Labour Looks to Re-Write Its Own Rules
Published by Patrick Omari in Government, 5 months 2 weeks 4 days 20 hours 46 minutes 52 seconds ago
Surely most of us have been in a financial quagmire at some point in our lives and learned that borrowing your way out is not the answer. Not Gordon Brown and Alistair Darling.
As the global recession lumbers closer, the government has announced its latest attempt to cope; re-writing the rules. With less money coming in from tax revenue the government is looking at a revenue shortfall of GBP8 billion. Gordon Brown, the man who's last budget put so much of the country in the toilet, is now considering changing the amount the government can borrow.
At present, the government is permitted to borrow up to 40% of the country's national income, a figure laid down by Gordon Brown when Labour took over in 1997. A new framework permitting more borrowing is expected in this Autumn's pre-Budget statement and could very well make a mockery of Gordon Brown's reputation. For a man with a reputation built on his ability on his prudent economy management, the current financial climate was damning enough, this current u-turn suggests a government floundering for ideas and unable to cope with the recession.
The other possible solution to the predicted shortfall would see the country facing a large tax hike, even worse news for a Prime Minister soon, hopefully, to face public vote. A huge display of incompetence from a government that has already borrowed GBP2.7 billion to fix the mess caused by the 10p tax rate, re-writing their own rules once again could be the massive blow in trust that leaves the doors to Number Ten wide open for David Cameron.
Another rule looking set to be broken by Mr Brown is the Golden Rule of the Treasury. During an economic cycle the Chancellor is allowed to borrow only to fund investment in projects (think schools and roads), NOT for day-to-day spending or covering short-falls in revenue that previous budgets had failed to foresee.
Shadow Chancellor George Osbourne has stated that the move would herald the "final collapse of Brown economics."
With housing prices dropping, houses sitting empty, the government is likely to lose a potential GBP5 billion of the GBP13.5 billion it had expected to rake in on stamp duty for the fiscal year. As the public reduce their spending an begin budgeting and economising, VAT receipts will also be feeling the squeeze. With money and credit running short across the U.K and a gloomy picture ahead, the country is looking to the government for answers while the government is looking to solve it all by borrowing. A great example considering it's something that less and less of the county are able to do now thanks to the "credit crunch."
While no decision has yet to be taken, could this be last act of a desperate government? We shall see. One thing's for sure though, what little confidence existed in Labour will be stripped away if they continue to fix the rules as it suits them.
As the global recession lumbers closer, the government has announced its latest attempt to cope; re-writing the rules. With less money coming in from tax revenue the government is looking at a revenue shortfall of GBP8 billion. Gordon Brown, the man who's last budget put so much of the country in the toilet, is now considering changing the amount the government can borrow.
At present, the government is permitted to borrow up to 40% of the country's national income, a figure laid down by Gordon Brown when Labour took over in 1997. A new framework permitting more borrowing is expected in this Autumn's pre-Budget statement and could very well make a mockery of Gordon Brown's reputation. For a man with a reputation built on his ability on his prudent economy management, the current financial climate was damning enough, this current u-turn suggests a government floundering for ideas and unable to cope with the recession.
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The other possible solution to the predicted shortfall would see the country facing a large tax hike, even worse news for a Prime Minister soon, hopefully, to face public vote. A huge display of incompetence from a government that has already borrowed GBP2.7 billion to fix the mess caused by the 10p tax rate, re-writing their own rules once again could be the massive blow in trust that leaves the doors to Number Ten wide open for David Cameron.
Another rule looking set to be broken by Mr Brown is the Golden Rule of the Treasury. During an economic cycle the Chancellor is allowed to borrow only to fund investment in projects (think schools and roads), NOT for day-to-day spending or covering short-falls in revenue that previous budgets had failed to foresee.
Shadow Chancellor George Osbourne has stated that the move would herald the "final collapse of Brown economics."
With housing prices dropping, houses sitting empty, the government is likely to lose a potential GBP5 billion of the GBP13.5 billion it had expected to rake in on stamp duty for the fiscal year. As the public reduce their spending an begin budgeting and economising, VAT receipts will also be feeling the squeeze. With money and credit running short across the U.K and a gloomy picture ahead, the country is looking to the government for answers while the government is looking to solve it all by borrowing. A great example considering it's something that less and less of the county are able to do now thanks to the "credit crunch."
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While no decision has yet to be taken, could this be last act of a desperate government? We shall see. One thing's for sure though, what little confidence existed in Labour will be stripped away if they continue to fix the rules as it suits them.
About Patrick Omari
Patrick is an expert Research and Travel consultant. His current interest is in Southampton port parking and Manchester airport parking.
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