Chancellor is wrong on bankers' bonuses and has ducked the tough decisions

Mark Littlewood and Philip Booth on the 2009 Pre-Budget Report

Alistair Darling, the Chancellor of the Exchequer, has failed to take the tough decisions to tackle the country’s enormous budget deficit according to the Institute of Economic Affairs, the leading free market think tank.

Mark Littlewood, the IEA’s Director General, said:

“A tax on bankers’ bonuses is a populist measure, not a practical one. It must not be allowed to distract from the enormity of the budget deficit. Both government spending and tax rates are far too high. In particular, we need to cut back dramatically on the country’s ballooning welfare bill which, including state pensions, accounts for over a quarter of total government spending. The Chancellor’s proposals today are barely even cosmetic. Unfortunately, this Pre-Budget Report seems to be more about chasing headlines by kicking bankers than dealing with the bottom line of the country’s public finances.”

Professor Philip Booth, the IEA’s Editorial Director, said:

“Trying to deal with a deficit resulting in large part from high government spending by raising taxes yet further is a big mistake. But arbitrary taxes, such as the tax on bankers’ bonuses are worse – it is the best way to drive business and talent away. Instead, spending cuts are necessary. Benefits should be indexed to inflation – and no more – even if inflation is negative, child trust funds should be abolished, and many of the gimmicky benefits given to older people by Gordon Brown in earlier budgets should be reined in. For example, the winter-fuel allowance alone costs nearly £3bn.”

IEA SPOKESPEOPLE ARE AVAILABLE FOR INTERVIEW, PLEASE CALL 020 7799 8900 OR MARK LITTLEWOOD ON 0797 456 92 99.

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