The morning after is always a time for reflection. Once the heat of the day has passed what is left to muse on? This is as true for budgets as anything else. So what is the message from yesterday?
I suggest there are five. First, this was a budget for wealthy people. I have been complaining for a long time about the near ££60 billion a year silent subsidising pension contributions, at least half of which goes to the top 10% of income earners, with the 1% getting a significant part in that. That cost was inflated by £1 billion yesterday to supposedly get 15,000 people back to work at a cost of £66,000 per job per annum. This was quite absurd, as was the uplift in permissible annual pension contributions to £60,000 a year. The £1 billion cost was enough to have solved the junior doctors' pay dispute, and that opportunity was not taken.
Second, this was not a budget for the low paid. Student nurses do not earn enough, for example, to qualify for the new childcare provisions. Nor will many on universal credit who cannot work more than 16 hours a week. This was a budget biased against those most in need.
Third, the budget was biased to big business. A £9bn tax giveaway to it (but not to smaller business, for whom there is a cost) was quite extraordinary. No wonder, as I noted yesterday, that corporate profits take a disproportionately large part of the forecast growth in GDP.
Fourth, this was a budget that will harm the environment. To suggest nuclear power is sustainable when no one has, after 70 odd years of its use, no clue how to dispose of its waste safely in the long term and most plants are built in places likely to be submerged by global warming, is absurd. The investment would give a vastly better return in tidal power, but as ever the UK government chose to back the wrong technology, being wedded to old notions of power, quite literally in this case.
Fifth, this was a budget for recession. I discussed this yesterday, but it is worth repeating. If the government cuts its growth to a rate less than inflation and expects less than inflation rate pay rises then it matters little that profits might rise excessively because they will not spill over into serious growth via multiplier effects, whilst consumer spending and government spending which would do that are not available to drive that process. That means we cannot have growth. Add to that a commitment to high real interest rates and the Bank,of England doing quantitative tightening and this budget was one for economic recession.
In summary, this was a budget serving the usual vested interests that showed neither the capacity to think a way out of recession or a desire to even start that thinking process. The pursuit of class war and hated of public services was written large all over this budget. Surely people are not going to fall fir that again? Or will small boats save the government?
And so, a quick poll:
Was a budget with a bias to the rich and nothing for growth what was needed?
- No (47%, 292 Votes)
- Yes (28%, 176 Votes)
- It doesn’t matter: they are banking on small boats to save them. (22%, 138 Votes)
- I don’t know but show me the answers anyway. (2%, 15 Votes)
Total Voters: 621
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If you are a nurse with a £1.2-million pension and want to up by £50,000, then the budget was very good.
I would have thought that even small boats can’t save them. I wish there was a way to get rid of them earlier than is scheduled.
They’re going to need bigger boats.
Well, I appreciated that Mr Kruse. I made what I thought was a witty remark about a troll on another thread and that fell on stony ground; or after this Budget everyone is losing their sense of humour
🙂
The tories keep showing people who they are and people keep not seeing.
“Student nurses do not earn enough, for example, to qualify for the new childcare provisions. ”
Pathetic and evil. What were they “thinking?”. Clue in the last word.
In 1959 my mother raised me and my sister – as a student nurse (then as now, the country was desperate for nurses) & got a motrgage for a house from the council.
The tories have come a long way from being quasi-human in 1959 with regard to the population to………..corporate fascisim and regarding much of the populace as human trash to be used and abused at will.
If there is a shortage of senior consultants in the NHS could a pension pot increase be applied solely to NHS pension fund contributions? A blanket increase benefits all high paid workers across all sectors (finance, industry and senior civil servants etc), including medical consultants accumulating pensions in private hospitals.
Why is no one talking about the number of high earners that are not NHS doctors who can/will benefit from this tax give away?
It may help sway public opinion away from blind acceptance of this regressive policy.
Precisely
There was a minor announcement in the budget yesterday which I think showed the Tories in their true colours. Hunt will end the ‘prepayment premium’ on pre-payment meters. For years the private energy companies have been getting away with charging more in both standing charges and the price of energy for customers on prepayment meters. These are some of the most vulnerable people in the land.
Hunt said, ‘It is clearly unfair that those on prepayment meters pay more than others. We are going to put an end to that.’
So, we have had Tory Governments since 2010 and it has taken them until now to realise that the prepayment premium was “clearly unfair”?
He went on.
‘We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.’
Not always Mr Hunt, far from it, it took you 13 years to clearly see something that was blatantly obvious to everyone. Mind you, this is from the man who thinks he has cut energy bills by half. You couldn’t make it up, except he does.
You can tell there is an election just around the corner and the Tories are getting desperate.
As I tweeted yesterday, it has taken them 13 years to do this
Might they like to make repayment of thirteen years of overpayments to ths9oe who made them?
Amongst my friends and family there is no-one whose energy bills have been halved. Most have doubled. Are Tories just incapable of speaking the truth? Rhetorical question, obviously!
Have I missed something, all of this talk of energy bills being frozen (yes I know they aren’t and it is the cost of an average home with average use and so on) but in effect aren’t we going to see our direct debits increase by £67 a month? The energy price guarantee might be staying at its current level, however as the winter fuel discount comes to an end the real effect will be to take a large chunk of spending power out of every household and hence reduce economic activity.
It will also be difficult for the government to explain, that they have both frozen energy prices and increased the cost to each household at the same time. I look forward to this display of cognitive dissonance.
I think the aim is to keep direct debits the same
I think….
Well Octopus are increasing mine by £67 next month to cover the ending of the discount.
They did not know there was a new one I suspect when telling you that, announced yesterday
The Tories have paid their usual sneaky trick of saying something while meaning something else. They have said energy support will continue, without confirming that there are currently 2 types of support.
The Energy Price Guarantee which will continue for 3 months as prices are coming down and it hasn’t cost them as much as they budgetted for anyway.
In addition every household has been given £400, paid over 6 months, at £66, £67 per month. For prepayment meters that amount is credited every month to the electricity meter. For DD payers the DD is reduced by that amount. Suddenly that support is being called winter fuel help and it ends at the end of March. So everyone will have to pay £67 more each month than they have been paying.
I can see them struggling to explain additional cost when they have said that support is continuing.
The £400 winter payment has come to an end.
The Tories decided some time ago that it was a one-off and would not be repeated. That support now ends for everyone regardless of how it was received, so yes, everyone will have to find that money from elsewhere now. Those on benefits or low pay may be able to get some additional support, but they will have to make a claim for any help and it will now be means tested.
It will hit spending power in the wider economy.
But that is what he new limit replaces
I have created a chart of the Income Tax Personal Allowance vs (RPI) Index Linked Personal Allowance from 1979 until this year. This was an interesting exercise and I wish I could show you the resulting graph, alas I cannot share it with you here.
What it shows is that from 1979 until 2006, the personal allowance increased broadly in line with RPI. From 2006 until 2019 the personal allowance broadly increased ahead of RPI but tracked it.
From 2019 until the present the personal allowance has increased by a meagre £70. Had the personal allowance been index linked then the current rate would be £14028, instead it sits at £12570. Therefore this year all income tax payers will be paying an extra £1458. Thank Hunt for that.
It would also be interesting to see how the upper rate threshold increases over time, but time is something that I am rather short of at the moment. Perhaps this may be something that would interest you?
You can send it to me
Richard.Murphy@taxresearch.org.uk
Further, the current plan is to freeze the income tax personal allowance until April 2028. That should be well into the next Parliament so there is a good chance the policy may change, either just before or shortly after the election. In the meantime it is about pretending we will meet self-ordained “fiscal rules” in future periods by booking billions of additional tax revenue expected to be payable due from fiscal drag. Smoke and mirrors.
Agreed entirely
As evidence the commitment to 100% capital allowances is only to make the fiscal rule work
I can’t help feeling that some respondents to the poll may have misread the question?
You may be right…
Not my best
I should wake up before writing…
Puzzled by the resuts, I realised I had indeed misread the question and voted Yes instead of No and suspect others may have done likewise. Richard is not the only one who needs to wake up and read more carefully before acting.
I’m afraid I did, too!
Richard, I think you are falling into the trap that the government want you to fall into. The increase in my energy direct debit is clearly stated as been a result of the ending of the £400 subsidy, not the price guarantee. They said separately that they would inform me off any changes due to the price guarantee at a later date. Smoke and mirrors from the government. I know that British Gas left their direct debits at the higher level but then paid £66/£67 a month back into each customers bank account. Which ever way this has been done every household is £67 a month worse off.
I don’t think I am
They are saying the guarantee continues – bit the arrangements are no in place as yet
Yes the guarantee is frozen and the details for that is not in place but the £400 winter fuel discount will end. So the real cost of energy to the average consumer is only going up by £67 a month not the £110 it would have if the guarantee had gone up as planned.
I might be wrong time will tell.
If the Chancellor was serious about growth, he would settle the public and pseudo-public (rail) sector pay disputes generously. Perhaps the key piece of OBR data is the forecast fall in real incomes/spending power. The worst of the fuel crisis is yet to hit people – our bill for about 11 weeks is higher than the previous quarter and one element of that is there was a one-off deduction of £150 the previous quarter which is not repeated.
Proper pay settlements for millions of workers would put cash in the pockets of people who not only will spend it but have, in many cases, little choice. Of course, significant amounts will be leached offshore by the global corporations ripping us off for power, water etc. but some will enter the real economy and stave off real recession. Fail to give private-sector workers a proper pay rise and they will be permanently worse off – easing of inflation does not mean prices will fall – some will, when commodity-based, but most won’t – and hence won’t really mean people have ‘more money in their pockets’. They will be permanently poorer, less able to spend; less able to contribute to economic activity.
This was entirely a budget for the mega-rich, who have more than they can possibly spend and won’t generate any economic activity – they will hoard the generous giveaways. The genuine but specific problem the failure raise the pension cap for several years (the same fiscal drag being used elsewhere to increase tax-take from everyine, particualrly the poorest) is the root of the problem but abolishing rather than just raising the cap and lifting maxmimum si=ums to be invested (with associated Tax relief ciosting the Exchequer) so more money can be drained from the economy into pension funds is no real answer.
The ‘expensing’ of capital expenditure will only benefit those spending more than £1 million a year, while the Corporation Tax increase – essential for large corporates – sees much lower taper limits so many SMEs will actually pay the highest CT they have ever paid, further hitting growth and investment in a sector again more likely to spend rather than the largest coproates which have any available cash sucked out by dividend demands, paid mainly agin, oh look, to investment funds that won’t sepnd in the real world.
This all seems pretty obvious to anyone who isn’t based in Tufton Street – or the Chancellor/PM. That it isn’t obvious to political leaders suggests they are beyond caring, having written off the next election whatever their MPs think and just being intent on raiding the piggy bank as much as possible before they go.
The lack of green investment or help for the poorest is unforgiveable.