The cupboard is bare

Although the electoral campaign appeared to have degenerated into a personality contest, the result suggests that people did not just chose the party with the leader they liked the most. Arguably, however, the head-to-head debates were a mistake and may have been a factor leading to the inconclusive result.

The important issues were, but only to be dodged. Halfway through the campaign, the Institute of Fiscal Studies pointed out that there is a giant gap in the government’s finances. None of the party leaders hads the courage to admit it, let alone come up with proposals for dealing with the deficit. All of the possible options for tax increases were damaging in one way or another. Tax cuts are out of the question, though reshaping could be helpful in a small way. Experience shows that cracking-down on benefit cheats yields little and may not even cover the cost of administration. Cracking-down on tax avoidances by plugging loopholes is an endless cat-and-mouse game and almost as unprofitable. Useful cuts are not going to be made without chopping out whole areas of government activity. How necessary, for example, is all the work done by the regional development agencies? Is Britain over-extended in its foreign and defence committments and activities?

Without LVT as a policy option, the parties have boxed themselves into a corner. Of course, even given the determination the policy could not be up and running in less than three or four years, but the announcement itself would transform the economic and business climate for the better.