Cameron’s pre-Budget verdict: ‘shocking, unconvincing, depressing’

CONSERVATIVE party leader David Cameron found the pre-Budget report “shocking, unconvincing and depressing”, he told Manchester business leaders earlier this week.

More than 500 guests at the Manchester Chamber of Commerce dinner heard that the “shocking” level of borrowing means the UK is going to double its national debt in five years.

“This is borrowing more as a percentage of national GDP than Norman Lamont in the 1990s, Geoffrey Howe in the 1980s and even Denis Healey in the 1970s,” he said.

“I also find it unconvincing – that there will be a great stimulus from cutting VAT for a year,” he added, poking fun at the idea that people will start shopping because they’ll  “get £5 off a flat screen television” when retailers are already discounting at 15% and 20%.

Of the 5% tax increase for people earning over £150,000 and the 0.5% increase in national insurance  he said: “we are starting to see the end of tax rates that should encourage enterprise, and entrepreneurship, and I think that’s depressing.”

Instead, Mr Cameron said he would introduce measures to get credit flowing through to business.

He proposed a new institution to issue government guarantees for new lending with a fee to cover the risk to the tax payer.

He suggested that business should be allowed to delay paying VAT by six months, and that national insurance rates should be cut for small firms, “so that they can keep employees on”.

He added that £3m in tax breaks should be used to reward businesses that take staff off the unemployment register.

In the longer term he said the UK must reduce its dependence on finance, housing and government spending, which he said had accounted for 70% of economic growth in the last decade.

He would set up an independent fiscal body, responsible for tax and spending policy, and would give the Bank of England responsibility for regulating credit.

“We must never again enter a downturn with such a massive deficit. The government has to save in the good years so it can borrow in the bad,” he said.