by Anna Bazley
Few people would argue that Britain’s fiscal spending doesn’t need a re-think. However, many on the left question whether the Con-Dem coalition, and specifically Coalition Chancellor George Osborne, are the people to achieve the necessary changes whilst still ensuring a high standard of living for all those in Britain. With the country experiencing 0.8% growth in GDP, above the projected 0.7% the economic problems are perhaps less important to Osborne than at the time of his drastic 2010 emergency budget. Arguably, what is at stake in this budget is not economic salvation or even rehabilitation but political prestige.
On the day of release of the budget, there are a crucial few things contained within it, or directly related to it, that have become the talking points. The first is the proposed rise in the personal tax allowance – from £8,... to £9,205. The Chancellor claims this will leave 24 million taxpayers with an extra £220 million. The Lib Dems feel victorious, and it is not too much of a stretch of the imagination to wonder if Nick Clegg sees this as some way forward on his party’s road to rehabilitation. The raising of the personal tax allowance to £10,000 was the key policy of the Lib Dems’ election 2010 manifesto and as such Nick Clegg and others in his party see this aspect of the budget as the vindication of their rights as coalition partners to influence what has up until now, been very much Conservative government policy.
There was also the increase in stamp duty and the increased bank levy to provide the appearance of a budget that ensures the poorest people in society are taken care of, and that the brunt of austerity measures will be shared equally by all members and strata of our society.
Labour Leader Ed Miliband was quick to dispel any such illusions. "Only the Liberal Democrats would be dumb enough to think that a George Osborne budget would be a Robin Hood budget," Miliband said. "It is Calamity Clegg again." Based on the above policies, Mr. Miliband’s accusations would seem completely unfair. However, the heart of Budget 2012 only serves to reinforce and give credence to Mr. Miliband’s assessment. George Osborne has delivered a cut in the 50p tax for people earning over £150,000 a year, down to 45p. Though he claims this will ‘only cost the Exchequer £100 million’ and claims that the 50p rate only encouraged tax avoidance amongst the wealthy, it is, in real terms, a reduction in the amount of money the Government can claim on the large incomes of the very wealthiest. Those who want to avoid tax are always able to and are nearly always able to. It is doubtful that those who moved their money or even country of residence to avoid the 50p tax rate will now come flocking back with their salaries and assets. Rather, they will continue to avoid tax whilst those high-earners who pay tax will continue to pay less.
Another money-saving idea outlined by the Chancellor in this year’s budget is the decision to scrap tax breaks for elderly people, prompting the #grannytax trend on Twitter. These proposed actions will leave existing pensioners £63 worth off per year and new pensioners facing a £197 loss, though even higher figures have been calculated by some independent pensions services. By 2015, this equates to Britain’s pensioners being £1 billion a year worse off. Osborne also planned £5 billion worth of savings by freezing age related allowances for half of all Britain’s pensioners by the end of Parliament. As well as money saving measures aimed squarely at the elderly, the Chancellor also seeks to find an extra £10 billion through cuts in welfare spending, despite the fact the budget increase the amount of families eligible to retain some or all of their child benefit with 750,000 families where the combined income of the parents is over the previous threshold of £42,475 benefitting. This can only result in welfare cuts that take benefits away from those most desperately in need. For all the coaltion’s tough talk on clamping down on ‘spongers’, benefit fraud remains an extraordinarily difficult area to target. There is a high risk that those who require benefits will be deprived of them.
Less publicised but arguably equally important was this Budget’s stance on environmental issues. The Prime Minister and the Chancellor had promised a commitment to green growth projects, and though Air Passenger Duty is set to rise and Osborne paid lip-service to ‘investment in our world-leading energy sector including renewables’ in reality this budget seems aggressively opposed to green policy making. No new funds were made available for green energy production, the Carbon reduction Commitment tax on businesses’ energy use was described as cumbersome and may be cut to alleviate the pressure on corporations, including the already heavily subsidised oil industry.
As could have been predicted, this budget shows a superficial commitment to the social justice and equality, yet ultimately cuts the areas and people that are most in need; the environment, the elderly and those on benefits, whilst making a host of concessions to high earners and corporations.