Just as an addendum to Fraser’s post on the international resistance to Brown’s world-saving act, there’s an intriguing little story in today’s Independent about “Labour backbench unrest” over the fiscal stimulus announced in the PBR. I quote it here in its entirety:
“Frustration is growing among Labour backbenchers over the Government’s rescue plan for the economy. Several MPs believe a VAT cut was the wrong way of spending the bulk of the fiscal stimulus package, and others fear more should have been funded through tax reforms.
‘Going shopping last week I was offered a little over a pound off a £35 item,” the former environment minister Michael Meacher said. “It really isn’t doing anything. It seems obvious that at a time when consumers are already being offered much bigger discounts, the VAT cut will have little effect.’
John Battle, the former energy minister, said: ‘I always favoured injecting cash in at the bottom by boosting benefits. We should be using this money to take on poverty.’
The only major redistributive tax reform introduced by the Government is a new 45 per cent tax rate on those earning more than £150,000.
Disquiet on the back benches could expand to wider disapproval if it emerges that the VAT cut has failed to boost trade over Christmas.”
Although Labour MPs may have slightly different gripes to the international cohort, their discontent could be equally damaging to Brown’s economic message – if not more so. Particularly if that discontent manifests itself as another 10p tax-related rebellion come Budget time.
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