Latest post on Left Futures

A budget aimed at the Tory faithful, not the economy

Weve all got budgets GeorgeShiny new coins did nothing to cover up the Chancellor’s blatant attempt to shore up the core Tory vote next year.

The budget giveaways were relentless targeted on the comfortably off, rather than those who have been hit the hardest by austerity economics. Changes in tax thresholds may take some out of tax, but they are actually pretty regressive, as this analysis and chart from the Resolution Foundation shows. The much vaunted hard working families would gain more if this cash was used for increased tax credits.

Help for savers in the form of tax cuts and bigger ISA allowances are again targeted at the upper middle income groups. How many low paid workers can afford to save anything, let alone £15,000 a year. One in three Scots has saved nothing in the past three months. Tackling pension annuities will be popular, but it does nothing to tackle the real reasons why pensions in the UK are so expensive. There is also a risk that this is aimed at a short term cash boost to the economy, at the price of long-term pensioner poverty.

There is nothing for hard pressed public sector workers who are promised more real pay cuts and further increases in pension contributions from 2015. Also no recognition of the damage low wages generally is doing to the economy. Real wages have now been cut for 44 months, a record unmatched since records began and a loss of £1600 per year for the average worker. Ironically, wages are lower as a proportion of the economy than when we had the thrupenny bit on which the new coin is modelled.

We had the usual rhetoric on tax dodging, but little real action. A few more staff in HMRC, to replace the ones he cut, but no concerted attempt to recover the £120bn of lost revenue. He described this as a ‘small minority’ who don’t pay their taxes. There may not be many of them, but they have deep pockets. As deep as the £5m per annum City Banker who has benefited from the millionaires tax cut to the tune of £200,000 a year – and the Chancellor tells us he can’t afford £250 a year for health workers pay.

Public expenditure for Scotland was largely fixed in the autumn statement, so the grim figures in today’s paper are just confirmation of bad news in the form a further real terms cut in the DEL. The modest Barnett consequentials of £63m go nowhere near compensating for a cut by nearly 11% in real terms over the five year period to 2015-16.

The Budget has a page or so on Scotland, largely regurgitating key messages from the Treasury’s analysis papers on independence. There was more unwise gloating about cuts in oil revenue in his speech and a nod to the Scottish whisky industry with the duty freeze. Like the much vaunted GDP figures, most of that benefit will disappear out of the country and won’t reach real households in Scotland.

However, the biggest problem with the budget is how little it does for the real economy. There is an excellent analysis by the IPPR published in today’s Daily Mirror. It shows how slowly we have climbed out of recession compared with other countries and the impact that has had on jobs, wages and business output. Even the deficit is double what the Chancellor said it would be in 2010 with the consequence that austerity grinds on causing even more damage.

In summary, a political budget for the Tory faithful. Mostly middle class welfare that does little for the majority and certainly doesn’t tackle the underlying economic problems faced by Scotland and the rest of the UK.

Comments are closed.

© 2024 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma