Living on a budget
It seems like only moments since I sat with a tapping pen anticipating the statements from the last budget. Well doesn’t time fly when the economy’s in deep water and a historical election has been ticked off the list?
There were certain things about this budget that we could well have predicted: the unforgiving cuts; the standard backlash from opposing sides (lucky that this has been reduced by one...) and the sense that things are well and truly about to change. And by that I don’t mean a Tory/Lib Dem synonym for progression. Change for good or for ill.
Harder to predict was exactly where the axe was going to fall. With such different opinions on matters like VAT, there was no knowing how the policy promises from both sides would affect the budget.
It was with some relief that I saw generous measures afforded to start-ups and SMEs, evident through reductions in national insurance; the 4 year corporation tax plan and the £5 million Entrepreneurs Relief. There was also a welcome reduction in tax rates for small businesses, down to 20%. No doubt many small and new business owners will be breathing a collective sigh of relief, the result of which should be a much-needed boost to the economy.
As expected, there are some controversial cuts within the public sector, such as the pay freeze that affects all employees above the £21,000 threshold. The rest will benefit from a token gesture of a £250 raise, regardless of salary size – a sugary little pill that effectively amounts to not much more than an extra packet of tea.
But what made me sit up the most, was a clampdown on the highest paid salaries within the sector, with no employee permitted to earn more than 20 times that of the lowest salary. Now if my maths serve me correctly that’s still a heap of cash, amounting to the difference between a super duper yacht and just a regular one. ‘Laughed all the way to the bank’? You betcha.
Speaking of which... an astute decision to finally impose a levy on banks is likely to be applauded by all – except the banks of course. A mention of freezing cash flow to the royal family should engender the same reaction and ensure more of the evening out between rich and poor that George Osborne has so keenly spoken about.
There was a sharp intake of breath and much ensuing complaint following the announcement that VAT is to take a hike up to 20%. A measure that commentators see as a tax on the underprivileged and I’d be inclined to agree. Surely a better measure would to be increase VAT on those social evils like alcohol and tobacco, than introduce a flat rate that stands to penalise everyone on the majority of goods?
There have also been benefit cuts across the board that seemingly work along the lines of shifting money to those who really need it. The doubt in my mind concerns the translation of policy into practice and how this will be enforced. One cannot help but feel concern for those who will undergo medical examinations in order to claim disability housing benefits –sounds logical, but how fair it will be in real life remains to be seen.
George Osborne has boldly claimed that this is a budget where ‘...a burden is fairly shared’ where ‘The richest pay the most and the poor are protected... It is a progressive budget produced by a progressive alliance.’
By George that’s quite a claim. But it also signifies a shift in mentality from the traditional Tory values that run starkly against these statements. It could be that with a little temperance from the liberals and some forward thinking, the economy could be on the brink of something better. Not great, not yet, but certainly stepping in the right direction.
