Thursday, 8 April 2010

Election: Cut, cut, cut.

There's been a few busy days of campaigning going on, I thought I'd have a look at the various things that have been said.

Without doubt the biggest argument of the campaign so far has been over the planned NI rise that Labour set out in the budget. A whole host of business leaders have come out against the tax increase and the Conservative's have said the 'tax on jobs' will endanger the recovery. Then there was anger over Labour claims that the leaders had been deceived. I think first of all people should remember, these are massive employers, they know about business, but given the choice of tax or no tax I think there position is always going to be the same, regardless of whether it is in the country's interest. No employer wants to pay more, that doesn't mean it will hurt jobs, the last NI rise was followed by a rise in employment. Times may be different but lets not assume that we're all market experts and can accurately predict how employment will be affected by one tax or another. Rather than look at the opinions of business leaders with their vested interests, I think the opinions of economists are more relevant here. If you look at what they say there is a much more even split between supporting Labour and Tory plans than the one-sided business opinion.

I think Labour's words that the business leaders were 'deceived' was badly phrased, they don't want to be seen to be attacking the business that has been so key to New Labour in the past. However, if you look past the wording, you can see what was really meant. All along the Tories have been the party that will cut the deficit immediately and that was their central concern. The first chance they see a vote winner, opposing the NI rise, they jump straight into tax cutting mode. If you want to keep NI the same, you have to spell out how you're going to save the money elsewhere. So far, all the savings have been 'efficiency savings', something David Cameron had previously said were the cheapest trick in the book, you cannot keep pulling more out of the public sector without someone along the line feeling the pinch. Vince Cable the other night took the opportunity to attack both parties, he told Osborne that he was planning to fund his NI reversal by using the same efficiency savings outlined by Labour which he had earlier attacked. He also told Darling that the efficiency savings he had planned were fanciful and that a real plan to cut costs was needed.

This election was billed as the time, like none that has gone before, when politicians could gain votes by spelling out where they would cut and how deep. This hasn't happened to a great extent with any of the major parties, the Lib Dems have broken the mould and are in fact the ones with the most detailed plans. The reason is this, people say they want to know where things are cut, but as soon as any cuts are announced there's a backlash. Politicians are not going to spell out cuts if it's going to lose them votes, they're not stupid. The general public needs to come to terms with the fact cuts are going to be made, and not immediately go into frenzy whenever a politician spells out where they are likely to fall. Maybe then we'll see some announcements about real cuts rather than all this drivel about 'efficiency savings'.

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