Budget 2011 – Reflections


When I go through the budget announcements I think on a couple of parallel lines. As well as the common ‘how am I affected’ line, I try to look at a wider effects of what the respective chancellor is trying to do or say through their budget plans.

For Osborne yesterday, I was distinctly underwhelmed. Not that I ever expected the budget announcement to be anything but irritatingly delivered in his slimy, sneering tones. Oops, did some of my political bias slip out there.

There are some good summaries around. I like this one from the BBC.

My A level Economics doesn’t really qualify me for detailed analysis but I’m always happy to give a point of view.

Ferrari 328 GTShttp2007@flickr

Fuel Duty

This is a purely selfish view and I raise that as an alert that is bound to irritate all my less urban readers but I don’t drive and yes, while I know that everyone doesn’t live in London and not everyone has access to the public transport system I might take for granted and I know fuel costs affect entire supply chains, we still have to account for the environmental and economic damage of our continuing reliance on fossil fuels.

Generally though, I’m fairly indifferent about the ‘headline’ for the budget but I have no doubt that even accounting for the fact that increased VAT will have raised the fuel duty over the 1p reduction which is ‘given back’, it will all make for good, positive headlines for the government.

There is some increase in the tax free car mileage allowance for those who use their cars for work but I pay no attention to these as I don’t drive. I know my transport costs have risen astronomically (thanks Boris) but I guess that will help people that drive. Again.

Income Tax

So the highest 50% tax rate is going to be reviewed? What about ‘we’re all in this together?’. Does that mean while benefits are cut and frozen and  public sector pay (yes, I know, the selfish element again) is frozen and VAT – possibly the most regressive tax in the ‘book’ – is increasing, the government has even considered dropping the 50% tax rate? Incredible. Just a reminder that this is the tax rate for those who earn over £150,000.

Personal tax allowances are going up which is generally good news although as reported the average gain by this will be 90p per week.

Pensions and Pensioners

On a positive note, I do think the idea of a flat rate state pension is good. So many people I come across in my work don’t claim pension credit which they would be entirely entitled to because they feel shamed into living on a pittance by a society that condemns the ‘claim culture’ even for those that desperately need every penny. Taking out the need to make a specific claim could potentially help a lot of people. However this will not affect today’s pensioners, more the shame.  This will take a long time to implement.

Sneakily as well, Osborne has reduced the Winter Fuel Allowance – as the Telegraph notes

Last night, it also emerged that pensioners are to lose out on winter fuel “top-up” payments that help them when bills are rising. This means the over-80s will see their payment reduced from £400 to £300. The allowance paid to the over-60s will drop by £50 to £200.

I haven’t honestly seen much reporting on this. It isn’t as if fuel prices are going down.

Public Sector Workers

Unsurprisingly Osborne bought into Hutton’s report on pensions in the public sector. As a public sector employee, it looks like my pension will be costing 3% more (plus the additional 1% rise in NI contributions that I’ll pay).  It isn’t something I’m overly happy about but it’s not surprising.

Some public sector workers earning below £21,000 will be spared the general pay freezes and receive an ‘uplift’ of £250. I was in favour of this but am disappointed that it only relates to NHS, armed forces, police service, teachers and civil servants but excludes local authority staff such as care workers and support workers.

Inheritance Tax/Charity Breaks

Again, I don’t expect my views to be popular here but Osborne’s provision to allow a tax break for large estates that leave 10% to charity was gormless to say the least. Personally, I think an increase in inheritance tax and yes, a death tax, is an entirely fair and progressive way to reduce some of the inequalities in our society. That won’t win votes though but I do think that there needs to be an examination of how ‘charities’ are defined. As long as Eton College remains a charity, the system of associated tax breaks has to be one that is questionable to say the least.  Did you know the Eton Rowing Club costs £300,000 per year to maintain? And they need charitable funds to help out. Can you imagine now, what £300,000 could do in a deprived area of your choice? How can those charitable donations demand equivalent tax breaks. It is quite sickening.

I missed any reports of anything related to assisting or recognising people with long term illness or disabilities. I didn’t watch the whole speech though. Perhaps I missed it.

Most papers have a ‘winners and losers’ page. It’s worth looking at this one from the Guardian.

Any list that has ‘higher rate taxpayers, drivers of gas guzzlers and people with jobs’ in the ‘winners’ section and ‘people without jobs’ who are going to be subject to the biggest ‘shake-up’ in benefits can’t be healthy and is indicative of the way the country is going.

It would be worth Mr Osborne remembering quite how many ‘people without jobs’ there are – a number that is increasing.

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