(a green perspective and comment 22nd March 2012)
ECONOMY AND PUBLIC FINANCES
Overall after only 5% of cuts and austerity pain: £2 billion decrease in the deficit of the UK
95% of cuts are still to come. Family silver being sold off : latest is our national roads to be sold off to private contractors. National Health Service Challenged without a government mandate for reform.
The current government promised not to ruin the health service which for once the public was pleased with as waiting times were shorter. It is as well to notice that the dangerous fiasco with putting mattress filling and hip replacements that leaked were all done in private medicine. The benefits of that private medicine go to the health care privatised companies and the government and society pays the bill to save the people who had this unfortunate surgery external costs are once again picked up by the tax payer.
Same with the banks the mess was created privately and we all have to pay for it to be sorted out.
Today the government will rob the poorest and most vulnerable in society: removing some allowances from dissabled people and give them in a tax give away to those with the very highest incomes over £150,000 1% of the population, removing top rate of tax and reducing it to 45% from 50% . It is important to remember that the poorest in society use most of their money on essentials and therefore feel the pain. Those at the top use it for luxuries and investment. In such a year of austerity this is absolutely immoral!
With regard to climate change which is starting to cost everyone money, the government has seriously renagued on its promises and removed stablity in the renewables and green markets with the fiasco about feed in tarrifs. This is possibly the least green and most cynical government ever. Robbing the poor and dissabled and blatently giving to the rich : how can the nation stand by and support it ?
Similarly Fracking causing local earthquakes: a danger to people and their lives and property is really silly, dangerous and short sited. And expensive. The costs get transferred to the community, ( so called externalities get met by the rest of us ) much better to have government led demand management and an urgent switch to renewables!
Mansion tax was called for houses over £2million: this is welcome:No one needs to buy a house worth over £2million.It is important everyone has somewhere to live and this anomily meant such people were paying less proportionately than everyone else.
GDP Growth In November, the Office for Budget Responsibility (OBR) took an axe to its forecasts - outlining a path that would result in the economy being 3.5pc smaller than previously predicted by 2016. There should be no repeat today of the horrors meted out then. The overall growth trajectory is unlikely to have changed, and there may even by some good news. Growth this year may have been revised up from 0.7pc to 0.8pc. Small mercies, but welcome ones.
Budget deficit The standard by which the Government measures itself should provide more reason for hope. November's dreadful revisions are likely to be changed again, to be slightly more optimistic. Government borrowing for the year to April is expected to be a little lower than the £127bn forecast and next year's figures will be about £30bn better than expected - because of the accounting trickery of bringing the Royal Mail pension fund on to the public finances.
National debt Budget day will not start well for the Chancellor. The Office for National Statistics (ONS) will reveal that the national debt has risen back above £1 trillion in the morning - an inevitable but significant milestone. The OBR in November said it expects debt to reach £1.4 trillion by 2015, peaking at 78pc of GDP. Any changes are expected to be minimal.
Spending and taxes In total, planned austerity amounts to £147bn over seven years - four-fifths of which will come from spending cuts. Spending so far has come in better than forecast, but tax receipts have been below expectations. There may be some further reshuffling of tax rises and spending cuts, but the overall profile will remain the same.
Personal allowance The tax-free threshold is expected to be raised from £8,105 to £9,000 next year at a cost of about £3bn. Stamp duty: Foreign companies buy UK residential property, and avoid stamp duty. The new top rate of 6pc a so called Mansion tax is to be imposed on homes worth more than £2m raising about £500m.
‘Tycoon tax' 20pc tax for very high earners was proposed by the Liberal Democrats but rejected by the Tories,most of whom are very high earners in their own right.
Council tax A new top rate of council tax could be brought in on high-value homes which is only fair Pensions . Pension tax relief could be cut which would hurt people already struggling womens pensions are already very badly hit .
Corporation tax Aiming to get it down to 23pc and to 20pc at a cost of about £3bn. We believe small and medium size companies must now be given tax incentives as they are the life blood of a local economy The help to banks to lend to small businesses is not going to help as it will give those already qualifying a slightly reduced interest rate but wont help any of them who cant currently get loans, and begs the question: what is it for?who will it benefit. Small companies urgently need help and support, training and loans, access to credit and also schemes to support them to help them survive and also to be able to take on staff to create jobs.
Fuel duty Due to rise by 3p per litre in August as our CO2 commitments become ever greater and the drought will start to cost the country money. There is a world hike in the price of oil and this was highlighted by Christina Laguard yesterday as a threat to the world economic recovery.
Rest of the budget
Child Benefit: most commentators seem to have forgotten why this came in. Basically give a woman money and she spends it on her family and her children helping the entire community, Give a man the money and the likeliehood is some will be spent on cars and other things for him: The idea was that all mothers had a least some money to spend on the family without interference. Women the world over suffer from doing more work at home and many suffer from domestic violence, most recently in Russia in endemic proportions but its everywhere at all levels of society.
This money : child benefit is the only benefit specifically for women. Now its being scrapped or removed from women to pay for the rest of the budget. We sincerely believe that child benefit needs to be left alone and not to two earner families but to Women regardless and directly to them personally. Women are bearing the brunt of the austerity, the stimulus packages are aimed largely at industrial jobs where they are less represented and their pensions have already been under attack. Apparently 80% of the current cuts affect womens jobs more and 1.1 million women have lost their jobs in the current round of cuts. So child benefit is the one thing women had and it should NOT be removed. Families with one higher-rate taxpayer will lose their child benefit this year saving £2.4bn, at the rate £44,000 to £50,000, costing about £200m.
Tax avoidance: A General Anti-Abuse Rule (GAAR) now companies have to check beforehand with HM Revenue & Customs saving £7bn a year by 2015.
Help for North Sea oil The Treasury is expected to begin plans for legally binding contracts tying all future governments into decommissioning tax reliefs. The measure would provide certainty and stimulate more than £20bn of investment, the industry reckons. There would be no cost implications for the exchequer.
Foreign companies Help for TNCs investing in the Uk is the same idea as what wrecked the Irish economy with tax incentives for large companies, making less money available for infrastructure: large companies must be pay equal if not more tax than householders and smaller businesses. The current measure proposed means that foreign earnings will not be taxed. More multinationals would come here, but this was tried in Ireland and Estonia and in both cases led to disaster. Small companies need incentives not large ones in todays climate.
Privatisation and incentives for investment in infrastructure. Selling off our national assets and roads is going to make us all poorer and not a good idea. Once again the building industry gets help. The spread of government help in a recession needs to target those most in need and ordinary people not just the richer speclative industries.
Creative industries Help for the flagship UK film and video game industries is to be welcomed.
Regional PayMuch of the public sector will be very badly affected by this, the idea being that regional pay will decrease. This means those public sector workers who moved out of London will see their pay stagnate and reduce and they wont be able to move back.More importantly the national pay scales will disapear making it much harder for trade unions to argue to support wages, whilst some wages of this kind have risen many have not with typically many public sector jobs still very low. The wage gap and the unemployment disparities between the north and south of England are already giving cause for concern without making this worse.
Green Comment: What I am missing here is any kind of modernisation of the economy, any kind of green stimulus, any kind of incentive for us as a nation to get ourselves educated or trained or to compete on the world stage, this strikes me as rearranging the deck chairs on the titanic as the boat slowly sinks to the bottom whilst the chancellor fiddles so ensure the rich get the final pickings of the UK economy and carve it up with the larger companies the ultra rich own. It is a receipe for the Uk to descend to become a much more unequal banana republic without the means to grow our own bananas.
This budget lacks imagination, and a realistic view of the future, it is a true son of Thatcher budget but even without her grocers daughter practical mitigation, although keeping her cruel edge on inequality. Quite a feat but a disaster for a nation whose economy is not even keeping up with others in a similar mess and GDP growth ( flawed though it is) not even up to 1% for another year running. This government seems much more concerned with its own back benchers and their disparate views than the needs and rights of the British people.
Women: are being hit from all angles, pensions, child benefit, austerity and cuts in the public sector.
Young people only message here is to save the employers money:nothing otherwise for young people which is incredible as they are the future and are termed the lost generation, it seems the case to help them is totally compelling, only a chancellor completely out of his depth would fail to adress the crisis in young peoples careers and employment Disabled people are currently loosing many of their benefits, even downs syndrome people cant get care allowances they need. The most vulnerable are of course trampled over in a budget like this. Pensions Robbing pensions is a favourite in time of austerity, however of course there are more and more pensioners so not helping the pensioners is political suicide apart from unethical and immoral.
Nothing here to stop poverty, nothing here to stave off climate change, nothing here to help biodiversity, nothing here to generate natural or human capital in future and nothing here to help Britain survive in the global economy! Nothing here in terms of exporting or even making an attempt to revive our industrial basis or our manufacturing and leading us to degenerate into a client state of larger sovereign wealth funded states and a pathway for even more debt being owed by us to them.
Medium term projection In the medium term a disaster.A budget for the rich and powerful and for the benefit once again of investors who can take their surplus money abroad. A budget to encourage ethics free shortterm disembodied investment from those who have absolutely no ties to the Uk and dont care what happens to it. No mention of national assets that really matter such as clean air, water and healthy soil and agriculture and diversity and local business and home industries support. No mention of our relationship to the Eurozone, no planning for defaults in Europe. No planning for diversification of exports. No helping with other industries apart from financial and construction. Ignoring the 15% of the economy which is industrial. A road to nowhere!
Surely we can do better in creating a fairer, more sensible, more creative and viable UK PLC economy for the 21st century!
Lets have some imagination and a special budget to address what really counts and get Britain moving again !
Miriam Kennet March 22nd 2012