Today George Osborne revealed his latest budget. There were no huge surprises - the economy is considerably worse than predicted yet again, and potentially positive-sounding news about borrowing not rising this year turned-out to be the same sort of ‘creative accounting’ that the government mocked the Brown government for. Basically, austerity has made the economy flat-line, and we’ll be lucky to avoid a triple-dip recession in this, the worst economic performance the UK has given for the last 100 years.
But it’s not all doom and gloom… or so the government would like us to think by making a few transparently crowd-pleasing announcements. There’s the unexpected drop of 1p on a pint of beer, and a more-or-less expected drop of the fuel escalator. The beer thing is a ridiculous move that doesn’t really benefit anyone individually (who will notice?), but as a nation will cost a good few nurses salaries. The 3p rise in fuel duty not only reduces money coming to the Treasury, but does nothing to combat congestion, pollution and climate change. While this is not surprising from our current government, it is an expensive, populist and pointless move however you look at it.
The rise in the personal allowance to 10,000 pounds earlier than planned is a good thing, as it reduces the tax burden on the poorest. However, this is really offset by mad policies such as giving money to households earning up to 300,000 a year for childcare but not giving it to the poorest.
Then, of course, there’s the extension of the public sector pay cap of 1% for another year, along with a new provision to stop increases in pay when staff move up bands. It’s a sorry sign of how much this government values its nurses and teachers that by the next general election they will have received an effective 10% pay cut. To put this is perspective, today Barclays announced it was paying nine bankers a combined bonus of 39 million pounds. It seems that nursing the sick and educating our children deserves a pay cut, while fixing the Libor rate deserves more money than the average person receives in a lifetime.
There we also moves to provide interest-free loans for house purchasers, with purchasers only having to find a 5% deposit. Industry experts have pointed-out that this is likely to lead to an increase in property prices, making the problem of Britain’s massively over-valued housing supply even worse. Even so, you may think that this is government action aimed at helping people who can’t afford a house, but is this true? It seems that it applies to everyone, including landlords with existing property portfolios. So is this yet another bung for rich friends of the government? Let’s remember that there’s only a housing crisis for the poor because the Thatcher government sold-off all of our council housing for a knock-down price in the 80’s, and in some areas landlords own up to 40% of these houses we all paid for to help the poorest in society.
There are a few other items - a less publicised move to help the already wealthy was the cut in stamp duty on AIM trading. It’s good to know we’re all in this together. How many libraries will that cost? Schools and the NHS will ‘be protected’, even though they haven’t so far, with both receiving cuts in real terms throughout this parliament. Then there are tax allowances for shale gas investments, even though most experts agree that shale gas in the UK is a non-starter. This, and the failure to raise fuel duties, make this one of the most environmentally irresponsible budgets for a long time.
George Osborne already has the worst economic prediction accuracy of any chancellor in recent times. Who believes him now? Why does he think that the policies that have so spectacularly failed to achieve his aims so far are suddenly going to start working now? Meanwhile, the wealth continues to flow from the many to the few. A cynic might think that actually everything is going rather according to his plans.