THE GOOD:
- Will Hutton to draw up plans for fairer public sector pay: those at the top will not be paid more than 20 times those at the bottom. Obviously, reducing the disparity is a good thing, but 20 times more is still far too much.
- Capital gains tax to rise from 18% to 28% for higher earners. This is still less than people were expecting and there are myriad loopholes.
- From April 2011, state pension to be relinked with earnings.
- The 10% Capital gains tax rate for entrepreneurs, which currently applies to the first £2m of qualifying gains made over a lifetime, will be extended to the first £5m of lifetime gains. This has obviously come from the Lib Dems.
THE BAD:
- Two year public sector pay freeze for those earning more than £21,000. The last thing we need right now is employees abandoning the public sector.
- Rise in state pension age to 66 to be accelerated. If you come home from work knackered now, imagine how bad it's going to be at 65.
- Child benefit to be frozen for the next 3 years. Given that the price of food and clothes is going to go up, this is unacceptable.
- Introduction of caps on housing benefit. Incidentally, only one in eight housing benefit recipients is unemployed.
- VAT to increase to 20% on 4th January next year. This is the worst part of the budget, the part which will affect the poorest people most adversely. Prices of food, clothing, transport and everything else will go up, whilst benefits are conversely being slashed.
- Corporation tax to fall over 4 years from 28% to 24%. This will benefit the average household, but it also represents a boost to private wealth at the expense of public services.
- Reversal of previous decision to increase duties on cider by 10% above inflation. Even as a cider lover myself, this won't have a significant impact on my finances, but it will lose a lot of money which the government should be spending on the government sector.
THINGS I DON'T KNOW WHAT TO MAKE OF:
- Scrapping the 50p monthly tax on phone lines to pay for the roll-out of superfast broadband. I've never been fully convinced that superfast broadband is necessary (even on one of the cheapest packages available, my broadband is still fast enough for most purposes), but is 50p a month really so much to ask?
THE ULTIMATE CONCLUSION
There have been several missed opportunities here. Why not raise income tax for higher earners? Where is this much trumpeted levy on bank profits? Why not help people to get off benefits with enterprise and training schemes?
But my real anger about this comes from the VAT rise. This will affect everyone, regardless of status and income, whilst the rich have been let off the hook. Is it necessary? I don't see how the desire to bring down the national debt (especially at a time when everyone has national debt) can justify pushing people into crime and associating with loan sharks.
Obviously, the budget focuses on the economy. But politicians seem to have forgotten that the economy itself is an abstract concept. Ultimately, this is about human beings and any move that prioritises potential economic growth above the welfare of the most vulnerable members of society is preposterous and unjustifiable.
Harriet Harman has called the good bits in this Budget a "fig leaf." Diane Abbot has reported that the Lib Dems in parliament were mostly sombre and ashen when the Budget was read out. It has already been condemned by union leaders, Save the Children, Shelter, the Labour Party, the New Economics Foundation and the vice chair of the Lib Dem federal policy committee.
Chancellor George Osbourne had the gall to call this a "progressive" budget... and to be fair, it probably was back when the world was believed to be flat.
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