Wednesday 21st March, a gleeful looking Osborne stepped out of the Exchequer’s residence at Number 11, Downing Street, on his way to Parliament to deliver the Budget speech. Were we surprised at the outcome? Not really.
When the Coalition Government came to power in May of 2010 the British public was curious. It wanted to know whether the Liberal Democrats would be a force for good in an inexperienced, predominantly Conservative Government of whether they’d bend over backwards and flail at the hand of their right-wing partners. Are we surprised the latter became the reality? There was, however, always the hope that this great British nation, which championed the trophies of the NHS and a more sombre attitude towards capitalism than their “special partners”, the US, wouldn’t see a move towards those pesky Thatcherite days. There was the desperation of hope that the NHS would remain public, that the bankers wouldn’t be allowed to run riot with the public’s money, fiscal policy would be tightened, bonuses would be addressed, that David Cameron wouldn’t ride the police horse given to Rebekah Brooks, that the Government would tend to the most needy and that though we were in a financial rut we’d still very clearly demarcate ourselves from American economics. What a hope to be had. What rank optimism.
Yesterday’s budget in a nutshell (combined with the passing of the bill from Parliament of the NHS reforms) has driven fear in the majority of the populace of the United Kingdom. We stand on the precipice of change - but this change is not good and this change will move us towards the much maligned US health/economic systems. So just what happened in the House of Commons and is this budget really that bad?
In Osborne, we talk about a man who seemingly does not know the difference between national debt and national deficit (having conflated the two in his speech yesterday). The Chancellor also couldn’t resist having a go at his predecessor, Gordon Brown, for having sold British gold reserves for £2bn. Although the fact Gordon Brown did this some 10 years ago is largely irrelevant. The key points of this budget:
- Pensioners are to have their allowances frozen meaning that, according to HMRC, 4.4 million pensioners will be around £83 worse off per year.
- Top rate of income tax is to be cut from 50p to 45p, which HMRC, have said will see a £3billion loss in revenue for the Government whilst only £2.7billion of this will be recouped via expected increased boosts in consumer confidence. The Chancellor hopes his gamble will pay off but the Labour Party, relying upon the Institue for Fiscal Studies, believe that Tories are being Tories and they have cut the tax too soon.
- Child benefits will be slashed for the £50,000+ earners. This move is perhaps one of Osborne’s more sensible moves, as the child benefits for low income earners remains unchanged but yet better than this 750,00 middle-income earners in the UK have been protected via Osborne’s change of heart in slashing the welfare for those earning above £45,000. Though critics have slammed the change for the increased bureaucracy saying the change will be too hard to administer.
- Corporation tax cut to 24% with further cuts, year-on-year, till in 2014 the tax will stand at 22%. Business owners, naturally have taken to this very well.
- Fuel prices will continue to rise as previously stated rising 1p for the next 3 years.
- Tobacco is to be rised by 5% above inflation resulting in around a 37p increase for every box of cigarettes/bag of tobacco.
- The gaming industry is set to receive tax breaks in order to stimulate growth and make the market more competitive.
But, we must be objective, there are some positives to this largely regressive Budget. Those on minimum wage will find their tax halved. The Government is considering enterprise loans for the young to start their businesses. The North of England will see improved infrastructure, and Britain will seek to move towards ultra-fast broadband. Ultimately, this bill is not as demonic as many have claimed it to be, but it’s timing and manner of unveiling will undoubtedly deflate confidence, upset the public and cause the media to pose the question: “Just how much of this is political manoeuvring?” There is little doubt that this bill would have psychologically been much easier to take had it come from a pre-financial crisis Labour Government as opposed to from a man who people just enjoy taking a dig at…even for not wearing a tie.
As for the reaction after Osborne’s budget: he was lambasted and rightly so. The Times, The Sun, The Daily Mail, The Daily Telegraph, The Guardian, The Independent and The Financial Times (so basically every paper in Britain) slammed the Chancellor for his tax on pensioners, at the least. It is seemingly apparent then that this Budget has failed to satisfactorily, if at all, address the key issues of the British public, namely energy prices, economic growth and unemployment.
So Mr. Wallace Osborne, I ask of you, is it time to call Gromit for help when even the right-leaning media are drawing funny pictures of you? Understandably it’s hard to imagine. So here is a nice graphic instead.