James Forsyth

The signs are that a fourth term Labour government would be even more fiscally irresponsible

The signs are that a fourth term Labour government would be even more fiscally irresponsible
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Patrick Hennessy has the scoop in The Sunday Telegraph that Gordon Brown plans to make a pledge not to raise VAT a key dividing line with the Tories at the next election. A senior Labour source tells Patrick that the Brownites rebuffed Treasury effort to raise VAT in the PBR because it “was all about dividing lines for the election. We were determined to be able to pledge that we would hold VAT at 17.5 per cent so we could hammer the Tories over putting it up to 20 per cent.”

One can see the politics behind this, the Tories won’t commit to ruling out an increase in VAT—indeed, I’d be shocked if they didn’t take it to twenty percent in their first Budget—so Labour will claim that while as Labour will place the extra tax burden on the rich the Tories will put it on everyone. This is, obviously, not actually accurate. Labour’s national insurance hike hits everyone who earns over twenty thousand pounds and Labour’s taxes on the rich are already at the point where they become self-defeating.

But something else strikes me. If Labour is going to ring fence the NHS frontline, schools, sure start, policing and international development, keep other budgets ‘pretty much flat’ and not raise VAT for the whole of the next parliament then where on earth is the money to pay down the debt going to come from? The more you hear about Labour’s spending plans, the more you worry about what could happen to the country’s credit rating if Labour wins again.

 

Written byJames Forsyth

James Forsyth is Political Editor of the Spectator. He is also a columnist in The Sun.

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