my council tax bill is the second largest monthly payment I make although energy bills are likely to overtake that at any time. We also know, by experience, that council tax bills tend to rise by considerable percentages year on year - particularly if you live in Labour controlled councils.

Freezing council tax bills would have two benefits. First of all it would allow people to budget for the long term - knowing that their council tax won't go up next year - and that helps them to know how much they will have to spend. Much more useful to your average householder than announcing a temporary cut in VAT.

The other benefit is that it caps public spending. It does not - as some will no doubt suggest - mean there will need to be cuts, it just means that the rate of increase in public spending will be less than it otherwise would have been. Every council in Britain has plenty of scope for reducing their outgoings, but few are willing to do it. Conservative councils (including those in "deprived" areas) have proven that you can reduce council spending and still provide top quality local services - so there really is no excuse for any council anywhere not to be able to do likewise.

So, well done George. It doesn't excuse you and Cameron from the stupid and now discredited idea of sticking to Labour spending plans, but it's a move in the right direction.

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