General Election Betting / BePolitics.com / 01 December 2008 / 1 Comments

The Pre-Budget Report signals yet another nail in the New Labour coffin. Jonathan Sanders from BePolitics tells us why...

Many in the news media were this week heralding the end of Gordon Brown and Tony Blair's New Labour project following the Pre-Budget Report (PBR) on Monday. In particular the end of the golden rule of 'borrowing for investment only' and commitments to increase taxation on the rich and poor alike in order to tackle the predicted budget deficits in years to come represent a marked change compared to the economic policies of the past 11 years.

New Labour wasn't born out of an ideological conversion however, it was born out of a raw desire for power not a desire for change - and has been sustained for so long only by virtue of the fact that the party has managed to remain in power. All this is about to change however, and following Monday's Pre-Budget Report, a new wind is blowing. A tipping point has finally been reached.

In a way, the Pre-Budget Report did not say anything that we the public did not already know; a recession is on the way (or in progress) and there is no cash in the rainy day fund to help us, so we must borrow. The announcements from Monday are much more significant that this though, and tell us three key things about the Government that will lead to its downfall.

Firstly, it shows the Government's complete lack of understanding. In the PBR, the only real benefit for ordinary people of working age - those people whose consumerism keeps the economy going - is the cut in VAT. Although on paper this should result in an extra few pounds in the bank at the end of the month, in reality people just don't feel better off, and if people don't feel better off, they are no more inclined to go and spend their money - £10 off a £400 computer won't make people more inclined to buy a £400 computer.

Secondly the PBR shows a government running out of ideas. The measures announced on Monday are rushed, and their impact on the ailing economy will be minimal. They also lack so called 'joined up thinking' - instead it seems the Government are clutching at straws. For example, when many retailers are struggling to survive and are concentrating on attracting customers, they are burdened with the logistical nightmare of re-pricing stock and making the necessary adjustments to reflect the cut in VAT.

Then, just when the economy is expected to begin recovering - at the end of 2009/start of 2010, VAT will return to 17.5% helping to stifle consumer demand and at the same time delivering a poorly timed petrol price rise. The rise in petrol prices will not only penalise motorists, but will also leading to price rises for consumer goods, food, clothing and anything else delivered by road. A double whammy for consumers of rising prices and rising taxes.

Finally, the admission in the PBR of a recession in 2009 with the economy shrinking by up to 1.25% is an admission of guilt and culpability on behalf of the Government. The Government that promised the 'end of boom and bust' has had its boom and announced on Monday that a bust is coming. This will be the final nail in the New Labour coffin - the conclusive proof that the sneaking feeling we have that you can't trust these New Labour types has been justified all along. Although claims to have ended boom and bust will be evaluated alongside all of the other lies and failed promises of the New Labour project, it will cut deeper than any of the others. Homes, jobs, livelihoods and futures will be damaged or lost as a result of this false promise, and the electorate will not be quick to forgive it.

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