The Chancellor, George Osborne, gave little away yesterday when he declared that Wednesday’s Budget would be intended to help “low and middle earners”. At at time when unemployment is high, creating more of these earners is a priority. This is the rationale for his reported intention to freeze the minimum wage for young workers at below £5 an hour. If it is cheaper for employers to take them on, it could go some way to bringing more young people into work.
More positively, he can be expected to go further in advancing the single most useful Liberal Democrat policy, to raise the income tax threshold to take more low-paid workers out of tax altogether. That is a genuinely progressive approach which would, as it happens, benefit all earners.
Over and above that, Mr Osborne has already declared his intention to close tax loopholes. He is expected to announce a general anti-avoidance rule which will exclude some of the more flagrant tax-avoiding measures, in particular the practice whereby the wealthy avoid stamp duty by buying homes through a company. That too would be positive — and popular. Few people actually like tax loopholes, apart from accountants.
Indeed there is still much more that could be done to recover the Chancellor’s original aim in office — to create a simpler, flatter tax system. The system is still overly complex. And however attractive concessions such as the so-called Downton Abbey tax breaks, favouring TV production companies, may seem, they too tend to create greater complexity. Moving towards lower corporation tax in general or cutting national insurance contributions would be far more useful than favouring special interest groups.
In truth, however, the Chancellor’s room for manoeuvre is drastically limited by modest economic growth. He must do more with less. He has that, at least, in common with most families.
Pay to drive
The new toll roads — or toll lanes — which David Cameron is proposing as a means of improving the nation’s infrastructure will be familiar to people who drive elsewhere in Europe. And for Londoners, the means for paying to use them would be much the same as paying the congestion charge. The proposal would involve leasing parts of the motorway network to the private sector on the basis that they could charge motorists to use lanes which they add to motorways or new roads. In most cases it would be lanes rather than whole new roads.
There is a good deal to be said for the idea. There are better uses for scarce public funds than ploughing them into widening motorways. The political difficulty is that the move happens at just the time when the cost of driving is increasing because of rising fuel duty and oil prices. But by the time the first new toll-lanes are built, the economy will have moved on, and toll-lanes may seem like the obvious solution to a perennial problem.
Capital democracy
This paper’s mayoral debate on April 11 will be an opportunity to witness at first hand the candidates making their case to the electorate. There is no substitute for live, head-to-head debate between contenders, especially in so close an election as this is. This should be an unmissable, electric encounter that will add to the gaiety of local democracy and our understanding of the candidates and their programmes.
