In nearly sixty years of studying and teaching economics I have always felt attitudes to the UK’s annual budget to be over-hyped. In earlier time MPs honoured it by wearing top hats, chancellors of the exchequer stimulated themselves with mysterious drinks, one of Disraeli’s budget speech lasted five hours but this wasn’t a record as he took a break in the middle, Gladstone once managed four hours non-stop.
Rachel Reeves’s budget probably wins the record for the longest and most misleading deluge of pre-event speculation around (deliberately leaked?) predictions.
These annual budgets have very little effect on the quality of the day to day lives of the vast majority of the population. The very poorest may benefit by a little more income or a better chance of getting a job. The lives of the comfortable and rich are hardly affected at all.
Similarly whatever the government does to try to affect the over-all level of economic activity, presently the desperate quest for economic growth, is often far overshadowed by external events: Donald Trump's tariff wars, the price of oil, the Ukraine war, a stock exchange crash, to name but some.
That said, I watched most of the speech and M/s Reeves sounded confident and I felt made a good case. She kept within her self-imposed fiscal rules and pre-election promise, found enough money to abolished the two-child benefit limit, taxed gambling and EV cars, and introduced an additional council tax on very expensive houses. (Will that stay with the councils or go to the central government for re-distribution from the rich to poorer authorities?)
I was sorry to see the Lower Thames Crossing confirmed as that is just a pointless prestige project, (ditto the largest of the London Airport expansion schemes) and the overhauling of the planning system which will further over-centralise our inefficient government.
In summary, the budget raises taxes in order to marginally improve the public realm and the plight of the poorest. The Tories regard that as a criticism: Labour should be “out and proud.”
I have three major criticisms.
1.The whole hooligan atmosphere of the budget debate does our democracy little credit. Despite the reservations expressed above, the budget is a serious business, especially for the poorest, and should be treated as such, not for jah-boo behaviour which would disgrace a football crowd
2.The approach is “muddling through.” The extra “add on “ of council tax for expensive houses is simply to make an unfair and ineffective tax just a little bit less unfair and ineffective. For real change we need a root and branch revision of the purpose of local government and how to finance it.
3. We need lots more “green” measures. Why is the pause in “accelerator” on fuel duty still in place, and no duty all or aviation fuel; why no taxes on pollution, congestion other “bads.?”
As to the political effect, I suspect both M/s Reeves and Sir Keir Starmer (who was very confident at PMQs) have saved their jobs.
Now let’s hope the Labour Party will stop fighting itself and get round to governing the county efficiently and with vision.
I think you underestimate the fury. This budget is another nail in Labour’s coffin. Those who contribute are fed up of paying for those who don’t. Britains’s annual welfare bill is insane.
ReplyDeleteThat's certainly how the Tories have badged it. To do so is greedy, insensitive and wrong. Every society has a few who for whatever reason, ( increasingly mental illness among the young, it seems) can't cope well in it. It is up to those of us who can cope to look after them, whilst at the same time enjoying and being being very grateful for our own ability to cope. I suggest you listen to the first of this year's Reith Lectures, and/or read his books.
ReplyDeleteEvery society has a few who for whatever reason,
DeleteAnd nobody has a problem with helping them out. The problem is…
increasingly mental illness among the young, it seems
… that we have thing like this, which is not in fact an increase in people unable to work but simply an increase in malingering by people who do not want to work and have realised that they don’t have to because the state will take care of them.
These annual budgets have very little effect on the quality of the day to day lives of the vast majority of the population. The very poorest may benefit by a little more income or a better chance of getting a job. The lives of the comfortable and rich are hardly affected at all.
ReplyDeleteNow that’s just not true, is it? I’m certainly not rich but I would count as ‘comfortable’, and everything I spend money on, from food to rent, is about 5% more expensive now than it was this time last year, in large part due to the effects of last year’s budget; and my pay rise was much less than 5%, directly due to one of the measures in last year’s budget (the rise in employer’s national insurance contributions). So that has had a large effect on the quality of my life.
I suspect both M/s Reeves and Sir Keir Starmer (who was very confident at PMQs) have saved their jobs.
They have certainly bought off their backbenchers, at least for a while. But I suspect they have sealed their fates at the next general election, whether that comes in 2028 or 2029. Mrs Badenoch, who gave a rather excellent barnstorming performance, may well then be our fourth female Prime Minister (and, I think, only our second to hold a degree in a scientific subject?). Let’s hope, in any case.
Even if your "comfortable" lifestyle has been reduced by 5%, which I don't necessarily accept, I suspect you'll be still sitting pretty. Have you had to forego any essentials?
ReplyDeleteEven if your "comfortable" lifestyle has been reduced by 5%, which I don't necessarily accept, I suspect you'll be still sitting pretty. Have you had to forego any essentials?
DeleteNo, but nice goalpost-moving.
The goal posts remain the same: "The lives of the comfortable and rich are hardly affected at all."
ReplyDeleteThe goal posts remain the same: "The lives of the comfortable and rich are hardly affected at all."
DeleteThen why did you try to shift the goalposts to ‘have had to give up essentials’?
So anyway: in that case you are wrong. The comfortable have not had to give up essentials, but their lifestyles have certainly been affected.
I suppose it's a matter of defiant but I doubly if the "comfortable" have ever had to give up anything the felt important (or do you regard hat as another shift in the goalposts?) By contrast with earlier generations and other parts of the world we live the life of Riley. Enjoy it, be please to be able to he other to enjoy it, and stop moaning.
ReplyDeleteI suppose it's a matter of defiant but I doubly if the "comfortable" have ever had to give up anything the felt important (or do you regard hat as another shift in the goalposts?)
DeleteI think 'felt important' is too vague and subjective to even be 'moving the goalposts', really. I mean what even does it mean? One person might feel their X-Box is important; another their annual ski-ing holiday to clear their head; another their children's education (which they might well have had to give up, along with thousands of others, due directly to the last budget delivered by Rachel from accounts).
But the point is that your initial claim was that '[t]he lives of the comfortable and rich are hardly affected at all' and then you switched to '[h]ave you had to forego any essentials?'. Well, there's a very very very very wide gap between 'hardly affected at all' and 'forgoing essentials'! Someone's life could be really very substantially affected before they have to forgo an essential.
By contrast with earlier generations and other parts of the world we live the life of Riley.
A point I think I have made before? But it's worth remembering that there's nothing guaranteed about us being in that state, nor that we will stay that way. The natural state of a nation is poverty: wealth must be generated, and what's more, because wealth is consumed, we must keep generating wealth by economic growth or we will end up back in the state Britain was in before our period of economic growth. Rich countries that don't work to stay rich become poor countries.
Enjoy it, be please to be able to he other to enjoy it,
As above, nobody — least of all me — objects to helping out our fellow countrypeople who fall on hard times, or who have real problems and struggles.
But there are two caveats.
Firstly, the helping out is just that: helping out. It's not meant to be a permanent lifestyle, nor is it meant to make them middle class. It's the equivalent of letting a friend who needs a place stay in your spare room for a few months (something I have done). But the aim is to help your friend get back on their feet (as my friend did) and make their own way again. Not to provide a luxury pad for them forever (which my friend, rightly, would have been ashamed of — we really do need to bring back a sense of shame of depending on the kindness of others).
And secondly the help is only for those who really need and deserve it. If it goes to the malingerers, the lazy, the skivers, foreigners, or fraudsters, then I'm sorry but they spoil it for everyone and you can't be surprised if people start saying that we have to shut down the systems that are being exploited and look for alternative ways to target the help to those for whom it is meant: perhaps dismantling the impersonal national state bureaucracies which simply don't have the capacity to assess individuals and so just dole out money, and returning to more local systems where people who know each other help each other. (In every other circumstance you seem to be in favour of making thigns more local: why not this?)
and stop moaning.
That is a bit rich, coming from someone who keeps a web-site that is 90% moaning!
"Someone's life could be really very substantially affected before they have to forgo an essential." Yes, indeed. That's precisely why the life-styles of the conformably-off are rarely significantly affteced affected by budgets .
ReplyDeleteYes, indeed. That's precisely why the life-styles of the conformably-off are rarely significantly affteced affected by budgets .
DeleteWhat? You seem to have got that totally the wrong way around.
Look, imagine someone comfortably off who, due to last year’s budget, had to take their children out of their fee-paying school and pit them into the local state school instead.
Has that person had to forgo an essential? No. But has their life been significantly affected? Yes.
That’s one direct effect. There are also indirect effects. There are other direct effects: imagine someone comfortable who employed a nanny. Due to last year’s employer’s NI changes, employing people, especially on low wages, has become substantially more expensive. As a result, say this couple have to reduce the hours for which they employ the nanny, and rearrange their lifestyles as a consequence. Again, have they had to forgot an essential? No. But have their lives been significantly affected? Clearly yes.
So the lives of the comfortably off are often directly significantly affected by budgets, even if they don’t have to forgo essentials.
And then there are the indirect effects: everyone, even the comfortably off, has had their lives significantly affected by inflation, which has been made much worse by the effects of the last budget (by the aforementioned rise in national insurance, and the public sector pay increases, among other measures). It may mean, for example, not being able to afford a holiday that they could afford last year.
So ‘ the life-styles of the conformably-off are rarely significantly affected by budgets’ is just wrong. They may not have had to forgo essentials, but life-styles are not just essentials.
Tough
ReplyDelete