Wednesday, June 23, 2010

The Budget - A tough one

Yesterday's budget was a difficult one. Before the election we campaigned on a platform of Fairness - Fair taxes among them. No-one, not the electorate nor any of the parties, expected to have a coalition government trying to cope with a deficit as bad as Labour left us. Interest of £80,000 per minute - yes, per minute - beggars belief. No wonder we ended up with a budget that's tougher than we hoped. But thanks to the coalition agreement the Liberal Democrats have managed to ameliorate the worst excesses of Tory policies. Several Lib Dem policies have come through almost unscathed:
  • Raising the point at which people start to pay income tax by £1000 this year, lifting thousands of low paid workers out of the tax bracket completely and helping thousands more ot pay less tax.
  • A new tax on banks to help clear up the mess they helped to create
  • A big rise in Capital Gains Tax for high earners, helping to put more of the burden on the highest earners
  • Linking pensions to earnings rises or price rises or 2.5% rise, whichever is the highest. Never again will pensioners be left behind as Labour did.
  • A regional growth fund to help areas like the North East develop new industry and reduce its dependency on the public sector for jobs.
  • Help for small companies setting out or expanding so that taking on new staff isn't prohibitively expensive
  • Cutting child tax credits for the better off and increasing child support for poorer workers.
All these are things we support wholeheartedly, and there are other things too which will come through in coming weeks.
The increase in VAT isn't something we wanted or campaigned for. But Lib Dem MPs looked at the books, saw the huge black hole in the country's finances and reluctantly agreed that it was unavoidable. By having a 6 month lead in time for the increase it avoids the risk of errors in rushing to implement it; some people will be able to plan their large purchases before the extra cost bites and as one young resident said "at least I can buy Chrissy pressies before it kicks in". I am very relieved that the extreme Tories who have in the past suggested VAT is applied to children's clothes or food or books haven't been listened to. In fairness to David Cameron I don't think those things were ever in his sights but sometimes leaders listen to the extremists in their parties. Coalition gives the opportunity to avoid that danger.
Mike Barker, Darlington Councillor and Lib Dem election candidate, has written a really good piece about his reaction to the budget - worth reading.

1 comment:

Anonymous said...

whilst I can see the need for some of these changes,as a civil servant earning over 21,000, with over 30 years in government I have already had my salary frozen for 2 years and now have to manage another 2 I only hope that MP's salaries are frozen too, if not this continues the lack of fairness as in the previous governemnt who continually raised MP salaries whilst freezing those of lower paid civil servants. My monthly bills have not gone down in 4 years but up, and i have to find a way to manage on a lower budget.