News & Opinion - Tue 22nd Jun 2010
Here you will find all our latest news, views and events.
Tue 22nd Jun 10 VAT's all, folks
When the would-be prime minister, David Cameron, stated publicly that: "We have no plans to raise VAT", we should have all been able to decode the political language, which essentially meant that they had every plan to raise VAT. Given that the new coalition government has inherited one of the worst budget deficits in the western world we all knew that Osborne's first budget would be the exact opposite of Labour's pre-elecion give-away: it was going to be painful.
The problem is that the Tories, who are historically against tax rises, had to reach a compromise with the Liberal Democrats (why did Gordon Brown always refer to them as the Liberal Party?), who are broadly in favour of higher government spending.
It is too early to know whether this budget will affect the future stability of the Con-Lib government, but one thing is for sure by next January the cost of living will go up. For businesses that can pass on the VAT to their customers the rise is largely irrelevant; the problem comes with the consumer who cannot pass on the increases to anyone and who will be faced with higher prices. If people start to rein in spending then this could undremine the future stability of the economy on which all our futures, public and private, depend.
From a communications perspective, the budget was clearly delivered with the Chancellor laying his cards on the table; the problem lies in the pre-election promise on VAT, which hasn't been simply stretched or bent, it has been well and truly shattered.
If VAT was high on the list of the in-coming government they would have been better not to have denied the possibility of a rise and Osborne would have been better to have increased VAT incrementally so that he had some "wriggle room" to delay the second half of the VAT rise.
The best advice is to always play things straight with your audience and you won't get bitten in the proverbial by spin (if that isn't a mixed metaphor too far).
On a lighter note, I can't get enough of Lady Gaga's latest hit, Alejandro, which is set to be Opera PR's song of the summer 2010. If you haven't heard it yet then simply click on this link (or paste into your browser) and turn up the volume:
Enjoy.