Wednesday, 15 March 2017

Budget crack'd already

That didn't take long. Chancellor Philip Hammond, Spreadsheet Phil to his friends, has backed down from his promise last week to raise the national insurance contributions of self-employed people to closer to those of employees. 

It turns out the Tory 2015 election manifesto has a pledge against raising taxes. 

So why did Phil even try to put them up? Long story, but here goes...

From 2010 to 2015 the Tory-led coalition government was very taxy spendy - they inherited a £600bn national debt and took it up past the one trillion mark. Eventually they got remorseful about just how badly they had managed the nation's affairs, and working on the assumption they would lose the 2015 general election they wrote into law that taxes could not be increased and nor could the national debt - much. (They were taken by the American debt ceiling legislation and wanted a ceiling of their own.) However, in this legislation raising the self-employeds' NICs was not banned.

So when Excel Phil considered raising that tax, rather than treating the promise in the manifesto as gospel, he took his lead from the law which they had intended to apply to a Labour government, and the law allowed him to raise the taxes. So he did.

And now he has backed down. But why? Does this indicate strength or weakness?

Plenty of backbench Tory MPs are furious. They wanted him to stick to his guns because otherwise Corbyn would be shooting straight into an open goal.

But the political calculus at Numbers 10 and 11 was more nuanced than that. Phil and Theresa decided that Labour are so weak that they could leave the goal undefended and Corbyn still wouldn't hit it.

And it seems they are right. They U-turned and nothing bad happened. Final message: we're so strong that we can act weak and it will make no difference at all.

Later today the Prime Minister will call the Ginger Nut and say, "Regarding you wanting another Scottish referendum.... Whatever."

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