Where's the Beef?

So the "Pasty Tax" U-Turn comes (or as I call it, the Sausage Roll). Rather too late to help the Tories through their little local election difficulties.

Paul Goodman has written a powerful piece giving a number of excellent reasons why the government shouldn't be u-turning - it would have raised much-needed revenue that the government will now have to find elsewhere, it makes ministers look weak, it makes loyal backbenchers (who've already voted it through) look ridiculous.

It was, however, inevitable that the government would have to buckle on this. It was an ill-considered policy, apparently foisted on the coalition by the Civil Service while they were asleep at the till (or in Osborne's case, on holiday). How do you judge whether something is "warm" or not without taking the temperature of every item? What is "room temperature" defined as? How many degrees from that temperature is an acceptable margin of error? Those conditions would have been difficult to comply with, but more importantly, they would have been impossible to enforce. (I'm not sure what the Civil Service was thinking of - perhaps issuing thermometers to HMRC inspectors?)

Nigel Lawson was wise enough to sidestep this quagmire when he first introduced VAT on hot food, writing:

"It does not apply to food and drink which has cooled to room temperature by the time it is sold, or to things like pies and pastries which are sold warm because they happen to be freshly baked, and not to enable them to be consumed while they are still hot."

Liberal Democrats are claiming victory on this, but I am rather suspicious. They have been in a bit of a muddle on this from start to finish - local candidates claiming the pasty tax was a Tory initiative (and that it would hurt "the Cornish pasty industry" - in spite of all the evidence that the only disadvantaged business would have been the Newcastle-based Greggs) when it was Lib Dem MPs who voted for it and Sarah Teather being the first politician to come out and justify the tax increase on Question Time.

In fact Teather's defence of the change was so thorough and heartfelt I wondered at the time whether this might be a Lib Dem initiative - after all it has all the hallmarks of a Lib Dem policy, a tinkering tax hike in the name of their warped sense of 'fairness'. On last Friday's edition of the Daily Politics, Toby Young gave some credence to this with a more developed theory of his own:

"I blame the Lib Dems. My theory is, we saw the Damian McBride blog in which he said the Treasury constantly produced this list, this wish list, of various taxes which he and Gordon Brown used to bat away. But I think what happened was, George Osborne announced quite late in the day that he wanted to cut the top rate of tax, so Danny Alexander and his team huddled with some Treasury officials, they said "well what can we ask for in return?" and the Treasury officials said "funny you should ask. We've got this list..." And then that's what the Lib Dems demanded as the price of accepting the tax cut."

It rings true to my ears...

UK comic prices

Diamond UK is raising comic prices by roughly 15% this week due to the collapse in the value of the pound.

Here's why. Thanks for nothing, Gordon.

George Osborne

Osborne's response to the PBR was brilliant, a defining moment for him (and this along with Harman's first turn at PMQs proves that a good parliamentary performance can change everything). He is the shining beacon of hope in a valley of economic gloom and despair - the likelihood that someone as intelligent and sensible as him will be Chancellor in just over a year's time provides me with the thinnest glimmer of hope that things might turn out okay.

And then I remember how much damage the Labour party intends to do before then. Scorched earth, indeed...

Guest blog: Ed Reynolds (1 of 2)

Gordon Brown has declared that he must act with "vision and courage" (no really) to end "The Age of Irresponsibility".

But Gord, who was it who:
- Put taxes up to record levels.
- Borrowed at record amounts (10-figures).
- Presided over a boom built on debt (10-figures).
- Has the biggest budget deficit in the G8 and almost all the developed world.
- Sold our gold reserves at the bottom of the market.
- Taxed to oblivion the pension fund which in '97 had more than the rest of Europe put together, sending many private funds broke and leaving people destitute in retirement.
- Clobbered students.
- Masked unemployment by rapidly expanding the size of the state, put everyone on final-salary pensions worth 5x that of those in the private sector.
- Spent the fund to pay public sector pensions!

It's unbelievable to me that he's got away with this. Well, now of course, it's too late. He hasn't just spent the money, but he's spent the money for nearly a century to come.

Just think about the enormity of that. Everything of value he's cashed in; every bill he's shoved under the mat for the next guy.

He's hardwired poverty into the British national DNA for generations.


Bush is nearly as bad -- his only saving grace is that at least the American stock market grew under him so there was some money being generated to make up for the money he was pissing up the wall; and he offered a timely tax rebate. But he's carried on like a big government maniac on his tinpot projects to socially engineer a country full of right little Bushes and Dicks.

See, suddenly everyone is talking sagely in revential tones about the failure of the free market. No. This is on governments.

We expect bankers to behave like, well, complete bankers because that's their job to be ruthless to generate money -- money which as well as lining their bonuses also ultimately pays for health and education and so on. I didn't see the Senate Banking Committee grumble as they were cut all those hefty cheques for their election campaigns from the mortgage giants. Nor did I see the Senate Banking Committee tapping their generous benefactors on the shoulder and saying "oi, oi" BEFORE the thing collapsed. I'm sure of course, that bail-out they arrange for their benefactors is going to be quite the slap on the wrist...

But obviously everyone screams "regulate!" as though this is a magic bullet.

Regulating the market into oblivion didn't help after Enron -- it just pushed business out of the USA. Gordon Brown's corpulent FSA, in eye-poppingly lush Canary Wharf offices, do nothing but regulate. Their last go at "pensions simplification" increased the size of the rulebook. But did it do any good? No -- our stockmarket has more or less flatlined for the last 11 years.

The FSA spent millions on thousand-page rulebooks but still couldn't tell Northern Rock and Bradford & Bingley that 100% mortgages are a colossally stupid idea.

The problem is the culture, the lack of integrity, the "spend today, worry tomorrow" attitude and that comes from the top, from both Bush (where are the GOP's budget hawks?!) and Brown.

The free market works because bad businesses fail and good businesses survive. Regulation, which will clobber everyone, is counter-productive and largely pointless without a culture of integrity and responsibility from those at the top. It's for the government to say, in effect, "you break it, you buy it" way ahead of time.

When people actually carry the can for their failures, it concentrates the mind wonderfully.