Are we witnessing the end of New Labour?

The contents of Alistair Darling’s pre-budget report would suggest that Gordon Brown and Co. are far more interested in party politics and winning the favour of the electorate ahead of the impending general election, than in actually fixing the major problems of UK plc.

They have attempted to appeal to their core voters with a gimmicky “Bash the Bankers” tax, a one off tax on all bankers’ bonuses above £25,000 (which applies to all banks operating in the UK).

But while Gordon continues with his strategy of “Class Wars” and “Policies dreamt up on the playing fields of Eton” to try and create clear blue water between themselves and the Conservatives, it would appear that Labour now believe the “Toffs” to be anyone earning more than £20,000 a year (surely an own goal).

Personal income tax allowances, basic rate limits and NIC thresholds have all been frozen at 2009/10 levels rather than giving the customary increase, making everyone feel a little worse off. Additionally, the higher rate band (currently £37,400) will be frozen in 2012/13 (moving more taxpayers into the higher rate band over the next few years – another stealth move).

In addition, the previously announced ½% hike in National Insurance (additional income tax by any other name) was doubled to 1% and will take effect from April 2011 (thus increasing employee contributions from 11% to 12% and employer contributions from 12.8% to 13.8%). And VAT returns to 17.5% from 1st January 2010. So all in all, a bloody nose for almost everyone.

Of course, as we already knew, a new tax band of 50% comes in from April 2010 for what Labour believe is the super-rich i.e. everyone earning above £150,000 per annum – sounds like another attempt at a vote winner from the core labour supporters as £150,000 pa does not make you super-rich (and is not likely to increase the tax take by the treasury significantly either).

And what of the economy overall? Well, we are still technically in recession, inflation is on the increase, we have a borrowing requirement now up to £178bn this year and £176bn next year, with no solid plans from the government about how this huge level of borrowing will be repaid (well, not before the general election, anyway), Gordon Brown wanting to carry on spending within the Public Sector and the amount of strikes and industrial unrest on the rise.

Could this be another “Winter of Discontent” similar to that in the late seventies which sounded the death knell of a previous Labour government bereft of ideas and bankrupt on policy? In the early stages of 2010 ahead of the next General Election, I wouldn’t be surprised to see a dash to the labour heartlands of the left, and Old Labour tendencies, in order to try and shore up their crumbling vote.

It’s about time that the people who want to lead this country stop playing party politics and start setting out an agenda for getting this once great country out of its difficult current situation and back on track towards sustainable recovery and prosperity.

Merry Christmas from Intervallum Limited

I would like to take this opportunity to wish a very Merry Christmas to all of our clients, suppliers, colleagues, contacts and friends.

Have a great festive period and a Happy New Year, and here's hoping that we all have a prosperous 2010.