George Osborne's boring, steady as she goes budget
On Wednesday, the chancellor must take the opportunity to respond to the squeeze on living standards facing families, not only because it may help his declining popularity but because it is vital to the economic recovery that eludes him. These are the very families who would spend rather than save their income. They are the ones who are at risk of falling out of work and costing the state more if they are not supported to stay in a job. They are the ones who will take on more hours when they become available because more income from work will help to ease their financial pressures.
It's clear the government will be sticking to its course in the budget. But the backdrop remains an economy that isn't growing, and a deficit that isn't shrinking. We need a push across all parts of government to get the economy moving.
The immediate priority is to focus scarce resources where they are most needed and can make the biggest difference. Our roads are the glue that holds together our transport system, but they have suffered years of neglect. Tackling the £10bn backlog in maintenance is as close as infrastructure projects get to being "shovel-ready" while bringing forward planned upgrades to heavily congested roads offers one of the best returns on taxpayer money.
The chancellor needs to tempt and coax businesses to take cash out of their pockets and put it to work in the wider economy. He needs to lay the sweeties out in front of companies to induce them irresistibly to spend. He needs to create a sugar rush of excitement with deals so attractive that finance directors delight in signing cheques.
The government is mired in debt, as is the average household, struggling to make ends meet with wages rising slower than inflation.
The only hope for the British economy is for businesses to start spending their cash, investing in plant and machinery as well as hiring staff. So lay out the bait, Osborne, prepare to entrap CEOs into fulfilling your desires.
In practical terms, he should cut national insurance completely for any new employee in the next one to two years, for all small and medium businesses. These are the engines of growth, so tempt them to hire. Make it easier too – the rules and red tape are frankly bewildering – so get rid of as much as the EU allows.
Second, entice businesses to buy new IT systems, to expand production, to upgrade their websites. Whatever project they have been postponing, make it so attractive to invest, that they can't help themselves.
For two years, allow all new investments to be written off 100% against tax. This may be costly, but it would force firms to spend money, which should provide a jolt to the economy.
Financial markets will also be reassured that it is only a short-term measure.
Sadly, after the disasters of last year, and the pasty tax, I fear this year could well be a boring, steady as she goes, budget. And while I agree that Osborne is very restricted financially, he needs to be bolder and braver. When the patient is dying on the operating table, it needs an electric shock to return it to life....Read more