I’ve always thought the Pre-Budget Report – like the Budget itself – was a lot of hot air about nothing. The Chancellor giveth with one hand and taketh away with the other. For most people it makes little difference.
This week’s report was being trumpeted as something different; with the economy in the doldrums, the Government was promising significant and urgent action.
Was it? Not really – in fact, from a motor industry perspective, much of the action being called for didn’t happen.
Yes, VAT has been trimmed from 17.5% to 15% until 2010, but there wasn’t the headline cut to 12.5% that the RMIF and SMMT wanted (there never was going to be – that was the minimum allowed by European regulations).
It will help dealers to maintain current levels, but won’t see a surge into showrooms.
The news on Vehicle Excise Duty was even less exciting. Alistair Darling has lowered the size of next year’s VED increase, but didn’t postpone it altogether.
And he has not removed the retrospective element, which means those people who bought a larger car in good faith a few years ago will still be hit with a higher tax bill.
The increase to corporation tax has been delayed – good news – and business rates under £15,000 on empty business properties have been scrapped. Good for the larger retail groups sat on empty sites; irrelevant for everyone else. And that was the giveth.
The taketh? Higher tax on fuel to offset the VAT cut. There were double takes on that announcement. The Government, which has been calling for oil companies to bring fuel prices down, has now decided to put them up itself. Quite how that is going to breathe life back into the economy only the Chancellor knows. Or perhaps he doesn’t.
Watching him brought to mind the futile attempts of King Canute to repel the waves. Of course, Canute knew that he could not control the sea; does Darling have the same level of awareness?
Ultimately, only two things will really boost the economy: another cut in interest rates and the unblocking of credit availability. And that’s out of Darling’s hands.