Budget

Of course the VAT increase will be unfair and will mitigate the beneficial effects of the increased personal allowance. That, in turn, should have been greater and applied sooner than next April. The pressure on local councils in England to freeze council tax is, to my mind an intrusion on local democracy - though not as bad as that by Thatcher/Heseltine and Blair/Prescott.

But Harriet Harman's anger in her response was totally synthetic, as Malcolm Bruce pointed out in his contribution to the emergency budget debate. No party absolutely guaranteed, before the election, that VAT would not have to rise if the financial climate got worse, so we could hardly be convicted of hypocrisy. Labour could have restored the earnings link for the basic state pension, but didn't. Not only has the coalition done that in its first budget, but has guaranteed a triple safety lock on future increases which will improve on the situation pre-Thatcher. Labour introduced a 10p tax rate - but then took it away again. The coalition is committed to taking the first £10,000 out of income tax. Labour has never liked small business, and, in spite of the occasional lip-service to the SME sector, introduced several niggling handicaps, both bureaucratic and in terms of tax. Many of those will be removed by this Finance Act, and will give a bigger boost to the economy than all the pseudo-jobs in the quango half-world.

Of course unemployment will rise over the coming months, but this was built into the process which started with the credit crash.

 And what about capital gains tax? Labour under Blair and Brown actually reduced this, even from what it was under Thatcher. Liberal Democrats called for it to be increased again, and it will be.

The opposition (how I like writing that!) have made much of the withdrawal of the promise of a loan to Sheffield Forgemasters.  This was part of a whole slew of promises made by Lord Mandelson in his pre-election tour of Labour marginals. I think of them as Labour's fighting ships: they were never serious proposals, because the writing was on the wall for Labour when they were made. They were probably always intended as political counters, for use in debate when they were inevitably repudiated by the incoming government.

As Nick Clegg explained in deputy prime minister's questions earlier, Sheffield Forgemasters had available a loan on commercial terms. The reason they preferred the offer of a loan from the state was that this would not involve dilution of the directors' interest in the company.  Labour exaggerates when it says that jobs would be threatened in Sheffield by the withdrawal of a government loan when the company could fall back on a commercial one.

All in all, this is some way from the budget I would like to have seen. However, it is still better than anything Labour has produced, or would have produced should they have been returned to power. Moreover, the programme of debt reduction which George Osborne announced today will, if it proceeds according to plan, put UK in a position where we cannot be held to ransom by the international money market.