A ComRes poll for the BBC’s Daily Politics found that 65% of people said they had cut their expenditure because they were worried about the future and that a majority of people – 54% – disagreed that they would spend more if the government cut their taxes. An overwhelming majority (79%) thought that any tax cuts now would mean higher taxes in the future.

More positively for the government a majority – albeit a narrow 51% – thought that Britain was well placed to weather the economic troubles compared to other countries.

Trust in Gordon Brown and Alistair Darling to handle to present economic downturn realtive to David Cameron and George Osborne also improved – they led 47% to 28% compared to 42% to 31% last time, though it is important to note that unlike normal ComRes polls this is not politically weighted and, given that questions like this are highly correlated to voting intention, the actual Labour lead will be exaggerated.

For a proper reaction to the PBR today we should be getting the monthly YouGov poll at the end of the week and may possibly be getting a few extras in the meantime. ICM’s monthly poll for the Guardian has yet to rear its head – it may be out tomorrow (too early for PBR) or it may have been held back so it can be done straight afterwards, in which case it might turn up around Thursday.

On a unrelated note, cheers to MPs and journalists who voted this one of the best ten blogs in the Total Politics poll here.

33 Responses to “79% think tax cuts now will be paid for later”

  1. Darling should have cut income tax by at least 3p, rather than this nonsense about VAT and all the rest.

  2. The 79% were right!

    NIC increases for everyone.
    Extra taxes over £100kpa earnings.

    And still-we dont start reducing borrowing till 2015-at which point it’s £1trillion or 60% of GDP.

    …unless we DONT come out of recession in the second half of NEXT YEAR-in which case its a whole lot worse.

    Oh boy!

  3. Colin -Yes I agree and all the independent experts interviewed seemed to be thinking that the Treasury’s growth forecasts are still on the optimistic side (as usual). So it could be a whole lot worse.

    IMHO Darling and Brown still don’t seem to be realise that the landscape has changed . Certainly because of the fall out in banking and the City the Government will be at least £40BN a year lighter on tax revenues just from this area never mind all the other problems. So they should be plotting future public spending based on realistic expetations of future tax revenues. They dont seem to have grasped this yet or is it because there has to be an election in the next 18 months?

    Anyway the cat is now firmly out of the bag regarding the Government’s future plans and it’ll be interesting to see what impact this has on the next batch of polls.

    Incidentally, although Osborne has had something of a bad press recently I thought he was rather good with his reply to Darling’s statement.

  4. KTL-agree on GO-he sounded very angry.
    Staring at the wasteland ahead of him must be daunting.

    BBC coverage very critical of the PBR.In depth analysis from Peston & Chote.

    Sky coverage very strange-no real analysis-BBC beat them this time

    Yep-what will the Polls do-booze & fags up wasn’t what the punters expected?

  5. How can the number of people who think that tax cuts now will be paid for by tax increases later be as low as 79% when the Cancelllor himself says in his Pre-budget Report that tax will increase later?! And with this at least the opposition agree.

    However, the problem to me seems to be that most financial and economic commentators, as well as opposition politicians, seem to agree that the Government’s emergency budget, for that is what it really is, makes over-optimistic assumptions about future recovery. And this seems to be confirmed by “person in the street” interviews, where the immediate reaction seems to be that VAT decreases will have limited effect, firstly because shopkeepers won’t pass them on, not least because they have discounted hugely anyway, and secondly because lower prices are no help to the many people who simply have no money to spend at the moment.

    If today’s give away does not work the Government will have huge problems because its tax income will fall short of its assumptions when it is already borrowing to the hilt. What then? If there are tax increases when there has been no recovery, spending will collapse, with dire economic consequences. Alternatively, the Government will go into a loop of borrowing more and more until it becomes bankrupt.

    The Government needs to recognise that there is a need for structural change in the economy to become less dependent on the financial sector. The example of the 1920s, when the cotton industry collapsed because of cheaper factories overseas, whilst coal exports were lost to Germany because of chronic failure to invest in mechanisation of the mines (exaccerbated by interrupted supplies as a result of the strikes of 1926) show what happens when the UK fails to recognise strucutural change in the world economy and in particular fails to invest in new cutting-edge industry. In addition, it is manifest that investment is needed desperately urgently in sustainable energy generation and in transport for the UK economy to survive . But the Pre-Budget report seemed just to tinker by bringing forward some quick-fix capital schemes like road-building schemes and new schools, whose role in generating money is at best nebulous.

    It the UK is to get its economic affairs back in balance, it is essential that the Government concentrates ruthlessly on capital investment that will produce a real return on investment as well as stimulating economic activity. Borrowing for such capital investment must take absolute precedence over give-aways to consumers and taxpayers.

    I believe that voters are going to see the very adverse effects of Government borrowing for current expenditure soon enough, very likely in time for a 2010 election.

  6. with all due respect to the poll I don’t think the government is denying that the tax cuts will be paid for later. Its a question of who will pay and whether it is right at this time given the economic situation to inject a stimulus into the economy.

  7. Heard some builders in the pub talking about VAT. They seemed to be more worried about late payment surcharges the Revenue levy. I think some of these schools the Government want to build will be in the firing line shortly – passed one today – unfortunately no children in the village.As Tony Crosland said ‘ the party is over for local government’. Suspect public service pensions are going to be drastically cut.

  8. I too am surprised the figure was only 79%. How else do people think we pay for anything, let alone tax cuts? I also agree with Frederic regarding capital investment strategy, but I think some of the more biased posters here are missing the point somewhat. Darlings aim has been to boost spending and help businesses survive. Capital investment is great, but challenging the loss of general market confidence is the first step that everything else hangs on. The historically low pound isn’t part of the crisis – by accident its part of the solution that should assist the much needed restructuring.
    The ‘man on the street’ who says the VAT cut won’t make a difference is talking nonsense. Its a massive £12.5b boost to the economy, whether lower prices are passed on or not. It may only be 2.5p in the pound, but we spend a lot of pounds collectively. The question is whether is will work to an extent that it makes the extra borrowing worthwhile. For example, if it keeps 1/2 million people off the dole for 1 year, we save about £6b in welfare and tax revenue. If the full £12.5b is spent in the UK economy we get back another £1.8b in VAT, more when the sellers buy further VATable goods to resell and so on.

    I have no idea whether this will work, and neither I suspect does anyone else really. Its a gamble with our money, but I lived through some very nasty previous recessions where the sole ambition of government intervention was to get people off the dole queues and onto sick benefit. I’m no gambler by instinct but I don’t see any other viable option that has a hope of working.

  9. Public sector pensions are one area that I’m sure will be looked at – particularly if the Tories are in power but the Government really needs to get some sort of balance between public spending in general versus tax revenues .

    Frankly at the moment public spending is way too high versus Government income for the next 6 years and that’s with optimistic expectations of growth after the next couple of years.

  10. By the way – I’ve just received three advertising emails increasing discounts by an extra 2.5%. Looks like the price cuts are already being passed on.

  11. “More positively for the government a majority – albeit a narrow 51% – thought that Britain was well placed to weather the economic troubles compared to other countries.”

    Wow. Have they not heard the EC’s prediction that Britain will fare worse than any other EU country? Or that Britain’s deficit is the worst in the entire developed world?

  12. I wonder how the Pre-Budget report will affect the voting intentions, as well as Brown-Darling versus Cameron-Osborne?
    It has gone down with the media much more negatively than I anticipated.

  13. An overwhelming majority (79%) thought that any tax cuts now would mean higher taxes in the future.

    Do you have any data on the % who believe the earth moves around the sun?

    Further, do you have any data on the ratio of Conservatives to humans who believe in the Laffer curve?

  14. Thanks for the post, Alec. I won’t take the point further about restoring confidence as compared to capital spending, because I agree it does rather go away from the concerns of this site. Suffice it to say that when and if it becomes apparent the Government has squandered the money needed for essential investment there will be a huge political price to pay. I am posting from Kent where excessive rail fares, which commuters cannot avoid, to pay for investment are becoming a big issue in the large proportion of marginals here. There are also beginning to be warnings that lack of investment in power stations will bring electricity blackouts – one of the fastest ways I can think of for a Government to lose votes.

    In relation to 2.5% price cuts, I agree that actually it will release a lot of money into the economy. But what matters for voting intentions is what people see. And not least, whilst things like restaurant bills, where the VAT is added, will go down, I don’t see prices in shops that are set in a whole number of pounds, or in an amount ending 99p, being reduced for long to an odd amount 2.5% lower, because the shops set prices according to what attracts. Which is also the response to Alec’s report about the emails he has received.

    I cannot see the link between the public pensions problem KTL refers to and today’s budgetary statement. However, the Government’s pensions commitments are totally unsustainable, and a cause of resentment for those who have worked outside the public sector (often in much more productive jobs). But the electoral implications for whatever party is finally forced into addressing this problem will be horrendous.

    Incidentally, if we have deflation, will people in inflation-proofed schemes have their pensions reduced? A lot of voters suffering in the real world will be very upset if they don’t . Whilst of course public sectors workers and pensioners will demand to keep at least as much pension as before.

    It is clear Labour will be targetted for excess public expenditure. But they will also consider the economic effects of cutting down the bloated civil service, and the electoral costs of redundancies. This is clearly going to be a big issue for 2009/2010, but the voting implications are complex.

  15. Alex,
    “Do you have any data on the % who believe the earth moves around the sun?”

    Are you saying a large portion of the British electorate are stupid? Surely not!

    In my opinion it’s more likely the 79% figure may be a result of Labour voters wanting to answer in a ‘positive light’ along party lines.

    If I was part of a hard core of labour supporters I may not wish to admit in a poll that ‘my’ party was likely to raise taxes at any point. It’s not logical but perfectly understandable human nature. That plus some lazy don’t knows could make up 21% easily.

  16. James Ludlow – almost certainly not. The man on the metaphorical Clapham Omnibus doesn’t normally spend their spare time devouring the lastest economic reports from the European Commission.

    That’s the point – polls show what the public think. It doesn’t necessarily correspond with reality, or what the “right” answer is… but everyone still gets a vote.

  17. Alex – is there a percentage to the number of Conservatives who post rogue or to be ignored when a poll doesn’t show them in the lead by double digits.

    Seeing as you all have written off the chancellors stimulus I concede that the next set of polls will show the Conservatives back in the 20+ lead.

    I get a more balanced view on Conservativehome than on here most days.

  18. @ Anthony – “The man on the metaphorical Clapham Omnibus doesn’t normally spend their spare time devouring the lastest economic reports from the European Commission.”

    True, and neither do I. But I do at least read the papers.

  19. Mike – the American situation is a very big point. Obama is set to release vast sums of money in a stimulus – far greater than Darling did. He may be banking that if the US pumps massive volumes of their dollars into the biggest economy in the world we can get all the benefits from a much smaller package by utilising the low exchange rate etc.
    I’ve said before, but this won’t work on a UK scale only – it depends for success on global action, and the signs are that we are going to get major global action.

  20. “An overwhelming majority (79%) thought that any tax cuts now would mean higher taxes in the future”

    Does this mean the remain 21% think we will default on the debt?

  21. We shall know soon enough if the electorate view the Chancellor’s statement as negatively as the media has so far but in my view the reaction of the money markets is just as important. I fear that the pound will continue its relentless slide against other currencies and that the key rate to the dollar will soon fall to $1.20.

    Even if by a miracle we are spared a run on sterling the country now faces a terrible situation. Does anyone believe the Treasury’s figures on future debt? 118 million next year ? No way. More like 150 million.

  22. Perhaps some of the 21% were reading the question as “Will YOUR taxes rise to pay for the econmic stimulus?”

    Perhaps Gordon has been successful in convincing people the rich will be doing all the paying?

  23. Does anyone know where I can find information on the national debt of different european countries?

    I’ve lost count of the amount of times I’ve heard some Tory MP saying ours is the worst in Europe followed by some Labour MP saying that’s rubbish. It would be nice to see what evidence (if any) they are basing their assertions on.

  24. I’m confused by the language some people are using. He raised NI in order to provide a VAT cut. So he’s raised taxes (by £40bn) in order to cut taxes (by £20bn). Surely this was a tax rise, heading into a recession no less.

    It will be interesting to see what happens in the polls in the coming days.

  25. Mark M – It’s a tax cut for now, then a tax rise later, after the next election.

    Nick is right in that there needs to be a global response. if it were a UK localised recession, of course a run on the pound would be on the cards. it isn’t, it’s global, and if the US does what they are hinting at, the dollar isn’t going to be the safe haven it normally is when the pound goes south.

    The measures are clearly spinnable either way, but I think will come to be seen as re-distributive, and therefore more like Labour than anything we’ve had in the last ten years.

  26. Steve, the best place for the figures you want is the OECD who have a pretty good and comprehensive web site

  27. Simon beat me to it, but yes – the OECD are your best bet –


  28. Alec. The difference between the Pre-budget Report and what Obama is doing is exactly what we discussed in previous posts. The United States proposes to generate large numbers of new jobs through capital investment in America’s infrastructure. The Americans are right, and it is what Brown and Darling should be doing. And I suspect Obama is pretty shrewd as to what is best to gain and keep electoral support.

    Incidentally, why is it OK to break election commitments in an economic emergency to provide public money for the banks, but not to raise taxes immediately for the wealthiest 1% of the population?

  29. Steve Wheeler, there is a useful graph on the BBC which shows some actual data:


    As you can see the UK is far from the worst debtor in Europe (one should not include Northern Rock as these assets are valable and are paying returns). Furthermore, although the £118 billion will put the borrowing level very high, it is not a much higher percentage of GDP than in 1993, and is forecast to fall further. The real gamble seems to be how quickly the economy can recover…

  30. “Does anyone believe the Treasury’s figures on future debt? 118 million next year ? No way. More like 150 million.”

    Most comment I have seen & read concentrates on the key assumption-that we will come out of recession in the second half of 2009 & return to 3% growth in 2010.

    There are also assumptions about tax revenue volumes which seem to be the subject of concern.

    Brown consistently underestimated his annual deficits & therefore borrowing.

    By the way I wish the Press would distinguish between Annual Deficit & Cumulative Borrowing.

    PBR assumes a doubling of current Cumultive Borrowing from around £550bn to £1trillion by 2015.

    It is only then that Cumulative Borrowing will begin to be repaid-so despite the delayed tax increases we will still be running Annual Deficits for at least the next 7 years .

  31. Thanks Simon/Anthony – that’s a really interesting site. Enough to keep a geek like me occupied for hours.

    If anyone’s interested a table comparing government debt is here:-


    but it’s from 2006 so it’s a bit out of date.

    There’s also:-


    Which is lightly more up to date (2007).

  32. I just looked at the CIA one. Interesting to see countries like Norway so high…. i would have assumed it was in the lower half.

  33. We should be concerned that we are loading debts onto future generations. Far more than our prdecessors imposed on us. College kids here are saying that ever more loudly. I hope this will induce them to get more involved in politics.