Today saw the announcement of the 2011 budget in the House of Commons. George Osborne was never going to be my favourite politician, first of all he is a Tory which is never a good start but also I really don't think that he has the first idea about what he is actually doing. Let us though peruse the facts that have come to light.
I will begin with something that I believe is integral to the economy, people actually going to work so that they have the money to spend on things. So what is happening there? Oh.. I see.. the UK is now up to 8% unemployment which in real terms is 2.53 million people. By the end of the Quarter March - May 2010 the figure was at 2.47 million which is obviously still ridiculously high but that does mean that in the eight months that the Conservative Government has been in power 60,000 people have lost their jobs, of which I am one of them. Had the cuts not come in there is no guarantee that my job would have remained but the UKBA where I was working was one of the worst hit by the cuts with already more than 5,500 job losses.
The current job seekers allowance is at a maximum £51.85 (for a single person under the age of 25) that means that not only are there 60,000 people not paying tax or having enough money to throw away on luxuries but also that roughly an extra £3 million pounds a week is going onto benefits. I may not be an accountant but to me those figures don't sound healthy when trying to grow the economy.
Unsurprisingly then the economy is not growing at the rate Mr. Osborne and his colleagues had predicted. So what is he going to do about it? Strangely enough nothing about creating new jobs. Instead there is an increase on Tobacco on alcohol (they were actually Labour's tax rises so he can't be blamed for that) meaning an extra 10p a pint of beer from Monday. Boo! There had been a plan to raise fuel duty but with the recent events in Libya and other oil rich countries in the region that has been postponed.
In fairness there were some positive points an increased emphasis on getting people into apprenticeships which hopefully will help people to get into employment in the future but it will do little to help the Tories to get where they want to be by 2015 as these people in apprenticeships still won't be paying tax.
Still though there is no obvious way of how they will make this extra money to help the economy grow. To find these you can't just listen to the budget, you have to dig a little deeper. One measure that is being introduced on the 6th April should help to raise funds.. the lowering of Gift Aid from 28% to 25%. This horrific cut will see charities lose out on hundreds of thousands of pounds each year in a move which in the bigger picture will do very little to help balance the books of the country yet may put some charities out of business. Strangely enough that one didn't make the speech?.. Where else? Travel. One of the things that people don't have a choice but to pay for. The Fair Fares now campaign points out that "the Government is planning massive fare hikes from January 2012. Fares are set to go up by 25% over the next four years".
So from what I can see the biggest changes are going to hit those who can't really afford it whereas the richer ends of society like the millionaire Mr. Osborne will carry on getting richer. Typical Tories
Tis indeed typical tories although methinks it is a clever budget.
ReplyDeleteShort term tax cuts mean the poorest families are going to save £320 a year while all households earning below £115 are going to save somewhere between £50 - £120 a year depending who you ask. However from 2013 allowances and tax thresholds will be linked to CPI rather then RPI, which means the state will rake in an extra £1 Billion a year income tax. Short term wow factor!
Also the 10% tax cut for inheritance tax for those giving at least 10% of their wealth to charity will encourage charitable giving and maybe make up for the gift aid cut, but again it is risky and is a happy story to cover the government's cutting aid to those in need.
Whilst money is being drained on increasing unemployment benefits, those on jobseekers isnt huge (yet) and is relatively stable, hell of a lot of savings to be made cutting other benefits though. Again playing devils advocate personal allowance is actually going to increase this year and the next by over a grand a head for those under 6 figures.
I'm glad Ed mentioned the VAT Increase which people have forgotten - despite the increase we've downgraded our growth this year from 2.1% to 1.7% ANNNNND the chancellor is having to borrow £50 Billion more then he planned this year (overall £146 Billion), pushing national debt into a peak next year (hope it is a peak.)
Clever clever budget. We're all going to a few hundred quid better off until 2013 with lower petrol prices - but come 2015 we'll be up to our necks in income tax whilst the rich get their 50p tax cut. Its short term left wing but long term very much right wing.
I figure I might as well start my blog trolling career here.
ReplyDeleteI find these graphs put the British economy into perspective quite succinctly: http://falseeconomy.org.uk/blog/osborne-claims-uk-is-part-of-the-international-mainstream-on-cuts.-the-fact
and
http://falseeconomy.org.uk/cure/how-big-is-the-problem
It appears that the rest of the developed world is waiting to see how this Tory experiment pans out. It is worth pointing out that Russia, during the 1990s transition, is the only country to have attempted to implement such a wide range of big reforms all at the same time during an economic crisis, as the current UK government is doing across the board. The point being that as cuts hit, rushed and poorly thought out reforms will further degrade standards, while the government's over-reliance on market mechanisms will accelerate the increase in inequality.