I can’t help thinking that Confucious would have been pleased to be alive this past week. It has been one hell of a week in British politics. The first formal coalition government for decades and Liberal Democrats in the Cabinet the first time since the 1940s. It really is incredible, I’ve been fascinated by the developments since the results of the election started to come in last Friday morning.
We have two parties at opposite sides of the political spectrum who have come together to form this coalition government, putting aside fundamental differences in beliefs for the good of the country. I know that there are plenty of people who will be cynical about all of this, after all you could take the view that it’s just a bunch of politicians doing a deal so that they get a chance to run the country and be in power. And maybe there is an element of that. Power is addictive and it’s difficult to refuse such opportunities when they come along. Mr Brown clearly didn’t want to give up the job.
We’ve got the government we voted for!
But the thing about this coalition is more fundamental. The simple point is that this is what the electorate voted for. You couldn’t have written the script better if you’d got a commission from the BBC to write a political sitcom! The electorate didn’t want a powerful left wing or right wing government, it wanted a change from Labour but it didn’t want a majority Conservative government. It wanted the Lib Dems to have some influence – and perhaps involvement – in government.
And this is what we’ve got.
It was quite strange watching the results come in last Thursday night and realising that there would be no immediate celebration party for either of the big parties. Quite a relief really. But also very strange because the politicians didn’t quite know how to react to begin with. It was as though they were making things up as they went along over the following few days.
I am no political lovey but I do believe that if the politicians can make this coalition work, it could deliver some good policies for the country. Marriages of convenience between diametrically opposed spouses may not always be harmonious but they can produce good practical results. And that’s what we want from our policiticians.
There are already rumours in the press of unhappiness about the coalition from some right wingers on the Tory backbenches. Well it’s just tough if they don’t like it. If the electorate had wanted a Tory majority with a menu of very right wing policies, we would have voted for a Conservative majority. We didn’t and any attempts by disaffected backbenchers – from any party – to upset the coalition will be nothing more than pathetic undemocratic behaviour from a bunch of bad losers.
Mr Clegg and the Lib Dems?
As for the Lib Dems, I imagine that they are still in a sort of state of shock at being in government after so long! There is no way that Mr Clegg could ever have imagined that just one week after the country went to the polls, he would be not only part of a governing coalition, but also Deputy PM! The Lib Dems were clearly initially disappointed that their excellent performance in the pre-election opinion polls didn’t convert into additional seats in Parliament. But with just under a quarter of the popular vote, they ended up with a totally unforeseen pivotal role, becoming junior partners in the new government.
As for Labour, like all tired administrations, they need time out of power to regroup and recover. I hope that they have a really good leadership election and take time for a good range of candidates to declare themselves and have a thorough campaign when they decide exactly in what direction their party needs to go.
I don’t think any of us could have foreseen the developments of this past week. We’re living during an amazing time in our political history – it’s been like a good book, when you can’t possibly imagine what is going to happen next! The next few years should definately satisfy any student of Confucious.
As a student of British History (my degree is in Modern and Medieval European and British History) I’ve really enjoyed watching the developments of this past couple of weeks. And I’m sure I’ll have my twopenny-worth about political issues in future, especially those that affect VAT or business. But for now we need to leave the new government to get on with the job and settle down into their new lives.
So where does this leave VAT?
In my opinion, one of the most ridiculous decisions ever made by Brown’s government was the year long cut in the standard rate of VAT to 15%. It had next to no benefit for us consumers and probably cost the Treasury about £5bn in lost revenue. It was one of those examples where Brown made a stupid decision about something and refused to change his mind even though it was clearly wrong.
So now the Government needs to find huge amounts of money to sort out our deficit. Cutting costs will only go so far. So they need to bite the bullet and put the standard VAT rate up to 20%. Announce it in advance so that businesses have time to get their systems in place but then get it done and leave it there.
I know that there will be losers in all of this. But our standard VAT rate is currently among the lowest in Europe. Most standard rates are between 20% - 25% so we’d still be at the lower end. Of course it would cost us consumers but it’s better that tax rises are on expenditure than income. And bear in mind that most food and children’s clothing will still be zero-rated for VAT, so the cost of basics shouldn’t be affected too much. This is never going to be popular but let’s just get it done and deal with it.
There will of course be other losers. I always feel sorry for small independent retailers when the VAT rate goes up. They operate at such tight margins anyway and unless they pass on the increases to their customers, an increase in the VAT rate could be enough to swing a small profit into a loss. Charities and exempt businesses will also suffer as their VAT bearing costs increase.
So if you’re planning any major expenditure – business or personal - that could be affected by an increase in VAT, then you might want to consider bringing it forward before any increase.
And Back To The Weather - At Last!
And what about the weather? Yes, it’s been chilly. It’s England, the middle of May, what do you expect? I’ve even had the heating on a couple of evenings this past week to take off the chill and am still wearing woolly cardies and fleeces around the house despite the fact that we’re only 6 weeks away from the longest day of the year and the beginning of summer!
But this has been an odd year and we’re a good couple of weeks behind because of the cold winter. I would normally be planting my summer bedding plants onto my balcony pots by the middle of May, but this year I’m going to give them another couple of weeks indoors so that they don’t get killed by the late frosts.
Apparantly things are going to warm up next week so hopefully we’ll start to see our gardens come to life soon and be able to enjoy getting out in the sun for some long overdue fresh air! I know I’m looking forward to it!
Marie