Friday 23 March 2012

The budget - not much to be proud of, much to regret

Every comment by Liberal Democrats, on the budget, the NHS or anything else for that matter, should be prefaced by the phrase:"the Tories have 306 MPs, we have 57." Given that parliamentary arithmetic, the best Liberal Democrats can hope to do is nibble at the margins to ameliorate some of some of the worst consequences of Tory philosophy.

So first the good news: the rise in fuel duty is to be retained. The Chancellor has stuck to his guns and not caved in to the motorist/road-haulier lobby as Labour so cravenly did under similar circumstances. Whether this is due to Liberal Democrat pressure or an unsuspected green streak in George Osborne's make-up I can't say.

Second the threshold for the 40% tax band has been lowered (by £825) so that this swathe of the well-heeled do not get most of the benefit of raising the threshold for the 20% band by £1,100 to £9,205. Pity he didn't for the whole £1 100, but as I didn't expect anything at all, this deserves half a cheer.

And that's about it.

Although I am a pensioner, (though not, I hasten to add, a Granny, or even a Grandfather for that matter,) I can't say that I'm too upset about the freezing and eventual abandonment of our age allowance. Pensioners whose income reaches the tax threshold will have an income of at least £3 618 over and above our state pension which is to rise to £5 587, and some people are expected to live on that alone. Pensions exist to prevent destitution when one's earning life is over, and you can live quite comfortably on £177 a week. Some of us have much more and enjoy the life of Riley, so have no need of an extra tax-free perk. What sticks in the craw, of course, is that this change is made to finance the absurd cut in tax for those with a taxable income of over £150 000 (over eight times the national average wage.) Were our modest sacrifice used to fund extra welfare benefits we wealthy pensioners would at least be compensated by a glow of virtue.

The two worst aspects of the budget are that it does nothing for those who are suffering most from the failure of unregulated capitalism: the low paid, the unemployed and others on welfare benefits. These do not benefit from the raising of the income tax liability threshold since, because their incomes are so low, they don't pay that tax anyway. They continue to suffer whilst the rich are rewarded.

Secondly , in spite of the evidence that it is a crass failure, the Tories are sticking to their austerity policy, and there is nothing in the budget which will stimulate demand, bring us out of recession, create jobs for more people, and thus increase the tax take and reduce the national debt, which in any case remains at relatively modest levels. If Osborne believes that the cut in the 50% tax rate and a further drop in corporation tax are going to produce the necessary stimulus he deceives himself and the truth is not in him.

Talking of truth, both Liberal Democrats and Tories are fond of claiming that that raising the income tax threshold takes umpteen thousand people out of tax. This is a gross misrepresentation. It may take them out of paying income tax, but unless they live in clandestine tents in a field,have no televisions, buy only uncooked food and children's clothes, and never drive, smoke or drink alcohol, they pay the council tax, the BBC licence fee, VAT and duties, which can add up to quite a lot.

I had thought Nick Clegg was learning. There were few nods of agreement as he sat on the Government front bench during the Chancellor's speech, and we were spared the embarrassment of an approving embrace at the end of it. However, Clegg has now sent me an Email telling me: "This is a budget we can be proud of." It clearly isn't for members of the party who wish to see conquered the five giants identified by Beveridge, and the implementation of Keynesian economics to bring us out of recession.

Better to emphasise that that 306/57 split. We can be proud of our bit of tinkering at the edges, but should dissociate ourselves from the whole.

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