Rich to bail out Britain

Wednesday 9th December 2009, 1:33PM GMT.

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Chancellor Alistair Darling today unveiled his plans to take Britain out of the recession – telling bankers and the super-rich they must bear most of the pain of the spiralling national debt.

The country will this year owe £178 billion – £3 billion more than he had previously predicted – which he blamed on the effects of the global financial crisis.

Shadow chancellor George Osborne said it was “the biggest debt we have ever known”.

Mr Darling announced a combination of spending cuts and tax hikes to halve the crippling national debt in the next four years.

Using the financial package to set the battleground for the next General Election he gambled his government’s future on a one-off tax on bank bonuses and promises to help those in need.

He pledged fairer taxes in an effort to win over voters, with the richest households bearing the brunt of the painful measures.

But the Chancellor said public sector workers faced a one per cent pay cap from 2011, a move which provoked union fury.

Mr Darling announced a 0.5 per cent increase in National Insurance from April 2011 – so those earning more than £20,000 will pay more tax.

He confirmed VAT would go back up from 15 per cent to 17.5 per cent in the new year, inheritance tax would be frozen at £325,000, and that there would be no extension of the stamp duty holiday, with the threshold returning to £125,000 from £175,000 on January 1.

But there was fresh help for struggling small businesses, with the calling-off of a 1p rise in corporation tax due to hit 800,000 small firms next year.

He revealed the basic State pension would rise by 2.5 per cent – a real-term increase of nearly four per cent – and other benefits linked to inflation, such as child and disability benefit, would rise by 1.5 per cent from April.

Mr Darling said the Government would guarantee that anyone in work will always be better off than they were on benefits, with extra cash help from the State if needed.

He promised more support for school-leavers and specialist and tailored help for over-50s to find work.

Mr Darling said that from next month no-one under 24 needed to be unemployed for longer than six months – down from the current 12 months – before being guaranteed work or training.

He said he was delivering his Pre-Budget Report at a “critical time for our economy and for our country”.

“The task today is to ensure the recovery and promote long-term growth,” he said.

To cut support now would wreck the recovery, he said.

He unveiled plans for the biggest squeeze in public spending, but said education, health and police budgets would be spared average cuts of about 14 per cent over three years.

But the axe will not fall until 2011 – preserving programmes designed to bring about recovery and protect frontline services – thereby establishing a key policy difference with Conservative plans to cut public service spending now to deal with record levels of debt.

Mr Darling warned there was “still uncertainty” for the UK economy but predicted a return to growth by “the turn of the year”.

Shadow chancellor George Osborne said that Labour has lost its “moral authority to govern” by putting electioneering ahead of fixing the economy,

Responding to the Chancellor’s statement on the Pre-Budget Report, Mr Osborne told the Commons Alistair Darling had put off tough spending decisions until after Britain goes to the polls.

He accused the Chancellor of failing to produce a plan for dealing with Britain’s debts, failing to restore confidence in Treasury forecasting and failing to convince the world that the country is open for business.

And he described the decision to increase National Insurance rates as a “tax on jobs”. Mr Osborne told MPs: “Today, confronted with the biggest budget deficit in our peacetime history, he faced a choice.

“Would he take the tough spending decisions before the General Election or would he completely duck them?

“We were promised a Pre-Budget Report and what we got was a pre-election report. They have lost all the moral authority to govern today.”

Commenting on the centralised pay cap on public sector staff, Brendan Barber, general secretary of the TUC, said it was “unfair and inefficient” and would damage long-established independent review systems.

“What we need is a fair tax system to make sure that those who did so well out of the boom years make a proper contribution,” he said.

By London reporter Sunita Patel


  1. 1
    marco

    I cant help feeling that all this attention on bankers and fatcats is a desperate ploy to divert public attention from the expenses scandal. They desperately need a ‘bad guy’ to flog in public.

    If they didnt divert all the attention onto bankers then the public would know who is really to blame for the current mess!

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  2. 2
    steve

    Well done Darling!
    NI going up.
    Punish the working man again to fund the state.
    No doubt there will be an increase in state benefits or will they be capped as well? I doubt it.
    Typical labour tactics, we need money, where can we get it…hmm tax the workers.
    Say what u want about the tories, I was raised under a tory govenment, we lived on benefits…I had all my university course paid for and i got a termly grant as well, no tuition fees. Along comes labour and screws it all up. Education for all? forget it.
    Come on David C. we need to kick the left out and put things RIGHT

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  3. 3
    Jeepers

    Wow – does anyone *seriously* believe that the Tories would put everything RIGHT – just like that?

    The days that Steve remembers – somewhat selectively, it has to be said – are gone forever. I don’t for one minute believe David Cameron and the Tories are the voters friends any more than the current lot, who themselves aren’t exactly covered in glory.

    It comes to something when the two main parties haven’t got much between them. The lesser of two evils – that’s about the size of it in the next general election. I don’t care much for the current government but sadly I trust the Tories even less. And thats going to be their problem!

    Report abuse

  4. 4
    Stuart

    National Insurance going up 1% (with the outstanding amount) for those over £20,000 – how “Rich” are these people. The Pre Budget Report very conveniently stopped in order to allow Darling to say nothing whatsoever about where all the cuts and increased taxes are going to come from AFTER THE ELECTION.
    Then the con about ring fencing Schools, Hospitals and Community Police Teams. Monty Python Balls let the cat out of the bag only ten minutes ago on Sky News. Schools budgets next year will be stood still, no increase and no decrease, in 2011 and 2012 they will go up 0.7%. So no allowance whatsoever for inflation (Teachers salaries will go up for two years at 1%, ie 0.3% more than the school budget) or growth/improvement. The same for hospitals and Police. What should also be noted is that budgets for these three services are SPECIFIC, ie “hospitals”, “schools” and “policing teams”. They make no mention of cuts in the “NHS”, “EDUCATION” or the “POLICE” all options are open on these and already we see cuts in the NHS and Policing.
    Borrowing will continue, until, (their figures), a ceiling of £178 BILLION has been reached in 18 months time – again AFTER the election when they will begin to reduce it.
    They insult our intelligence, a gang of charlatans and con men, having wrecked the country, they now perform a holding operation with lies, half truths and spin in order to con us until after the election when the day of reckoning will come. They should be prosecuted for treason for what they have done and continue to do.

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  5. 5
    Genbac

    The reason this government is such a disaster is because they carried on the extremist ideas of Margaret Thatcher and gave free reign to the bankers and buisiness people of the land.
    If at last they are going to try and claw back some of the wealth that the rich have stolen from the poor then maybe they will win back the support they have lost from working people.

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  6. 6
    Y Mab Darogan

    Neither Party has any real idea.

    However this is what I would do to save our once proud country

    1) I wouuld cancel all benefits paid in cash. Anyone on benefits will be given food/energy vouchers to live on reducing benefits being frittered away in pubs, bookies and on unrequired luxuries. In term those people on benefits wishing to spend on luxuries will be given the kick required to accept any job.

    2) We have a huge amount of unemployment therefore we no longer require any foreign nationals to work in this country hence the Uk will be shut for foreign nationals wishing to work until we achieve near to enough zero % unemployment.

    3) Anyone earning under 25K per year will no longer pay tax on earnings however those earning over 25K per year will pay a greater amount of tax but once tax is taken off they will not earn under anyone not paying tax.

    4) A greater push to become a manufacturing country again.

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  7. 7
    John Smith

    Oh I am sure that will not go down well with those that are well off.
    Don’t you just love the way the Tories lay blame on the opposition yet failed to do any good for the country themselves when they had control? Or has everyone really forgotten how many small businesses went down and how many people lost out when the Poll Tax was first brought in? Vote Tory? Not a chance matey!

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  8. 8
    Mat

    They’re all going to tax you more, whoever gets into power. There’s no more valuable stuff to privatise, bar the public services, so tax and ‘efficiency savings’ it is, whether that’s pay freezes or reduciton of people on benfits. The deficit needs to be reduced no matter what, so tough times ahead. The government spent just as badly as the public with their credit cards/easy loans/mortgages leading to debts.

    There’s likely to be a hung parliament coming up – who will the Lib Dems join up with?

    Report abuse

  9. 9
    Big E

    How much would we save by pulling out of Afghanistan…..

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  10. 10
    Drew

    Thank you Labour
    Same old tax and waste!
    Beyond repair this time.
    Going going gone!!

    Report abuse

  11. 11
    Neil

    Steve, “kick the left out”? sorry have I missed them, when were they elected? Labour and the modern cuddly Tories are fighting over the same patch of slightly right of centre ground, or are you going on the US definition which says that everyone who doesn’t agree with letting the poor die in the gutter is a dirty commie?
    Maybe if the “left” had been in power the banks wouldn’t have got away with gambling our future for so long.

    Report abuse

  12. 12
    English Exile

    No 2 Steve

    Oh what short memories we have.

    Here are some of the things provided courtesy of the Conservative governments 1979 to 1997.
    Doubling the VAT rate
    High Interest rates
    Rioting on the streets of our major cities in Toxteth, Brixton and Handsworth.
    Poll Tax riots
    Record Home reprocessions
    Demutualisation of Building Societies
    Giveaway Privatisations in Electricity, Gas, Water and Public Transport.
    (where are the lower bills and fares as a result of market competition?)
    City of London Big Bang which eventually brought the big Bust which required a government rescue to prevent complete financial disaster.
    Black Wednesday when £14 billion was spent in one day trying to rescue our overvalued currency. (Failed – Chancellor Lamont’s advisor, one David Cameron).
    Record high unemployment.
    Three (3) major recessions (1981, 1988 and 1992)
    NHS waiting lists UP to 2 years.
    Contracting out of NHS cleaning (MRSA anyone)
    This isn’t social flak. These are just some of the things that happened when government was last guided by Conservative Values.
    Just in case you had forgotten.

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  13. 13
    Telford Steve

    Couple of things,
    why not pull out of the war which might save a couple of quid.
    And, instead of hitting working people with higher taxes, why couldn’t they make people work for living? If they were better off before on welfare then just make up the difference.

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  14. 14
    winja

    If the Conservatives do win the next election, at least have some comfort that David Cameron will have been elected by the general public!

    Unlike our Scots friend Winky!

    Report abuse

  15. 15
    Lucy W

    All I know is its very expensive going abroad because of the weak pound.

    Like Steve, I remember happy Tory days when the working person had a better chance of owning their own home.

    At least the Tories are going to reverse the Hunting ban which will bring back jobs in the countryside – what are the lefties doing about it? I’ll tell you..no I won’t as the moderators wont post it!!

    Report abuse

  16. 16
    Alial

    After reading this news report, its reasons like these, why I am currently in Perth, Australia, studying here to increase my job prospects. Granted I pay more for tuition at college than I would in the UK. However, when I look at the way they are now putting taxes up even more and NI and putting this, that and the rest-up in price, I am glad I am here and my aim is get permanent residency and live here. I feel there is no opportunity in the UK anymore and no quality of life. I wish the govt parties could read this so they know the country is in such an embarressing and sorry state, that it drives british citizens away – to another country no less.
    I miss my family and friends immensely, but I will never miss the high taxes, the NHS system, the lack of jobs and general ‘no-one gives a crap about you’ attitude. Proud to be British? Not anymore…

    Report abuse

  17. 17
    KB

    So don’t go abroad, Lucy, not having a holiday abroad is unlikely to kill you.

    I do believe house prices rocketed under the Tories, too, in fact Labour had been in power for 2 years before I was able to afford to buy my own home. When I was starting work, house prices suddenly doubled and I had no chance of buying somewhere.

    As for the hunting ban, surely the Tories have better things to do than repeal a law that was voted in – it would be better to tighten it up considerably rather than repealing it. People are still following the hunt, I doubt if many (any?) jobs have been lost since the ban was brought in and if hunts were keeping to the law, they would be likely to get more followers as people who don’t agree with terrifying and killing wildlife would follow them, too.

    As for Steve, living on benefits under a Tory government, words fail me on that one. Benefits should indeed be capped for those who are able to work but won’t – and if you are better off on benefits than working then I agree with the poster above that benefits should just be used to top up your wages for the low paid.

    Report abuse

  18. 18
    Stuart

    Why should this country worry when there are people who see what Labour have done to this country and still insist on supporting this unholy shower. This once great country has been reduced to the dregs by people who in many other countries would have been prosecuted at least and shot at worst. No intelligent person can view what Labour have done and then vote them back into power. To do so shows just plain thick, blind, stupidity and crass unintelligence if one wants more of what we have had over the past 13 years. There are another five political parties all crying out for votes, one or two may not be very savory but any of the others are a more sensible alternative than voting for Labour.
    English Exile comes out with the purile rubbish that we have come to expect – question why did you make yourself an exile if in fact you did. FACT, in 1997 Gordon Brown, Labour took over the Chancellorship from Clarke the Tory Chancellor. No sensible political/economic expert would argue against the fact that Brown took over the best economy that this country has ever had at the time of a party/government change. It was so good that Blair said that he would keep to it with existing Tory spending plans for two years, which he did. Then Brown took hold of it and wrecked it by excessive borrowing and spending
    Just in case some forget, in 1997, Labour slated the Tories for having a £5 Billion “black hole”, yesterday Darling admitted that the Labour black hole would reach £178 BILLION by the end of next year with total Government debt set to reach over ONE TRILLION POUNDS. Yes Labourites, feel proud of the charlatans that you support, they have brought us to our knees which will take over 30 years to remedy.

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  19. 19
    the cothercott kid

    well done chancellor darling, anothe 2.5% for the pensioners next april, it is the grey vote who will go out and vote next may and will ensure the return of a new labour government by 18 seats majority. gordon brown and his government are like poetry in motion, and the bunch of spivs will remain in opposition. at least there will be an acting role for diddy david cameron, as he is the spitting image of the actor robert hardy and when the bbc remake a new all creatures great and small series step forward diddy david fot the siegfied farnon role,. eh up mr vitinary!!!

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  20. 20
    the cothercott kid

    english exile,i like your list. you may want to add to it,
    1,000,000 living in cardboard boxes, homeless, the mental homes closed and the mentally ill added to the cardboard box problem

    remember the tory westminster council who sold off cemeteries for £1 each, that same council led by dame! shirley porter was responsible for exiling thousands of council tenants so that westminster council remained blue.
    never trust a tory, never vote tory or ELSE!!!
    privatisation of the railways
    sell off of tsb bank
    de mutualisation of building societies, eg halifax, bradford and bingley etc

    the seeds of the credit crunch and banks greed were sown by maggies government

    doubtless next may, when voters have the choice in front of them they will remember the good things labour has done and remember the damage done to the country by the maggie/major axis

    Report abuse

  21. 21
    marco

    @Y Mab Darogan
    1) Food and energy vouchers sounds like a good idea

    2) unfortunately there is no shortage of jobs like ‘lay about’ ,’drink’, ‘public disorder’ etc. the foreigners are here because either they are more skilled than the locals, or the jobs are ‘beneath’ the locals and they would rather be on benefits.

    3) why punish those who are already contributing most to society? How about those who contribute little or nothing to society (on benefits or below the tax threshold) are required to contribute in others ways… like doing volunteer work, or washing the cars of those who do contribute?

    4) Good luck competing in manufacturing with countries that have no minimum wage, no health and safety, no green taxes and no welfare handouts.

    Report abuse

  22. 22
    Lucy W

    KB, I go broad for work as this government is creating a brain drain but I still passionately want Britain to be great again and take its rightful place on the world stage. Would have been Nice to see Gordon Brown get a Nobel Peace prize, after all he’s sending more troops out the same as Barrack! And Al Gore did his share of bomb dropping as Vice-President, and got one. But oh no, the Brits as the laughing stock of Europe.

    I think you will find that the Tories are repelling the hunting ban as they respect the rights of minorities – even if you don’t have dark skin. Equality is for EVERYONE, not just the majority.

    It makes me laugh that the Labour Government spent more time debating the fate of a few mangy foxes than it did the fate of millions of Iraqi’s before invading them!

    And the smoking ban that has ruined the Great British Pub!!! In Germany they applied the same EU Directive and have smoking pubs and non-smoking pubs, and some mixed – everyone’s happy. But no, this do-gooder lot had to ruin a great British institution because it felt that some people could decide not to work in a pub. A building site is more dangerous – but people choose to expose themselves to that risk.

    Why o why can’t the British people be trusted to decide on their own personal acceptable levels of risk after being informed by the state of the risk?

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  23. 23
    winja

    What is scarcely believable is Thatcher STILL being held accountable for the total and utter ineptitude of the current government incumbents. For the avoidance of future doubt, have a look at the roll call of Bliar and Broon’s tenure:

    £22,500 of debt for every child born in Britain
    111 tax rises from a government that promised no tax rises at all
    The longest national tax code in the world
    100,000 million pounds drained from British pension funds
    Gun crime up by 57%
    Violent crime up 70%
    The highest proportion of children living in workless households anywhere in Europe
    The number of pensioners living in poverty up by 100,000
    The lowest level of social mobility in the developed world
    The only G7 country with no growth this year
    One in six young people neither earning nor learning
    5 million people on out-of –work benefits
    Missing the target of halving child poverty
    Ending up with child poverty rising in each of the last three years instead
    Cancer survival rates among the worst in Europe
    Hospital-acquired infections killing nearly three times as many people as are killed on the roads
    Falling from 4th to 13th in the world competitiveness league
    Falling from 8th to 24th in the world education rankings in maths
    Falling from 7th to 17th in the rankings in literacy
    The police spending more time on paperwork than on the beat
    Fatal stabbings at an all-time high
    Prisoners released without serving their sentences
    Foreign prisoners released and never deported
    7 million people without an NHS dentist
    Small business taxes going up
    Business taxes raised from among the lowest to among the highest in Europe
    Tax rises for working people set for after the election
    The 10p tax rate abolished
    And the ludicrous promise to have ended boom and bust
    Our gold reserves sold for a quarter of their worth
    Our armed forces overstretched and under-supplied
    Profitable post offices closed against their will
    One of the highest rates of family breakdown in Europe
    The ‘Golden Rule’ on borrowing abandoned when it didn’t fit
    Police inspectors in 10,Downing Street
    Dossiers that were dodgy
    Mandelson resigning the first time
    Mandelson resigning the second time
    Mandelson coming back for a third time
    Bad news buried
    Personal details lost
    An election bottled
    A referendum denied

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  24. 24
    Lucy W

    For those who don’t follow the Gilt Market, the yeild in UK Government stock has sharply risen. This means that the lenders to the government (banks, pension funds etc) would rather lend their money to Johnny Foreigner Governments and get less profit in exchange for greter certainty of it being repaid.

    We are no better than 1930′s Germany!

    The whole world has no confidence in how his country is being run with spiralling debt in a vain attempt to buy votes.

    I always believed that we should keep the pound and determine our own economic future, However, if this is the best we can do then we should join Euroland and let them make better job (assuming they will have us now).

    Report abuse

  25. 25
    Stuart

    Very well said Winja, but any intelligent comments made to a Labourite is likely to fall on deaf ears. They don’t wish to – or more likely are unable to, face facts. Labourites generally have been bred into it, it’s a case of like father, grandfather, great grandfather etc like son. It follows them down through the ages and they go along like sheep. Nothing will make them question, analyse, compare or even doubt whatever the Labour Government comes out with. The word “Labour” is like a drug to which they are addicted, a few go in for “cold turkey” and come off it but generally I find that they are content with their lot as a Labour party punter. Take the “cothercote kid” for example, I think we have had him under another pseudonym in the past. He now goes on about the pensioners voting for Brown because of the 2.5% pension increase, funny, I am a pensioner and I am not jumping with joy. It was announced today that all pensioner groups are up in arms because of the routine and usual Labour lies and deceit, the 2.5% is payable only on the basic pension and not on the add-ons, for my wife that will be £1.25pence per week as it will be for many other pensioner women. So, what does the cothercote kid have to say now, when once again this Labour cabal are shown up for the liars and cheats that they are. Yes, of course he will vote Labour no matter how much they con us, he doesn’t mind being lied to, cheated and insulted. I reckon cothercote, your pension increase will be about £10 a month if you contribute to society and are not on benefits, you will also be paying council tax, so way up your £10 quid a month, take off the council tax increase and then tell me that you will be dancing with joy about the Labour increase. And just in case you forgot, Council Tax has gone up over 100% under this Labour lot at Westminster and they have now told Local Authorities that they are required to make savings in all their services. What did Brown and Darling say about maintaining public spending until 2011. They have already started the cuts.
    Nobody but nobody could be so daft as to put this Labour lot in again after what they have done, any party, except the BNP and the Greens are better, yes even the Lib Dems. I look at Labour as being below the level of the BNP and that is really saying something.

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  26. 26
    S Lambert

    One way of saving money – only pay out benefits on the first two children. This will make any potential parents think properly before creating a child. It will reduce the parents who have loads of children just to get a bigger house and live on the money they get off the govt. I dont agree with the conservatives who want to increase the threshold on inheritance tax. This will only benefit a small minority. We need to look at all budgets and prioritise them as we are in such a mess. The £250 gift given to newborns could also go as inflation will eat away any benefit to the individual but as a whole costs the tax payer a lot.

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  27. 27
    capt chaos

    Politicians of all parties try to divert our attention from their own failings and the people who always get hit the hardest are the middle income bracket who always pay their dues! the really well off have the resources to find the loopholes, we need a new Guy Fawkes!

    Report abuse

  28. 28
    Peter

    Winja,

    The reason that people still seek to blame the Tories for our current malaise, is that it is they who made the fundamental changes to our economy that led to where we are.

    We became heavily over-reliant on the financial services ‘industry’ for our wealth. In the end it consumed itself in its own greed as we have seen. And who were the great champions of so-called ‘service industries’?

    We were also over-reliant on the housing market, and have an enormous demand for privately-owned housing, which dates back to the wilful undermining of the publicly-owned housing we used to have. Who was responsible for all those council house sales and refusing to allow the proceeds to be re-invested in public housing?

    We hear complaints about the wages and salaries of the average working man reducing in real terms, whilst the very wealthy get richer and richer, seemingly regardless of economic circumstances. Who was it who removed protection and the right to protest efectively from the working man, and in some cases the basic right to join a trade union? Who was it who made huge concessions to the wealthiest people in the country in their taxation policies/ And who is it who would continue with this in allowing inheritance tax breaks for the wealthiest if elected?

    I’ll leave you to guess the answers to the above – one clue – the answer to each is the same.

    Now, if you were to ask me if New Labour have been foolish in continuing to follow these doomed policies, I would probably agree, and like Genbac and Neil above, I’d rather have seen a party of the ‘real’ left restoring a degree of balance – but at least New Labour haven’t been as rabid as the Tories were at their peak, and have had the courage to invest in jobs, education and the NHS, where the Tories didn’t.

    Lucy’s typically nasty racist jibe in her last comment simply serves to illustrate the emptiness of her argument. To compare the ‘right’ of people to torment small animals, with the fundamental human right to avoid discrimination on the basis of skin colour or religion is just vacuous.

    As for wasting parliamentary time, if the bloodsports enthusiasts had simply accepted that democracy didn’t favour them, we wouldn’t have had to waste so much time on such a trivial issue. In the end the principle of the rights of our parliamentary democracy outweighed this pressure group, and was the really important issue under consideration.

    I doubt if any jobs were lost as a result of the hunting ban – in fact is seems to be more popular amongst people with wider views nows, largely perhaps because they find it morally more acceptable not to set out to torment small animals for their idea of fun in the first place.

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  29. 29
    Lucy W

    S Lambert said ” I don’t agree with the conservatives who want to increase the threshold on inheritance tax. This will only benefit a small minority.”
    Typical !!! Minorities don’t matter, unless it’s a racial thing. Just where is the EQUALLITY in Britain? At least the conservatives are starting to respect the wishes of minorities by repealing the Hunting Act.

    Sorry if that upsets Peter. He seems to think that Democracy is a wonderful thing – I don’t. It only serves the majority and if the majority are ignorant, then in there lies the problem.
    As Winston Churchil said “ The best argument against democracy is 15 minutes with the average voter.”
    PS May I recommend that if anyone else is ignornt about hunting then they purchase a copy of the video “Fox hunting with the six Fell Packs” and enlighten themselves (I think you can get it the internet)

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