Cheques and balances

Sometime next week, a Treasury civil servant will drop a note on the desk of Business Secretary Vince Cable to advise that retail activity trends are expected to exceed normal levels in the present quarter. Unfortunately, this bit of seasonal good news has a downside in that the main reason is an anticipated flood of consumers attempting to avoid 20% VAT on their purchases in the New Year.

Analysts predict a significant dip in sales, despite assurances from High Street retailers that they will “absorb” the VAT increase. But regardless of the bravado, the market knows that raw material & fuel suppliers have no remaining leeway and will pass on the additional charge to manufacturers and so on down the supply chain.

It is fast becoming another unravelling thread in the government’s patchy fiscal programme in which their assault on the public spending deficit is increasing depicted in the media as kicking for the less well-off in society. As Danny Alexander rants away from the dispatch box, the feeling in the cheap seats is that the ConDems need a real politician with enough nous to avoid the “wrong move, wrong time” mentality that so often beset New Labour. In other words, Boris could do it all a lot better.

The child benefit reforms have a hasty, unfinished feel about them which is bound to lead to yet another “rethink”. Today’s announcement of sanctions against high-taxpaying households sounds less convincing when  tax experts flag up the more or less non-existent data exchange capability between the depleted ranks at Her Majesty’s Revenue and Customs and the DWP Gestapo. Coincidently, a project to create a joint data management system was scrapped in a pre-CSR pogrom.

It all adds to the perception that Tory and Lib Dem ministers much prefer picking on the poor than the better-off. And if that sounds a little unfair, take a look at how many many of the FTSE who received an average 55% pay rise are the same names who backed the Chancellor’s public spending cuts.