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Friday, 23 March 2012

Mismanaging News

George Osborne has committed a major gaffe in public relations, by describing his biggest tax 'raid' in this year's Budget as a mere simplification of the tax system. The resentment that this has set in train will mature slowly, and be disastrous for the man's image and for his party. Meanwhile, in the twenty-four hours since he made the cock-up he has resorted to an item of crude propaganda. In the tradition of Potemkin, Stalin and Putin, his sycophants have arranged with Glaxo Smithkline to announce their decision to extend factories in the UK on Budget Day, and even to say that decisions in the Budget were favourable to the decision. Osborne touted his sneer around the TV and radio studios to extol the great investment, and suggest that it was vastly more important than the granny tax.

The company's plans must have been in train for many months. It would have been outrageously improper if the Treasury had shared their plans for setting rates of corporation tax with the company over that period. The actual reasons for the Glaxo decision British manufacturing is becoming 'affordable' again to international companies, as has been evident over many months past in the motor and fashion industries. The company owns sites and has infrastructure with skilled staff around the UK. It will be easier and possibly cheaper to invest in the UK, with or without tinkering the tax system. One can speculate what inducement was offered to the company to arrange its announcement to coincide with Budget Day, but it was probably trivial.

Osborne used the same trick a few weeks earlier, when he grabbed for his own publicity machine the announcement that a Chinese Wealth Fund was buying a block of shares in Thames Water. This transaction had been arranged as a business deal over some months but the announcement was arranged to coincide with the Chancellor's 'triumphant' return from a nugatory visit to China. There was no correlation between the visit and the deal: the announcement was crude propaganda. Such are the standards and practices that impress the current crop of puerile politicians: indeed a country gets the government that it deserves!

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