Gordon Brown’s upcoming handout.
Well it seems that as the world leaders meet at the G20 summit this week, (it’s called a “summit” as they always have summit’ to talk about), the main thing they’re deciding on is the best way to fix the economy in a unified fashion. Having Brazil do this and Canada do that just isn’t working, so it seems, so all the leaders along with their treasury brain-boxes have got together to thrash out a solution.
Gordon Brown himself is in a very peculiar position. Behind in the polls but constantly gaining against the Torries the worse his economy gets. What kind of incentive is that? If this keeps up he should just devalue the pound to it’s lowest level since 1946 and call a snap election in the same week, bingo!
No, what Mr Brown is going to do is to actually buck this trend. He wants the economy to do really well and hope that, by the time he calls the next election, we’ll all reward him for making us better off.
Before the current economic crisis the best way in recent times to make the economy better off was the simple idea of job creation. If the government creates a job not only does the employee not claim benefits but they actually start paying you tax – it’s like a ‘6-point game’ in football. Labour was good at this and they did create a huge number of jobs around Britain. I myself benefitted from the New Deal packages, which now seem so outlandish as they were created using money from a Â£5bn windfall tax on private companies. A windfall tax, surely not? Isn’t that a bit, you know, Marxist.
We can’t create jobs now though apparently as companies around Britain are shedding them due to some kind of recession. During a recession most of these companies still make huge profits but not enough to make the shareholders happy. That’s when we get the news that “BigCorp has made 5,000 employees redundant”, or that the “RBHBHS Bank has shed 25% of their workforce”. So nice to see that many of the workers at these companies are making the biggest sacrifice of all as they go out their way to increase shareholder value. Unfortunately they wont be having a quartly appraisal now in which to bring this up.
So Brown must go back to the drawing board and think again. And it seems that what he’s going to do is create what’s know as a ‘stimulus package’. God, that sounds pretty macho, doesn’t it? I can see Brown putting on a Barry White LP while he tells us that he’s about to make us relax, put a smile on our faces and save the country’s economy with his huge stimulus package, “now lie back and think of England”.
But the truth is that this stimulus package aims at putting a whole bunch of money in our pockets in a multitude of various ways. This is meant to kick-start the economy; save jobs; solve the current retail crisis; reduce inflation; and make us happy Labour voters. The government doesn’t quite have this money so we’ll all have to pay it back in one form or another in higher taxes in the future. This mechanism is also known as ‘Tax and Spend’.
Now I get to the main point I wanted to address. Who is Brown going to give this money to? And how will he do it?
An obvious way would be a straight income tax cut. Brown has already done this, with mixed results (the 10p tax debacle), so he may leave well alone. Also it’s hardly going to send you rushing to the shops when you realise you’re getting, say, Â£10 extra in your pocket every month.
He could try George Bush’s method of giving around Â£400 of tax refunds to every tax paying American. This could work and it’s the one I’d benefit from most. It might just take a bit of time to work through though.
He could decide to give it to families earning under a certain amount by utilising the Family Tax Credit system. This also would take time to work and has the huge problem in not giving ME any money and alienating all those single people out there, many who are potential Labour voters.
One brave option would be to temporarily cut VAT from 17.5% to around 10%. It’s bold but consumers would feel the effects straight away. That is if the retailers actually reduce their prices by this amount instead of just pocketing the difference themselves.
No, I think he should give every man or woman over 16, in work or not, who earns less than Â£40,000 per year a nice cheque for Â£250. In time for Christmas. This would reach the recently unemployed too, unlike the tax rebate measures. After spending all our tax money bailing the banks out surely he could throw some our way. And we’d pump it straight back into the economy, not into offshore accounts.
Rough calculations show this as costing around Â£10 Billion – a snip. To pay for this we could just do another windfall tax on the utility and oil companies. They’ve put their utility prices up by so much in the last three years and have seen their own profits shoot up at the same time. The main UK energy providers made profits of over Â£3 billion currently, an increase of 538%, and the oil company Shell alone made nearly Â£8 billion in the first six months (read this Unite article about Energy company winners). I’d like to see people argue against that. Well, apart from oil men of course. I’m sure they’ve just been saving up for this eventuality anyway.
So there you go Mr Brown, my sticky plaster for the current recession. And just think, it’ll pay for nearly half of the HD TV I’ve been looking at buying for the last month. And as I stare at you in High Definition over the next year I’ll probably be thinking to myself, I might vote labour this year. Everyone’s a winner!