Friday, 29 October 2021

Bullshit budget

 As a well-brought-up choirboy I learnt  to avoid vulgar language, so was a little bit discombobulated to read the Guardian's headline "Chancellor to strike bullshit note  in budget" last Wednesday morning.  A second glance revealed that it was actually a "bullish" note, but I'm pretty convinced the first reading wasn't far wrong..

By skilful presentation Rishi Sunak  has managed to present himself as competent and "nice" to Tories and much of the press, but some of his earlier key decisions have been deeply flawed. 

 To finance  our social care services by a hike in the rates of national Insurance contritions was to choose  the least suitable tax.  NICs are tax on a "good", (employment) whereas we should be switching taxes to "bads" (pollution, congestion, fossil fuels . . .).  and it is regressive (takes more of the incomes of the poor than of the rich: takes nothing from the comfortably retired such as myself.)  His stamp duty "holiday" on houses actually fuelled house price inflation: fine for those of us who already own our houses, tough on those saving up to buy one).  "His "Eat out to help out" scheme with its donation of £10 taxpayers' money to those who could already afford  to "eat out" probably helped spread the virus

So economically and socially his previous decisions have been inept, to put it mildly.

However, his presentation skills are without equal.

For a full seven days before the budget we were deluged with "gobbets" (cf Allan Bennet and the "History Boys) of "good news."  Extra spending for this, that and the other assured us that the days of austerity are over, and ensured that the provider of all this largess remained in the headlines.

The budget itself contains several obvious howlers.

The reduction in air passenger duty for internal (short haul) flights is bizarre, especially coming the week before the Cop26 summit. Surely if we are to reduce CO2 emissions short haul flights should be, if not banned, made prohibitively expensive.  

For similar reasons the continued  freeze on petrol duty is another  example of cowardice (though so cravenly populist is our politics that Labour can hardly criticise, since Gordon Brown started it.)

The meddling with the alcohol duties  is another silly crowd-pleaser, reminiscent of "Eat out to help out."  The 3p off a pint of beer, but not until next April when it is likely to have been eroded by inflation, is hardly likely to affect either the coffers or our habits.

 Most serious in its immediate effect, or lack of one, is the discontinuance of the £20 "uplift" in universal credit, especially for those unable to work, who fail to benefit  from the "taper" which reduces the marginal "tax" rate to those in work but  entitled to receive the benefit because their pay is so low from 63% to 55%.  (The marginal tax rate for those earning a decent salary is 20%, bigger money 40% or 45\%.  So much for levelling up.)

There is a case for arguing that it is no function of the state to subside employers by "topping up" the salaries of low paid workers.  Rather the employers should be forced to pay a genuine" living wage."  This is the argument the government is using for stopping the immigration of EU citizens prepared to work for lower wages in in our care homes, orchards and fruit and vegetable fields and thus transforming Britain into the high wage high skilled economy.  Similar reasoning could have been used to reduce the £20 top-up by, say 10% a year, this giving recipients both in and unable to work time to adjust (though what compensatory measure those unable to work could make is not clear.)

Now we wait to hear how the gobbets of largess are in fact insufficient for purpose.  The "special premium" for the care system will mostly go to the NHS to make up for the inadequacies resulting  from the systemic real cuts since 2010.  The bung for the bankers is about double that to provide for the catch-up lessons pupils have missed during the pandemic.  Local government has lost about 40% for its funding since 2010.  An extra 3% for three years will hardly repair the damage.

But Sunak has achieved his objective: he's the darling of the Tories and favourite to succeed Johnson.  After the soaking the press have given him, the media caravan will move on to Cop 26 and whatever other crisis is round the conner, COVID  having now been successfully relegated to normalcy (apart from for  those still  dying from it.)

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