Stephen Lloyd's thoughts on the Budget


I wanted to share with you my thoughts on some sections of the Budget. I haven't covered all of it otherwise this email really would go on for ever. I have focussed on those aspects that I believe are particularly important, not least as they provide an insight into how this new Tory government is going to behave, and what it's priorities are. 

Some I approve of, others are simply appalling. Read on......

Good:

A further cut to corporation tax: The private sector have played a blinder since 2010 with over 2m new jobs. This will help keep the engine motoring in the right direction.

National Insurance Allowance: Increased from £2,000 to £3,000 will also be good for future employment prospects.

Apprentiships: The Chancellor's levy on business to be spent directly on more apprentices is over-due. UKplc has generally relied on Central Government to fund apprentices.

This levy brings us more into line with Germany and will, hopefully, get companies to be even more pro-active in funding and training apprentices. This can only be a good thing for them and us in the long term.

Higher Living Wage: The announcement of a new higher 'living' wage is a good idea. It will cause some difficulty in certain low paid sectors but the principle is an excellent one. 

Non-Doms: Making it harder for non-doms to avoid tax. This sector exploded under New Labour so it's about time people who derive all the advantages of living in the UK with few of the costs actually contribute a fairer share.

Personal Tax Threshold: Continuing to raise the personal tax threshold when we start to pay income tax to £11,000. I'm glad to see this Lib Dem policy has become entrenched and is set to continue, even if the Prime Minister in 2010 said it was unaffordable!

Defence Spending: Fixing defence spending at 2%. In today's troubled world this is a necessary step.

Albeit I do not believe we need to spend £100bn or so over the next twenty years on a like for like replacement of Trident. I would keep a smaller nuclear deterrent but not the all-singing and dancing (and hugely expensive) package that both the Labour and Tory's propose - ie like for like replacement.

Why is it that throughout history we seem always to be locked into the time-warp of fighting 'previous generations' wars rather than the current challenges we actually face? 

Bad:

Education: Cutting the Maintenance Grant is a deeply regressive move. It will put off young people from low income families deciding to go to university.

By replacing grants for poorer students with loans of up to £8,200 pa - on top of the £9,000 tuition fees - the Conservatives have consigned to the dustbin decades of positive effort to improve the life chances of many youngsters. At current figures this deplorable decision will negatively impact on half a million young people a year. 

If George Osborne wants to promote fairness then scrapping a grant which enables students from low income families to compete with the middle class and the rich is a bloody funny way to go about it. 

Further Education: Cutting £400m from the Further Education (FE) budget will also make it really tough for the sector over the next four years. Again this is a regressive move as many people from lower income families attend FE Colleges to train up for employment. 

Employment and Support Allowance (ESA): Reducing ESA rates for people who are in the work-related group to the same as Jobseekers Allowance is a shocking decision.

This cohort are often people with disabilities who have been out of work for a long time and are trying to get back into employment. Penalising them for doing so is both cruel and, frankly, dim. Where's the incentive?

Working Tax Credits: The significant cuts to working tax credit for those on low incomes are absolutely brutal and I am not exaggerating!

Under the treasury's own calculations, an out of work family with two children living outside London will lose £6,000 of their annual income. Whilst a couple with the same two children but earning at just under the household median for a town like Eastbourne (£27k) will be facing a similar savage 10% income reduction. From 2016 they'll be around £2,000 a year worse off.

It seems the Tories are clearly intent on penalising the poor; working or otherwise. Why?

Meanwhile, Inheritance Tax: Raising the inheritance tax threshold to £1m will benefit only a tiny number of people - approx 8%. Compare that to the attack on the millions of folk who make up the working poor! 

I do wonder how exactly our broader nation benefits from a tax change that makes it easier for the very well off to pass on their wealth to their offspring at the same time as making it harder for poorer people with children?

Cutting Green Subsidies: I guess David Cameron's view of us trying to build a sustainable green economy as 'green crap', has come to fruition!

Further four year cap on public sector wages: 1% per annum for public sector workers is mean-spirited. Teachers, nurses and the like have borne a lot of the brunt of the austerity programme since 2010. Forcing their wages down in real terms for a another four years is I think unfair. I get a sense it's almost a personal vindictiveness from the Tories against the public sector.

 

My conclusion of the Budget overall is that if you are of the working poor, disabled, young or work in the public sector, then the next few years are going to be bleak. If however you are rich or in the upper 50% of income, then life's just going to keep getting better. 


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