The capacity for politicians to surprise us has been stretched to breaking point during 2009. As more details of Westminster expense claims were posted online, this time not as a result of a leak to a newspaper, the shadow chancellor George Osborne spoke for many when he labelled Alistair Darling's pre-budget report (PBR) as "cynical". Of course, this is really about as meaningful as criticising gorgonzola for being cheesy. Cynical and short term is what politics is now all about. And with an election just months away, it's naïve to expect the PBR to be anything but political. But what did it mean for directors?

It depends on sector and size of business. If you happen to work in a bank, the windfall tax on bonuses means a review of remuneration policies is probably in order. A clunky piece of political theatrics, the tax won't bring in a great deal of extra revenue and won't really hurt the kind of people the man in the street is so angry with. Now France has announced a similar scheme, it has the look of another international first for Brown. But there are too many easy ways around such taxes to make it a useful strategy.

Darling's announcements to maintain his fiscal stimulus have been largely welcomed, even while everyone knows this debt will soon have to be paid back. The main deal seems to be (some) more cake today at the expense of (considerably less) cake tomorrow. That he is unlikely to be running the kitchen when tomorrow comes eases the pain somewhat, at least for the chancellor.

But if it exists at all, the recovery remains fragile and fiscal life support is needed. The problem is government assistance too often ends up being little or no assistance at all. Measures to guarantee jobs for unemployed youngsters within six months rather than a year and plans to extend the "Time to Pay" scheme that allows businesses to defer tax payments are welcome. The latter comes with a caveat that larger firms will have to explain why they need help.

Retailers moan that the plans to return VAT to 17.5 per cent will damage sales on the High Street, although their complaints are louder than their cheers were when the lower rate was introduced. Potentially more damaging, and affecting all directors, are the plans to claw back some of that cake. The most damaging measure is the planned increase in employers' national insurance contributions. This would be impossible for many firms to handle now. But if the pessimistic forecasters are right, it's unlikely to be any easier in 2011.

Of course the advantage of Darling's plan is that it sets a political trap for his opponents, who will have to confirm whether they would scrap the change. It's the same with the 50 per cent tax hike and the planned changes to tax relief on pension contributions for higher earners. Here the additional trap accusations of unfairness and helping the rich add to the potential punch.

The chancellor's highly political PBR tried to do several things at once. As well as grandstand gestures to hurt bankers, he kept the fiscal stimulus alive; he set traps to help Labour paint the Tories as a bunch of toffs looking after their own and tried to reclaim a reputation as the party of prudence. But good rarely comes from a man trying to do more than one thing at a time.

Richard Cree

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