The great tinkerer

Richard Wellings comments on the Budget for The Business online and The Spectator online

In Gordon Brown we have a Chancellor who has favoured complex and costly policy options over simple and efficient ones. Apparently oblivious to the growing burden of taxation and regulation, including spiralling compliance costs, he appears to believe that economic prosperity can be achieved through the intricate management of taxes, benefits and subsidies.

Over the last decade the tax and benefits system for families has become an unnavigable nightmare. Perverse incentives have encouraged couples to split up and discouraged career advancement. Businesses have also suffered from micro-management. There are countless schemes providing special tax concessions or grants, such as enterprise capital funds, small business loan guarantees and the business growth incentive scheme. Although the 2007 Budget appears to have reduced complexity in some areas, most notably income tax rates and capital allowances, overall it can be seen as a missed opportunity.

Certainly there was little sign of Brown simplifying the government’s environmental policy. A wide range of measures were announced including a competition to develop the UK’s first full-scale demonstration of carbon capture and storage, a review of vehicle and fuel technologies, a package to support biofuels, stamp duty relief for zero carbon homes, subsidies for energy efficiency and a rise in the climate change levy. In addition, Vehicle Excise Duty (VED) will rise from £220 to £400 for band G cars.