Budget round up


2:17 pm - March 24th 2010

by Don Paskini    


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Here’s a quick summary of what the liberal-left people in our live budget discussion did and did not like about today’s Budget:

Good things:

Labour’s record on keeping unemployment down
Nigel Stanley (TUC): Tax credits, a desire to keep skilled workforces together by employers, and sensible union negotiators have all helped build the right kind of flexibility – not easy hire and fire.
Sunder Katwala: Where tax credits flexed upwards, for 440,000, that average £38/week is worth quite a bit more for those families even than the £700/year threshold change for earners over £10k in the LibDem tax threshold plan.
Will Straw: Job Guarantee extended for young people – a really critical development for dealing with youth unemployment. Will the Tories support it?

Stamp duties changes
Unity: There’s the predicted rise in stamp duty allowance – funded by an increase in stamp duty on property’s over £1 million. Sharp political move there
Will Straw: Agreed, Unity. I couldn’t see what he was doing with the morning briefing but that’s a good move. Still, as Giles points out, a property tax (or a land tax) would be even better

Tax revenues higher than expected, and plans to reduce the deficit
@richardjmurphy: #budget2010 Tax revenues this year have risen – exactly as the Green New Deal group and others forecast would happen if we spent.
Nigel Stanley (TUC): £11 billion is vindication of stimulus and other help. Good old Keynes
Sunder Katwala: So on those numbers, he has more than halved the deficit! And the structural deficit by two-thirds. 54% debt of GDP to 75% of GDP is not dangerous. The argument is now whether people want to cut faster and deeper than that (for which there is rather limited public support)
Nigel Stanley (TUC): Deficit fetishism looks even more like something that should be reserved for consenting adults in private

Freeze in Inheritance Tax threshold
Will Straw: Progressive move in freezing the IHT threshold
Unity: Freeze on IHT linked to cost of care for older people – good move and key election battleground
Sunder Katwala: Freezing inheritance tax thresholds is a Fabian/Tim Horton proposal, endorsed in newsnight’s politics pen, and adopted in pbr, now extended

Overall approach
One_Society: oh my gosh, did Darling just say “those who benefited most from past need to pay their fair share now”? Spot on. Money quote! #budget2010

Moving the civil service out of London
Mark Reckons: Great move, moving CS out of London. I’ve been saying that for years.
OfficesUpNorth: Civil servant army on the move. You are more than welcome up north where the offices aren’t so expensive. #Budget2010

Cut in business rates
Dave Cole: the cut in business rate is good news – esp for SMEs

High Speed Rail Link
Shamik: High speed rail link long overdue! Hope the Tories back it if they’re in power
rachel reeves: High Speed Rail fantastic for Leeds and other Northen cities.

Green Investment Bank
Will Straw: £2bn Green Investment bank – finally!
Howard Reed: Investment Bank: good stuff but falls a long long way short of a Green New Deal.
@richardjmurphy: #budget2010 £2bn green investment bank is a big win for the Green New Deal
rachel reeves: Green investment bank is what could really re-build UK economy. Exciting for manufacturing and for every region.

Tax breaks on computer games industry
tasha_darke: #Budget2010 – Did I just hear Video Games mentioned? Yes please to keeping the industry competitive. I’d like to raise my kids here, not USA
Unity: Tax breaks for computer games industry is interesting but no substitute for investment in programming talent through education system. We need to put programming skils back in to information technology GCSEs not shovel out qualifications for using Microsoft Office

International links to reduce tax evasion
Sunder Katwala: He’s about to mention Belize!
Giles: BELIZE! Ha
Will Straw: Who knew Darling had such good comic timing!
Unity: Belize!!!!
Shamik: Hear, hear, hear!
rachel reeves: a tax agreement with Belize. Labour benches loving this!!!

Increases in child tax credit
Giles: ‘There is an additional element to the child tax credit and to the child trust fund . … £4 per week from 2012 … ‘ this sort of thing sounds fiddly. But well done for saying “we don’t care if you’re married”
rachel reeves: supporting children not just married couples. honest family friendly policies
Nigel Stanley (TUC): £4 a week sounds worthwhile to me – so I would exempt from tricksy. But we don’t need all this stuff mixed up with the macro-judgements.

Bad things

Gimmick on university spendingHoward Reed: Prime example of micro-announcements – some extra money for universities but very small compared to the overall cuts in the HE budget! This is why people don’t trust politiicans…

Not raising Capital Gains Tax
Will Straw: A great pity that Darling isn’t increasing the Capital Gains Tax rate. It was that old socialist Nigel Lawson who equalised it with Income Tax in the 1980s. Labour lowered it.

“Efficiency savings”
Howard Reed: Will be very interesting to see the details on “efficiency savings” – my guess is it’s going to be brutal and will hit the quality of service delivery. Richard’s point on HMRC is just the start.

Privatising student loans
@richardjmurphy: #budget2010 Asset sale for student loan book – selling our young people into perpetual debt and servitude. I could weep.

Increases in ISA limits
@richardjmurphy: #budget2010 ISA limits increase – a subsidy to wealth. Again not needed. We don’t need saving right now. We need investment. They’re not…

Cameron’s response

Giles: Cameron is good on his feet. Good at one off lines. But a bit like a vociferous ex pat in a bar going on about how the country is going to the dogs …
Sunder Katwala: Cameron’s speech seems to contain almost nothing responding to the Budget so far, after the stamp duty lines at the top.
Giles: For the Tories, it is always 1975-83. That is the biggest risk facing the country.
Giles: Cameron’s line is always the same: we have a lot of debt, ooh look at that debt, wow have you seen the deficit, gosh, did you know that £Xbn is the same as £y per second per toddler – absolutely nothing about how they would have handled the economy
mort mort: hmmm actually i am a natural tory voter, but really am starting to think a marginalised hung parliament will be a good thing for a short while

…and finally and most importantly:

Cider taxesUnity: Here comes the tax hike on cider – 10% above inflation with new definition for stong white cider
Sunder Katwala: Does the cider tax reflect that south-west is a LibDem-Tory battleground?!
Sunder Katwala: Used to drink Diamond White when I was 18. Horrible stuff
Mark Reckons: Talking of drinks I used to drink at 18, what’s the tax on Mad Dog 20/20 like? 😉

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Story Filed Under: Blog ,Conservative Party ,Economy ,Labour party

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Reader comments


Darling’s figures on people “leaving the claimant count after 6 months” (I think he said 3/4 of claimants) need looking at. If you’re eligible for contributions-based benefit and not income-based benefit, you’re only entitled to unemployment bens for 6 months. Is he counting them?

Alix:

Probably… need to map claimant count against economic activity/inactivity to be sure

International links to reduce tax evasion
Sunder Katwala: He’s about to mention Belize!
Giles: BELIZE! Ha
Will Straw: Who knew Darling had such good comic timing!
Unity: Belize!!!!
Shamik: Hear, hear, hear!
rachel reeves: a tax agreement with Belize. Labour benches loving this!!!

Hi-larious it was too. As far as I can tell, however, (based on the Liechtenstein Agreement) it will have precisely no impact on the finances of somebody resident in the UK, but domiciled in Belize. It is designed to prevent UK tax resident and domiciled people from hiding money offshore, not to police the tax affairs of non-doms. So, it got a cheer from the backbenches, but will have precisely zip-all impact on Lord A.

Cider tax: BASTAAAAARDS

…And yeah, it’s a delicious bit of politics. Nobody in Bristol votes Labour, but everyone drinks zhydurr. Much as I admire their bare-faced chutzpah, I still deep down want to roast Darling on a spit for coming between me and Henry Weston.

@Tim J

If it’s the usual international tax agreement, it’ll be reciprocal, i.e. Belize authorities will publish a mirror image which will have the opposite effects.

5 – preventing all those naughty Belize residents from hiding their money in the famously low-tax UK?

All these tax-evasion agreements are a method by which Govts can keep tabs on the off-shoring of what ought to be UK tax money. Unless there are suggestions that Lord A is evading tax (and there aren’t…), this agreement is entirely irrelevant to him.

Still, mentioning the word ‘Belize’ is guaranteed to raise a cheer.

7. Bill Kristol-Balls

On the Tories Budget Response 2010 site it says –

If you spot a dodgy figure

Well there’s one on the right of the screen to start with 😉

http://www.yourbudgetresponse.co.uk/

Labour’s record on keeping unemployment down:

with 25% of working aged adults in the UK not in employement. Marvellous job!

Tax revenues higher than expected, and plans to reduce the deficit

Vaguely costed at best, and having £167bn / 12% budget deficit is still embarrasing. By 2015 debt interest alone will have doubled and be in the £60-80bn range, which is roughly defence and education spending combined. Another fantastic job. Debt/GDP is important, and the govts figures rely on very optimistic growth forecasts and very low rate forecasts. Deficits and debt do matter, as markets simply won’t keep funding the UK deficit indefinately. It’s pretty myopic to suggest that deficits don’t matter, especially when every other OECD country is taking action to manage theirs.

Absolutely nothing about what is going to be cut either, other than more “efficiency savings” which Labour have had a terrible record on. Gilt market has sold off heavily on the budget…..

Green Investment Bank:

£2bn is pi**ing in the wind, and green investments at the moment are near totally reliant on govt subsidies. how are they going to actually raise revenues?

Cameron’s response:

Err…it was a response, not the Tory’s budget. This is a typical Left wing tactic – give very little in terms of policy, then accuse the Tories of the same thing. THe absolute cheek is amazing. Brown does it at every question at PMQs and frankly it makes a mockery of the whole session….but it does give a clear indication that Labour have no real policy other than to stay in power. Their whole strategy is to attack the Tory party.

Whatever people think of the budget, it makes little difference though. Whoever is in power next will be forced to make huge cuts; the markets simply will not continue to fund the UK in such size at such low cost. The UK *is* in huge financial difficulties, and we can’t “grow” out way out. Labour have got us into this mess, despite all their claims of making the right deicsions, and their policies to get us out have been ineffective at best. Regardless, the UK is going to be left in it’s worst financial state for many decades.

Is that really something to be proud of?

I like cider so much I’ve probably just gone up a tax bracket. Bugger.

More importantly, this is going to be another blow to our pubs. I wish he’d stop doing this kind of thing.

10. Shatterface

‘Labour’s record on keeping unemployment down’

WTF? Working Tax Credits have certainly been a success but they’ve hardly made a dent in the unemployment figures.

And a cider tax: agree with Gwyn and Yurzzem!: bastards! I’m a real ale drinker than a cider drinker (though we’ve got our own 2% above inflation hike to deal with) but if you stay off the bottled stuff there are some fine ciders and perries (did he mention those?) out there.

It is indeed another blow to our beleagured pub industry.

11. Shatterface

I should add that though I mainly drink real ale myself, several of my friends regularly drink cider so I *will* be paying more when I get the round in…

So, a tax on being sociable. Nice one.

Have I missed something, or did the Chancellor say nil/zero/nada/diddly squat about affordable/social housing? Something of an omission, I would argue….

Matt

P.S. And no, abolishing stamp duty for those already rich enough to buy doesn’t qualify!

Re. university funding – Peter/Paul robbery, sorry, politics…but hey it gives Mandelson and Lammy a chance to claim they’re doing universities a favour.

Nigel Stanley (TUC): Deficit fetishism looks even more like something that should be reserved for consenting adults in private – dress code of hairshirt mandatory. Economic masochists to bring their own scourges.

In a drinks market like the UK, where consumption is flat but there’s a massive shift from in-pub to at-home consumption, flat-rate tax rises on booze *favour* pubs.

A pint of cheap cider in a shop costs around 50p (if bought as part of a 3-litre bottle) – so a 10p tax rise is a 20% rise in the price. Even if you’re buying a bottle of something more premium in a shop, that’ll be around the gbp1.50 mark, so a 7% price rise.

In a pub meanwhile, a pint of their cheapest cider costs at least gbp2.50, and a pint of something expensive can cost up to gbp4. At that level, a 10p (2.5%) price rise makes absolutely naff-all difference to the consumer.

Two things are killing traditional pubs: property prices and social change (the smoking ban is a symptom of the latter which is generally overplayed by libertarians). Tax isn’t.

What an excellent round up! Belize comment made me laugh out loud on the train this morning!

Interesting to see the Green New Deal though not adopted, certainly vindicated! The Greens are growing in credibility!

True, add to the problem the behaviour of Pubcos. However the extra tax won’t help. I wish the Exchequer would find the will to help pubs in some way.


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