17 Apr 2012

Making the argument for the chancellor’s budget

Nick Robinson asked yesterday in his blog if anyone has been making the argument for capping tax relief on charitable donations. As he suggests, the answer has been “precious few”. Today we have Philip Stephens in the FT and Polly Toynbeee in The Guardian making the case.

At the weekend, Paddy Ashdown gave it a go on Marr, arguing why should rich people choose where their every penny goes when the rest of us have to hand it over for the state to divvy it up between schools, hospitals and the rest?

Insofar as there has been a government argument, it’s that the tax relief clampdown (charitable giving included) is about “dealing with abuse” (as the PM said in an interview in Jakarta), which has helped to provoke the philanthropists’ outrage. And putting the other side of the case, with powerful understatement, you can hear Tony Blair on last night’s Newsnight.

The best argument for freezing pensioners’ allowances was likewise never made by the government, but left to commentators and opinion pieces in the newspapers arguing about inter-generational fairness and re-balancing contributions to the national belt-tightening.

The chancellor, by contrast, in his budget speech talked about “harmonising” allowances – a slogan that probably won’t particularly help to get the vote out in May. That’s two important budget measures not forcefully defended by the government.

Some in the coalition think a lot of the blame for this attaches to the chancellor. George Osborne has modelled his media strategy on Gordon Brown’s years as chancellor – the so-called “submarine” strategy, surfacing only very occasionally for interviews or short “clips” with selected individuals on strict terms.

But policies without articulate public defenders can get pretty battered. By the way, it’s been pointed out to me that the 25 per cent of income cap on tax relief on charitable giving proposed in the budget makes it lower than the 50 per cent tax relief on seed investment in small business which took effect from 6 April this year.

Another argument runs that the government’s problem of policies without passionate advocates is down to being in Coalition. You see it in the case of the NHS reforms. Once both sides of the Coalition had battered each other into concessions it wasn’t clear who had ownership of the end product and would defend it. Tony Blair referred to the “policy trade” of coalition that can lead to policy “incoherence” in government.   

And those tax relief beneficiaries get to trouser any profits of course. Like all reliefs, it’s there to incentivise certain behaviour – but why is the incentive for small business investment double the charity incentive?

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