Well if anyone thought the Pre-Budget report was going to be the usual, slightly pointless, Pre-Christmas report about the state of the economy then a quick glance along the newspaper shelves this morning will disabuse you.
The right wing media are mourning the death of new Labour (didn't care much for new Labour previously, I seem to remember) and pointing to a Britain on the edge of bankruptcy. The centre ground cautiously suggest a brave move (although most reserve their positon to change this to a foolhardy move if it all goes wrong). And the left media........ oh, I forgot.
What is certain is that there is now the sharpest political divide since Cameron tried to rest the centre ground from Labour by claiming the inheritance to Tony Blair. Rather than being swept into insignificance by accepting the need to support the government when the country is facing economic difficulties, Cameron has gone for the high risk separation. The Tories have set their stall out against the economic package announced yesterday in a very stark way. The clash between a government which believes intervention is necessary to help stimulate the economy and an opposition which will leave everything to the markets (just remember the last time they did that) could not be more clear.
And the game is now on for the General Election. if the measure announced by the Chancellor gain some traction in the next 12 months, then labour will be home and hosed. If they fail, then Gordon Brown will have gift-wrapped an electoral advantage to the Tories.
So the big question is, will they work? if we knew the answer to that we'd all have different jobs - probably lecturing in economics.
Clearly the massive redistribution of wealth to the least well off, will help spending. As will the the pension increases, and Xmas windfalls for children. Th headline catching reduction in VAT has already lead to double digit increases in share value of some leading retailers, so the markets think that may work to. And there are welcome measures to support small and medium businesses, from spreading business tax payments to an extra £4bn to help banks lend to SMEs.
Labour announced real help for people during difficult times by:
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a one year cut in VAT of 2.5% - putting a £12.4bn boost into the economy
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giving every basic rate taxpayer £145 extra (up from £120 this year)
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giving every pensioner £60 in January
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increasing child benefit to £20/week in January instead of April
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increasing child tax credit by £75 a year in April above indexation
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providing more loans for small businesses and allowing them to spread their tax bills on a timetable they can afford
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£1.3bn extra help for job centres to get people back to work, and a 3 month moratorium from the major lenders on repossessions for homeowners who get into arrears
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bringing forward £3bn of capital projects including on housing repairs and insulation, school extensions, GP refurbishments and transport improvements to provide jobs right now when the economy is under pressure
If it works then the economy will begin to grow again. And when that starts the gains made will make the measures in this budget pale into relative insignificance. A win win for new Labour. If it doesn't then the PBR at the fag end of next year will be a depressing opener for the General Election campaign.
But as Alistair Darling says,
Labour's vision is of a fair future for all. Fair rules, fair chances, and a fair say for everyone.
By helping people and putting money into the economy we can come out of these difficult times sooner and stronger.
Quite simply the economic cost of inaction is too great.
There is a consensus around the world on the need to act. Only in the Conservative Party are they saying we should no nothing. They would sit back and watch as the recession became longer and deeper.
We're providing real help now because unlike the Conservatives we won't turn our backs on families and businesses at the time they need it most.
Oh, and as forecast here yesterday, the one thing this budget does mean with some certainty is that the General Election will be in May 2010.
