Initial Budget Thoughts


Osborne delivered the so-called ‘Austerity Budget’ yesterday. Cuts we were expecting and cuts is what we got although, and there is nothing original in me saying this, the ‘We’re all in the together’ mantra does ring a little hollow when it’s delivered by a multi-millionaire.

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I’d recommend Aethelread’s thoughts on the Budget as well. He has a well-considered piece (and I agree with a lot of what he wrote as well!).

I’ll run over my first thoughts on a few of the areas announced.

VAT Increase to 20%. Both unsurprising and disappointing. VAT is recognised as being the most regressive tax – yes, there are exempted items but that’s hardly an argument in favour of the increase. It is impossible to argue anything other than the fact that those with the lowest incomes will suffer the most from this increase. Yes, it will bring the money in for the government but it hardly rings of the ‘fairness’ that the so-called ‘new’ politics has lauded.

Capital Gains Tax increase I think this could and should have gone further and it demonstrates the lack of influence of the Lib Dems in the so-called ‘coalition’. The increase only affects those who have earnings and income over the higher threshold of £37,400. There is no doubt that the growth in the buy-to-let sector and people wanting to ‘make a killing’ in property led in part to the housing boom that saw prices skyrocket. It seems that those who pay CGT have somehow been subjected to less ‘pain’ than those who generally pay income taxes. Again, it has a vaguely regressive feel to it.

Personal allowance raised This is one of the few pieces of good news that I have seen emerge from the Budget.  It will directly help low earners and bring more people on low incomes out of the taxation regime.

Council Tax frozen This seems like good news but actually it worries me profoundly. My council froze taxes last year and local government is increasingly having more pressures places on it for funding. We are going to see a LOT of pain in local services as a result of this as the money just isn’t there. Savings can be made. Savings will continue to be made. Lets just hope they are made on cutting down on consultancy posts and biscuits in meetings rather than actual services and withdrawing posts in front line teams.

DLA medical assessments Currently DLA forms are horrific. They require a ‘professional’ as a ‘reference’ – GP, Consultant, Social Worker, CPN, OT. I’m not sure what will be achieved by demanding independent medicals apart from a further stigmatising of people who have disabilities and a creation of a great new trade for independent assessors. There seems to be a wish to appeal to the ‘Daily Mail’ contingent who directly relate ‘receiving benefits’ to ‘scroungers’ which provides an oppressive and discriminatory narrative to discussions about assistance for those who have disabilities. DLA in particular is a benefit to recognise the increased costs related directly to having a disability. I truly can’t see a purpose for these assessments except to plant a seed in the ‘general public’s’ collective mind that a lot of people who shouldn’t be receiving the benefit are. My experience is far more in Attendance Allowance (which is a similar benefit at a lower level provided to those over 65)  and to be honest, it is FAR more likely that people who are eligible do not claim than vice versa.

Child Benefit This has been frozen for three years. I can’t understand why it is not means-tested. Anyone who complains that it would be ‘too difficult’ to means-test, I’d argue that the government seems to find ways and means to introduce potentially costly measures such as ‘independent assessors’ for DLA then it can work out a way to means-test child benefit and direct it to those who have the greatest need.

Child Tax Credits Households with incomes over £40,000 will see eligibility for child tax credits fall. I haven’t really paid a great deal of attention to tax credits as, honestly, they seem incredibly complicated to me but I think that £40,000 bar sounds reasonable if cuts have to be made.

Housing Benefits Upper limits introduced to Housing Benefits paid. As someone who lives in London where the housing costs are the highest in the country, I can see these limits leading to an increased ghettoisation of families away from certain parts of the city. One of the joys for me about living in London is the way that there is a juxtaposition of rich and poor in many areas and that may well be a thing of the past. Of course receiving £104,000 in housing benefits in a year seems ridiculous but I suspect that is the exception that turns up on the front page of the The Sun or The Mail rather than the rule. The problem is that in some parts of the country, housing is very expensive. The answer in my very simplistic mind is that more social housing be built and maintained in the public sector as I am not sure I feel comfortable about the buy-to-let landlords growing rich on the back of LHA but no matter, there’s no way that’s going to happen.

All benefits to be cut Linking all benefits to the Consumer Price Index as opposed to the Retail Price Index will see an effective cut across the board to all welfare payments. We’re all in this together, right?

Public Sector Pay Frozen This is one of the ones that hits me directly. I can’t say I’m surprised. I am glad that the lower paid public sector employees have been exempted. To be honest, I can absorb a pay freeze adequately. It doesn’t fill me with joy but it’s better than tying my pay to the Consumer Price Index.

In general, I am left with an uncomfortable feeling that some of those least able to pay might be suffering the most  (VAT) and the way that DLA has been targeted seems to show very little understanding of the needs of those with disabilities other than a wish to appeal to a rabble-rousing press fixated on ‘benefits scrounging’.

But to roll out a well-used cliche, the proof of the pudding is in the eating. We’ll see. I have no doubt whatsoever there will be more cuts coming soon.

and I’ll raise a glass of cider to that!

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