Adam Smith Institute

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What Alistair Darling should do

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There are stories circulating in Westminster that the Chancellor has stood up to the Prime Minister and resisted demands for more fiscal stimulus. It is to be hoped this is true because there has been too much of that already. Cash is being scattered like confetti, and billions tossed around like bread on the water. The burden of that debt will fall heavily on the next generation, restricting what they can do and cutting into the wealth they might earn.

What is needed now is more pull and less push. The Budget provides a chance for the government to create spaces into which business and entrepreneurial activity can move. That means creating some of the conditions under which business flourishes, and that means a more benign tax system and more sympathetic regulation. There is talk of tax increases to finance the government's spending commitment, but what is actually needed is a reduction in that spending and in the taxes needed to sustain it.

Far from raising the rates on high earners, the Chancellor should be reducing them to give more incentives to high achievers to live and work in the UK, and for entrepreneurs to aspire and work to join them. Government has to cut its waste and its spending, and boost its efficiency. It is what businesses do when they encounter a rough patch, and it is what governments should do.

The odds must be against it, given this government's record. There has been talk of money being pushed at people to buy more houses and more cars, whereas what government should be doing is removing some of the obstacles which inhibit business activity and expansion. Those obstacles were put there by government in the first place.