The Budget – breakdown
What it means
Comment on the publics responses.
Today’s Budget was never going to be an easy one. The country is in a worrying recession, reported as the worst since World War II, people are unhappy and the government was under enormous pressure to deliver solutions. The government needed to strike a delicate balance between spending, borrowing and taxation and try to ease as many burdens as possible without adding to them and without borrowing too much to fund their changes. In brief this is the Budget 2009:
CIGARETTES, ALCOHOL AND FUEL
• Alcohol taxes to go up 2% from midnight – putting the price of the average pint up 1p
• Tax on tobacco to go up by 2% from 6pm – equivalent to an extra 7p on a pack of 20 cigarettes
• Fuel duty to rise by 2p per litre from September, then by 1p a litre above indexation each April for the next four years
• Income tax for those earning more than £150,000 to rise to 50% from April 2010
• Tax relief on pensions to be reduced for people on more than £150,000 a year from April 2011
CAR SCRAPPAGE SCHEME
• From next month until March 2010 motorists to get £2,000 discount on new cars if they trade in cars older than 10 years
• They will have to show they been the registered keeper of the vehicle for the previous 12 months before ordering the new car
• The government will provide £1,000 with the industry expected to provide the other half
JOBS AND TRAINING
• Government support for economy to protect 500,000 jobs
• Statutory redundancy pay up from £350 to £380 a week
• Extra support for people who have been out of work for 12 months through the flexible new deal
• From January all under-25s out of work for a year to be offered a job or training place with extra money on top of benefits for those in training
• £1.7bn extra funding for Job Centre network
• £250m funding to help people get work experience in growth industries
• Funding to create 54,000 new places in sixth form education
• Economy forecast to shrink 3.5% in 2009
• Growth expected to pick up in 2010, expanding by 1.25%.
• Economy to grow by 3.5% annually from 2011
• Public borrowing to increase to £175bn this year
• Borrowing levels to be £173bn, £140bn, £118bn and £97bn in years after
• Consumer price inflation to fall to 1% by end of year. Retail Price Index to go to -3% by September.
• Capital investment to continue at historically high levels until 2012
• Scheme to guarantee mortgage-backed securities to boost lending
• Stamp duty holiday for homes up to £175,000 to be extended to end of year
• Extra £80m for shared equity mortgage scheme
• £500m to kick-start stalled housing projects – including £100m for local authorities to build energy efficient homes
• £50m to upgrade housing for the armed forces
• Tax loopholes and schemes identified which could provide £1bn of extra revenue over the next three years if closed
• An extra £9bn in efficiency savings is planned
• Public spending growth to be cut from 1.1% next year to 0.7% from 2011-2012
• Annual limit for tax-free ISAs to rise to more than £10,200 for over-50s this year and for everyone else next year. Of that amount £5,100 can be saved in cash
• Britain commits to cut carbon emissions by 34% by 2020
• An extra £1bn to help combat climate change by supporting low-carbon industries
• £525m for offshore wind projects over the next two years
• £435m support for energy efficiency schemes for homes, firms and public buildings
• £405m to encourage low-carbon energy and advanced green manufacturing
• Child tax credit to rise by £20 by 2010
• Child trust funds for disabled children to rise by £100 a year, £200 a year for severely disabled children
HELP FOR BUSINESS
• Help for loss-making companies extended – they will be able to reclaim more taxes paid in the last three years until November 2010
• Businesses’ main capital allowance rate doubled to 40% to encourage firms to bring forward investment
• New £750m strategic investment fund to help emerging technologies and regionally important sectors
• Grandparents of working age who care for their grandchildren will see that work count towards their entitlement for the basic state pension
• Winter fuel allowance to be maintained at higher level – £250 for over 60s and £400 for over-80s – for another year
• The basic state pension will be increased by at least 2.5%, regardless of inflation
• From November the limit on savings pensioners can have before their Pension Credits are reduced is to be raised from
£6,000 to £10,000 to help those hit by low interest rates. It will mean an average of £4 extra a week, says the chancellor
In fairness I believe the government has delivered a good budget, considering the economic climate and the difficulties faced. There seems to be a great deal of public criticism, however, springing up on news comment pages (which I will come onto) but I believe this is undeserved and no I’m not getting party political (I am quite happy to criticize any party despite my own leanings).
Here are my brief opinions, point by point, which will be followed by my longer (irritated) responses to some of the arguments and criticisms I have seen springing up on various comment pages.
Cigarettes, alcohol, fuel – anybody who didn’t expect tax raises on these items should be assessed for delusional beliefs. These three are always subject to tax raises at the budget and as a smoker I can’t say I really mind. I expected the raise. Alcohol and tobacco are luxury items and are taxed as such. Fuel is another luxury, despite those who claim it’s not. Plus I don’t have much sympathy for fuel guzzlers anyway, it’s not very environmentally friendly to drive here there and everywhere. Try walking.
Car scrappage scheme – A good plan, already proved to be effective in other European countries and a boost to the car industry.
Tax- why shouldn’t high earners be higher taxed, makes sense and it will push more money into the economy. Surely the rich shouldn’t mind helping out the country in this time of need.
Jobs and Training- It’s good to see incentives in this area and the creation of new jobs that will hopefully give some much needed relief to many families and offer extra training and education.
Housing- Good to see the stamp duty holiday extended and also help towards mortgage schemes and new housing projects.
Government Savings – Looking good that this extra money will be generated.
Benefits- Extra help for families with children and trust funds, which will help these children when they are older. Also more money for disabled children in the trust funds, a nice addition.
Savings- Some good help for savers.
Environment- Some good pledges and money to a good cause. Obviously would always like to see this higher but can hardly complain during a recession. It is still a great step.
Help For Business- Again, a good move to help businesses and hopefully offer some relief.
Pensioners- Extra help for pensioners, always welcome, higher fuel allowance, more general relief.
And now to some of the comments I have seen. Many, quite frankly, are ridiculous. Some of the issues I will deal with by point but to address some of the more general arguments that cropped up I will start with this; this recession is a GLOBAL recession, therefore it is hardly the personal fault of Gordon Brown, as many seem to think it is. Unless Gordon Brown danced around a cauldron and cast a spell to bring a downturn across the world it is hardly his doing. Britain, in fact, are less affected by the downturn than many other large nations and the recession would have occurred no matter what political party was in power. It is not a case of New Labour causing the recession.
Another annoying amount of comments were along the lines of “what does this budget do to help ME”, “I want money”, “ME ME ME ME ME”, basically “Fuck everyone else where is my money?”. What were they expecting? A special portion of the budget dedicated solely to funding them? No budget can satisfy everybody and lets not forget initiatives that do help everybody already in place, such as the VAT cuts. The budget is a balancing act and not everybody can be vastly rewarded. When people complain where do they think the money would come from to be spent on every individual desire? Maybe these people should consider that they could be partially responsible for this recession themselves because many of the public are. For years people borrowed and spent what they could not afford, true the banks wrongly enabled this but individuals are still responsible. We are all suffering from their recklessness. Spending priorities have to be made, the government does not have the money to chuck at everyone. Anyway I presume if they did the same people would just criticize that the government was borrowing and spending too much. No-win.
There is also a great deal of inexplicable ignorance towards the way tax works and to how elections work. The usual bunch are making comments about how Gordon Brown was ‘unelected’. For the last time GORDON BROWN WAS ELECTED by his constituents, like every other MP and PM. A few people also went as far as calling the entire labour government unelected. I must have missed that coup d’etat in 1997. I thought it was an election, clearly I was mistaken…
Now to a few issues that cropped up regularly. A number of complaints were directed at ‘immigrants’ taking our money, often followed by the comment ‘this country is crap I’m going to emigrate’. Erm… do the math there. You hate immigrants yet you see no problem in emigrating to another country where you would be an immigrant. Not to mention the fact that none of this has anything to do with immigrants anyway. This is just good old fashioned ignorant right wing racism.
Many high earners, those who will be affected by the tax increase and are clearly non too happy about it, are vehemently complaining that their money is going to louts, lazy bastards, teenage mothers, druggies, proles, the great unwashed etc etc. Basically anyone who doesn’t earn as much as them is scum who must be stupid and lazy and deserve nothing. A very Thatcherite view really. Not everyone can earn high salaries, this doesn’t mean they do not work hard in demanding jobs and contribute to the economy. It is only fair that higher earners should pay higher tax. Otherwise we would have a gaping rich/poor divide, plus public services need to be funded somehow although it seems some people resent that. One commenter complained that his hard earned money went to free healthcare and free schools and free school meals etc etc and he didn’t feel he should have to fund this for other people. Fair enough we should just let people who can’t afford private healthcare die in the street then, people with broken limbs suffer in pain, people with mental illness suffer with no aid, illnesses spread like wildfire because not everyone can afford inoculations, people with cancer, AIDS, etc etc die in pain without any treatment, children starve because their parents couldn’t afford school meals and anyone who can’t afford private schooling should just be left uneducated- in fact, lets get the workhouses going again and send the kids there. Unfortunately many seemed to share this “why should my money help anyone else” view. Get over it. Everybody pays tax, even low earners, it is an individual choice to pay for private schooling and healthcare. If these rich individuals want to do so then it’s up to them but they cannot penalize those who cant afford it.
Another annoying little comment that keeps cropping up is “Why do under 25′s get this retraining help. I am over 25 do I not matter”, in a self-righteous, sulking fashion. May I remind people that over 25′s already get a higher rate of Job Seekers Allowance. All this scheme does is level out the playing field. It is fair. Along with “BROWN HAS STOLEN THE CAR SCRAPPING IDEA FROM GERMANY”… erm well nobody ever tried to deny that this idea came from Germany and openly implementing a good policy from another country at home is hardly stealing.
Generally a real selfishness has come through in the majority of comments. People want their own money but are unwilling to help the nation during a national crises. The government cannot wave a magic wand and wave us deftly out of this recession. Higher earners should be glad they earn enough to buy nice things, eat decent food, live in nice houses and pay their bills because some people cannot do these things, through no fault of their own. Should they suffer? Should their children suffer? No. This is a fair budget, it is a budget to assist in rebuilding the economy, which will not happen overnight, there is no easy quick fix.
As for the people accusing the government of spin… huh? Is all I can really say. Maybe if the Brown government employed the same spin tactics of the 1997 era people would be happier because they would be shielded from how bad things were. People ask for honesty and then whine when they get it and it isn’t as gleeful as they wanted. I don’t see even half the level of spin occurring now as there was in the early Blair years (I happen to be an expert in this too, if nothing else). Brown and co face terrible insulting press everyday, how is that spin exactly? I’m starting to think people don’t actually know what spin is, if they did they might realize that Cameron has a much fuller grasp of ‘all spin, no substance’ than Brown does. Cameron just says what all the critics want him to say but where are the real plans and solutions? What is he really offering?