Ray Stafford is sales director of trade-only plumbers merchant, Williams & Co.
As the chancellor wrestles with planning his “budget for growth” he will face one problem over and over again. How does he reconcile the needs to constrain public spending with the need to foster growth, particularly in those sectors which suffered a contraction in Q4 of last year?
At the same time, he has his Lib-Dem allies to keep onside, and those pesky CO2 reduction targets haven’t gone away.
He also wants to boost consumer spending, but not in the kind of way that fuels the sort of private debt bubble that caused so much pain last time around. It would be a poor recovery that depended on sub-prime credit card debt funding ever more imported flat screen TVs!
So how does Mr Osborne square the circle?
One easy suggestion is to revive the hyper-popular boiler scrappage scheme.
Firstly, it is largely revenue neutral. By the time you account for the VAT on the sale and installation, plus the taxes paid by the boiler manufacturer, merchant and installer, the treasury is probably a few quid up on the £400 subsidy it puts in, so no harm is done to the deficit reduction strategy.
Secondly, it stimulates British manufacturing and the hard-hit construction sector.
The third benefit is that it encourages the householder or landlord to spend, but as a constructive investment, rather than as a transient bit of hedonism. The energy savings generated mean that the consumer will have that money back to spend again over the next few years, stimulating sustainable growth.
In terms of the environment, those CO2 reduction targets aren’t going away just because the UK economy is having a rough time! Whilst upgrading inefficient household boilers isn’t going to solve the problem on its own, it is at least a big stride in the right direction.
Finally, it really is a quick and easy thing to do. The mechanisms are already tried and tested from last year. The scheme went very well – the only complaints were that it was on too small a scale. – so a boiler scrappage Mk2 could be implemented in just a few weeks
As a side issue, and call me an old cynic if you like, but the original scrappage scheme was championed by Lib Dem MPs, who contributed by far the most signatures to the early day motion supporting the scheme. Lib Dems were pretty much marginalised at the time (pre-general election). Now things have changed somewhat, and Osborne may be looking for something on which he can “agree with Nick”.