"Those the gods wish to destroy, first they make mad"
We have the news that today inflation is again rising - http://www.bbc.co.uk/news/business-12214546 - public spending is being slashed and taxes such as VAT has been hiked. Councils have had huge budget cuts which will result in mass redundancies. Strangely, the right wing press lauds George Osborne as an economic genius. I happen to think the current program is completely bonkers. Here's why.
Council budget cuts will add half a million people to the dole queue. They will be paid to do nothing, rather than something useful. How will this help the defecit? Many will be removed from programs which have huge social benefit. The long term results will cost even more. George Osborne says that the private sector will pick up the slack, but he's hiked VAT which will add massive costs to customer facing businesses, making it harder to employ staff. I estimate that the VAT hike will cost me the equivalent of one part time worker at my business. We are not a charity, so where does that come from. We also have huge hikes in fuel costs, rates and stealth taxes such as parking charges. There is no "small business RPI" but my costs have increased by 14.4% this year as a result of various tax hikes. That is way beyond the tax quoted as the RPI. What does that mean? There is no way I can recruit any out of work social workers and retrain them.
A banker yesterday wrote to the BArnet Alliance for Public Services and asked how the government could fix the budget (amongst other things) without damaging public services. The answer is dead simple. They could ask large companies to do what I have to do as a small business - pay all their taxes. Vodafone were recently let off billions of pounds worth of taxes. Why? No one has given me a good reason. I know I haven't been at my business. Banks were bailed out. Surely they should be paying the taxpayer back, rather than paying huge bonuses.
Soon we will have the spectacle of George Osborne announcing his next budget. What will it contain? More cuts and more hardship for those at the bottom. Will the top 1% of earners, who control 60% of the nations wealth be materially worse off? Will they have to have readybrek instead of smoked salmon bagels for breakfast? I don't know. Who is the mad one. Me or King George Osborne. I really don't know
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