Morts Musings

While I’m not about to go into an in-depth analysis of this week’s pre budget report, there are a few of the Chancellors announcements which I feel the need to comment (& maybe even rant) about.

If you’re interested a summary of the the Report’s main points can be found here.

The much speculated upon moves to curb the bonus culture of banks is probably one of the biggest events of this PBR, but in the end were Darlings moves about encouraging the bankers to live in the real world, which most of us mere mortals inhabit, or was it more of a move to placate the public?
There wasn’t a windfall tax on the banks themselves, but bankers’ bonuses over £25k are to be subject to a one off tax of 50%. Yeah, sock it to them Darling!

Actually for all that it sounds good, not to mention fair, when one considers how much of tax payers’ money has been used to aid the banks over the past year or so, the bankers don’t seem to be taking it with good grace. There’s been the predictable wailing and whinging, and threats of taking their business abroad, from some in the industry. I do understand that, to an extent, we have to be careful not to drive the banks overseas; it’s undeniable that the sector does contribute substantially to the UK economy, but at the same time it’s clearly neither sustainable, nor acceptable, to have a system where the bankers run around making risky investments and creaming the profits ’til it all goes wrong, at which point that make contrite noises and go cap in hand to the tax payer.
That can’t be allowed to happen again, and frankly any bank which hasn’t the good grace, to recognise that being based in the UK is to their overall advantage, and engage in a little give and take, is welcome to run off to some unregulated banana republic; Let’s see how willing such countries are to support the banks when it all goes wrong again! Good riddance to bad rubbish!

Even those who are staying are desperately looking for loopholes to try and avoid the bonus tax; apparently the “Investment banking boutiques” are trying to argue that they’re not technically banks, even though some of their bankers are amongst the best rewarded, in terms of bonuses. Well guess what guys, somantics aside, you are exactly the guys that helped kick off the financial crisis, & who the public are pee’d off with! You can argue technicalities all you want, but you’re distinctly “banker flavoured” and you’re precisiely the people that this tax is designed to hit, live with it!
I hope the treasury takes the same attitude. Although full guidelines on the tax are still being ironed out, it at least appears that the treasury’s intent is to prevent the exploitation of such loopholes; lets hope thats how it pans out!

Other tax measures in the PBR include a 0.5% rise in NI, and the basic rate of VAT returning to 17.5%, although on the positive side there is to be a 2% drop in Bingo duty, so it’s not all take, take, take!
Actually, in fairness, there are also to be changes to the NI system so that those earning less than £20k won’t end up paying more due to the announced hike. I do like this move, a lot, it’s almost as if the Labour party have remembered that they’re meant to be the party that doesn’t screw the poor.

There was also some encouraging green measures in the PBR too. There’s to be a “scrappage” scheme for outdated household boilers, as well as £200m of govt money set aside to assist home owners with improving energy efficiency. There are also incentives for green vehicles too, electric company cars are to get a 5 year exemption from road tax, while electric vans are to receive a 100% first year capital allowance. A piece of news which will no doubt make Sainburys, who have recently announced an increase in the size of their fleet of electric delivery vans, very happy; “Every little helps,” as one of their competitors might say.
Any regular reader will know that I’m a fan of the concept of electric vans and cars, so it’s good to see the govt taking steps to encourage their use, even if, so far, those measures only apply to businesses.

Obviously that’s by no means all that the PBR contained, but it’s tone overall seemed to be one of trying to juggle the need for austerity alongside doing enough “headline” stuff to make people happy. Indeed, opposition have already called it a “pre election report”, rather than a “pre budget report, a label which is undoubtedly politically motivated in itself, but which also, probably, isn’t too far from the truth.