There are some good points to be seen in the budget, the biggest winner for me is that the lowest earners in our society under £10,000 a year will be, over a period of time taken out of tax completely. As a young man starting out in life myself and having held down a low paid job, I know first-hand how working a normal week with no liveable wage is not good for morale. This and another measure included in the budget for removing child tax allowance for earners over £60k is right, as it cannot be fair that those earning substantial wages still get this benefit.
However in this budget the negative points outweigh the good as far as fairness across the whole country is concerned. What we got yesterday was lots of 'sound bite economics' where the Chancellor carried on with his austerity regime driven by ideology and short term political capital. The big loser is the misguided attempt by the Chancellor and his MPs, that somehow "to make millionaires pay their way in Britain, we do that by cutting their tax and then somehow their money would appear in the Treasury". The top rate of tax of 50p for every high earner over £150,000k was enacted by the previous Labour Government to make high earners pay their way into the economy at a time of great economic stress. The coalition claim that the tax does not bring in enough money and has in fact encouraged tax avoidance by its target payers while also discouraging enterprise. It has now been said that the numbers and maths confirming the 'uselessness' of the top rate of tax over the years cannot be confirmed.
I agree with Vince Cable the Business Secretary that the 50p top rate should not have been an issue in this budget, yet the Chancellor has enacted a tax cut of 5p over a set period of time meaning that the highest earners in Britain (some 1% of society) get a tax cut of £40k a year.
The total of the extra cash available to these earners as a result of his tax cut measure was left out of the budget speech, but proudly exposed by Ed Miliband minutes afterwards.
It cannot be fair that the budget gives a cut for the highest earners (including bankers). The Chancellor should have left this alone and focused on measures to stimulate wealth creating businesses. The budget had the feel of a 'protect the south east' budget meaning that the main drivers of the economy would be focused on the south - again! The Chancellor did make noise about the north but the measures in the budget do not go far enough as far as I'm concerned to ensure that wealth creation includes the north. A cut in corporation tax was good for encouraging business as was the idea that investors should come to Britain to use the enterprise zones to promote local economic growth. Yet the Chancellor has fallen into the trap of promoting economic growth while ensuring that long term social depravity and poverty in our poorest communities are left to continue. I have said before and will say again that the Chancellor should use targeted community investment controlled by central government to push business to set up shop in these poor communities encouraging employment in the process. Instead we have a government that is afraid to use its clout to push business to recover in these poor regions and use the taxation system as a tool to achieve this.
What doesn't help also is the move to abolish the national pay rate for public sector workers meaning that local authorities with already tight budgets will be forced to pay public sector workers according to (in theory) local conditions. The South West is a financially poor region that will see its public workers fall afoul of the government's mission to promote the private sector as the main drivers of recovery.
In conclusion, this budget is far from the Liberal Peoples' Budget in 1900. This budget reinforces already present social inequalities and will entrench financial poverty across the regions with the end of the national pay rate. Also the extra £40k for the nation's highest earners is wrong and misguided also. The possible measures I could think off to empower the citizen to take control of the economy were not as expected included. In my view this budget will help short term and provide the coalition with political capital. But youth unemployment, an uncertain international economy and a lack of consumer confidence will hit the economy again. Stability for now, maybe growth but long term instability will still prevail.
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