An Out of Touch Budget from an Out of Touch Government

If the UK Government thought that they would be able to buy votes with their new budget for the rich and middle England it doesn’t seem to be working with their proposals being criticised by everyone from the Telegraph to the Greens. The Tories’ coalition partners the Lib Dems don’t seem to know whether they are criticising the budget or supporting it. This morning it was all over their website that the budget was a great thing and full of Lib Dem ideas (unfortunately I didn’t take a screen shot). This evening as it became apparent that just about everyone was unimpressed, Danny Alexander their Chief Secretary to the Treasury appeared with a yellow box and announced an alternative Lib Dem budget.

Fundamentally the problem is that the budget is built on a fixation with reducing public borrowing, but right now the cost of borrowing is lower than it’s ever been and any borrowing would lock in these low interest rates in fixed rate bonds for decades. If ever there was a time to invest in publicly funded infrastructure it is now! Not only would borrowing to invest mean that we got the infrastructure upgrades we need at rock bottom prices it would also create jobs taking people out of unemployment and back into the tax base as well as giving them dignity and self-respect and keeping their families fed.

We need to invest in electric vehicle infrastructure, upgrading the railways, rural broadband, the NHS, educating people and in our community assets. Apart from investment to improve rail services to SW England there’s nothing, and I suspect the money for the SW is only coming because the line washed into the sea a last winter leaving Cornwall with no direct public tranport links to the capital (and possibly also because the SW is one of the last bastions of the Lib Dems and something they will be desparately trying to hang on to!) Instead the budget continues asset strip the country and cut already over stretched budgets. This is so short sighted! Does the UK Government really think that in 10 or 20 years time companies will be rushing to invest here when our roads are full or potholes, our trains overcrowded and broadband plods through the cables like a tortoise? Probably they don’t care as sitting in their off shore tax havens in the sun so it will be irrelevant.

Is there anything good in the budget? Well, there are some steps to close down some tax loop holes, evasion and avoidance, and some increased taxation on bank profits, although more probably could be done.

Increased funding for mental health services, particularly services for young people is welcome, but we also need to look at why people are suffering for mental ill health in the first place. If people are suffering because the services they need are being cut; they don’t have a job or they have having to cover the workload of colleagues whose posts have been increasing mental health services is treating the symptom not the cause.

Income tax thresholds have increased, but this doesn’t help the least well off who don’t pay income tax anyway. If you’re using a foodbank or an apprentice working for £2.73 an hour this won’t help you! There has been no reduction in VAT rates which would have helped these people. And it’s hard to understand why the top tax band has been raised faster than inflation (except of course, that those at the top have not been restricting themselves to below inflation wage increases).

There’s some investment in new technology: £500 million for science and technology, a paultry £8 million to support the video games industry, £60m to support a “National Energy Catapault” in Birmingham; £100m for driverless cars (its unclear whether these would still use fossil fuels, and if I was a truck driver I’d be starting to worry about my job!) but all this pales into insignificance compared to £1.3 BILLION in tax cuts for the oil and gas industry. Yes, those highly profitable oil and gas companies! The days of fossil fuels are numbered. North Sea oil is running out, and if we are to avoid catastrophic climate change we cannot afford to continue to burn fossil fuels. Instead of giving away more money to oil companies who are increasingly indulging in “rent seeking” behaviour – threatening to leave the country if they don’t get a pay off – we should be investing in renewables and in upgrading the electricity supply network.

Yet again the fuel duty escalator has been frozen. This tax was supposed to increase annually to incentivise people to switch away from fossil fuels. Instead its been frozen for years. “Rural motorists” are always cited as people who benefit from this, but in fact the main beneficiaries are likely to be haulage companies. Rural fuel prices are high, but they could be tackled in other ways – investing in public transport would be a start! Other measures could include mandatory limits on fuel prices to ensure that rural prices are not hiked above the prices in areas where there is more competition or some sort of fuel voucher system for people in areas with poor public transport and high fuel prices. Blanket freezing of the fuel duty escalator benefits people in urban areas as much as rural ones, and given that there are more people in urban areas they benefit most.

The budget continues to sell off assets which the public have bailed out and made profitable, so instead of keeping the profits now being made by Lloyds we’re selling it along with the government share of Northern Rock’s and Bradford and Bingley’s mortgages. We pick up the tab in the bad times but don’t keep a share of the profits in good times. Where’s the sense in that?

Of course we can lift our glass to cuts in excise duty for the Scotch whisky industry! Is this a major employer in Scotland? It’s difficult to find the figures, but compared to the NHS or councils probably not. But it sounds so tartan and iconically Scottish. How could any Government which so enthusiastically supports the Scotch whisky industry be accused of being focussed in SE England?

There are many areas of taxation which don’t get a mention: inheritance tax, capital gains tax and corporation tax are conspicuously absent. But hey, what would “ordinary people” know about these – they’re only paid by the rich so we mustn’t raise them!

So what about public spending? Nothing is said about key areas of spending: benefits and the NHS don’t get a mention, but given the spending targets and tax give aways these will have to suffer swinging cuts. But never mind we can cheer ourselves with the thought that £1 million will be spent to celebrate the battle of Agincourt (that’s bound to bring in lots of tourists from France!) and an additional £40 million will be added to the fund to replace church roofs.

In summary an out of touch budget from an out of touch government!

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