Too Little Too Late

The latest news that the government is to stop closing job centres and, indeed, is to employ another 6000 people to man them to cope with rocketing unemployment, encapsulates rather neatly the dilemma which faces the administration.

All those centres – vital though they probably are - will have to be manned by people who are on the public payroll, at the very time that the government is trying to cut back on public spending. Perhaps those jobs are important; but what about all the other crazy jobs in the public sector that are paid for by the taxpayer? More about this in a moment.

The government’s desperate measures to stop recession turning to slump and then deflation are too little and too late. The idea that consumers will help Britain spend its way out of trouble by simply knocking 2.5 per cent off VAT will not make an iota of difference to consumers who either haven’t got any money to spend, or are terrified of the future and determined to hang on to the little they have, or who have become so used to offers of 25 to 50 per cent off everything that 2.5% seems laughably infinitesimal.

The property market needs a real fillip. And it was not in this package. One way of getting some movement would have been to abolish stamp duty altogether. And especially for first time buyers. That would have been really radical and adventurous.

Neither was there any word of encouragement for hard-pressed landlords of rented properties who are vital in making up the shortfall in housing and accommodation. And not one sign of real or daring invention – bringing back tax relief on mortgages for instance – which was mooted in TheLettingSite.co.uk articles very recently.

As for taxing the rich… what about those people who don’t pay a penny of tax in the UK, the multi-millionaires who prefer to salt it away in sunny tax havens – sheltering their wealth behind foreign-based companies and putting assets into their relatives’ names?

The foreign-based tax-avoiders are always quick to lecture the country about what is needed. But why do they keep hiding away in Britain’s hour of need? The immediate closure of such tax loopholes is vital. Going after the very rich should have started immediately. It might be the politics of greed and envy. So what? It would have been a big morale booster for the rest of the nation which has already had to bail out the City and is going to be pressed so hard in the future by tax hikes of unimagined proportions.

Interestingly, the real worry is that people on £40,000 a year are going to be clobbered. In other words – middle England is once again going to be the real milch-cow, the absolute loser in all this. The way that Darling has done this is by raising national insurance by a half-point. It’s estimated that people on £40,000 will pay an average of £3 a week extra – and this should swell the national purse by about £500 million.

People on £100,000 a year will have their personal allowances chopped in half. Anybody on more than £140,000 will lose them altogether. In 2011 somebody on £150,000 will pay another £3000 a year in tax. About £60 a week. Ah didums! If they’re on £200,000 they’ll pay another £5000 a year. About £100 a week. Breaks your heart doesn’t it?

Already a motley assortment of accountants are bleating about Britain no longer being seen as the alluring place it once was for foreign investors. Oh horror of horrors! The red flag of blood-red Socialism is once again flying over Downing Street. What utter piffle.

If the foreign investors don’t like it why don’t they go and have a look at somewhere like Dubai, for instance, where the great property boom – which attracted the celebrity likes of Beckham and Schumacher - is now suddenly knee-deep in the unmentionable.

This is not a crisis restricted to Britain. It’s world-wide. And there’s still hardly a corner that could match the stability and maturity of the UK – certainly not somewhere like the United Arab Emirates – touted so recently as the smartest place to park ones loot. OK. So the UK’s taken a battering. But where hasn’t? It could be worse. It could be Iceland.

Now to the thorny question addressed at the commencement of this article. Namely, one wonders if the reduction in public spending by a chunky £12 billion – and remember, it was only eight months ago that Darling set out his state spending plans – will result also in a cut back in the number of ludicrous state jobs which accompany public works?

A glance at the public sector jobs still being advertised in The Guardian every week gives a clue to the lunatic salaries and unbelievable pensions that are still on offer for often bizarre, politically-correct appointments. Virtually half the working population is now on the public payroll. So when are Brown and Darling going to do something about them?

The problem is that if the government culls its employees it will A) lose their votes and B) have to pay them redundancy money and still honour their pensions. So whatever happens – if they retain their jobs, or if there are cut-backs – the taxpayer, all those poor devils flogging themselves to death in the private half of the economy, will still lose out.

The only thing that is certain about the crash and how to survive it is that Britain is now seriously in the red – up to its gunnels – and that Brown and Darling have taken a massive gamble with our money. The big tax bill will be due in 2011. That’s after the election. So if Cameron gets in – the chalice will be well and truly poisoned.