The Bankers’ Budget


Nobody would expect a fair budget from George Osborne. The Chancellor was never going to give a budget that benefitted the many over the few, or one that put the realities of everyday life above right-wing economic dogma. Expectations suitably adjusted, we can perhaps take small comfort from the 50p tax band “only” being cut to 45p. Ed Miliband gave a sterling speech in response, and I raise a glass to the intern who wrote the jokes. Professional hacks will be casting their own analysis; what follows is my personal take on some of the details.
 
The Chancellor’s big spin on this budget is that it “rewards work”.  We already know that under-18s are to endure a cut in the minimum wage. In the UK it is possible to work a 40-hour week and still live in poverty. The way to make work pay is, surprisingly enough, to actually make work pay, by implementing a proper living wage. Today we heard no commitment on improving the pay of the low paid. It would be naive to ever expect one from a Tory Chancellor. Increasing the income tax threshold seems reasonable, but not when even the poorest are still hit by VAT, and duty on fuel, alcohol and tobacco. What Osborne gives with one hand, he takes several times over with the other.
 
Projections for economic growth and for a fall in unemployment are welcomed.I only hope they hold true. As far as I am aware the budget made no specific commitments relating to the latter. I fear that further cuts to the Department of Work and Pensions will only result in more inhumane box-ticking and the harassment of the vulnerable. The Government – as ever – has put all its faith in the hands of the wonderful private sector.
 
On the 50p rate, the detail most comprehensively leaked, news was always going to be disappointing. Having endured two years of the government chaffing on about deficit reduction, one could at least have assumed that they intended to maximise tax revenue. Basic maths will tell anyone that a 50p rate will raise more by its presence than its absence (“Laffer Curve” / wishful thinking / pseudoscience aside). Osborne himself stated that the rate raised around £1 billion. To me a lot, to him “next to nothing”. Cutting it will cost £100m. That’s a lot of disabled children who will have to go without.
 
The moral case for the 50p rate is even more clear cut – there can be no reason why someone “earning” in excess of £150,000 per year needs a penny more. Greed can be the only motive, and the one which leads to tax evasion and avoidance. It will be argued that such non-payment means that the tax rate might as well be cut. Just apply this same rational to other crimes such as burglary and murder – “You’re never going to catch every criminal, might as well legalise it!” – to see what a fallacy it is.
 
Tax evasion is “morally repugnant” according to Osborne. It is hard to shake off that dirty feeling that comes from agreeing with him – especially given those are often my own words. Tax evasion, and avoidance, are both morally reprehensible. They are as much a theft from the community as your typical off-licence robbery, in scale perhaps more so. The problem is that Osborne is the last person I would expect to do anything about it. I fear that despite pledges to the contrary, he will be all talk and no trousers. Every spending decision taken thus far by the government has convinced me that it is a government of the rich, by the rich, for the rich.
 
Miliband’s best line came when he challenged the government front bench to admit who among them personally benefit from the budget. Furthermore it is worth considering how many prominent Tory donors will also benefit. Such borderline conflict of interest makes a mockery of democracy – and will certainly not be reported in the Tory press. The headlines will trumpet crumbs from the rich men’s table, and ignore the widening inequality that will be a direct result of Osborne’s decisions.
 
Labour should commit to restoring the 50p band, and to actually getting serious on tax fraud, just as we should commit to renationalising the NHS. Anything less will be to continue to concede to the rightward drift of our national political discourse.
By Chris Nash
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4 comments on “The Bankers’ Budget

  1. labourluke says:

    Let’s not forget that any controversial announcements to come over the state pension age, the expansion of airports (or the creation of Boris Island), and many other issues are to be delayed until a publication in the summer months, a clever and tried-and-tested piece of spin which will mean life-changing reforms will be released on a Friday afternoon in the middle of August when anyone affected will either be on holiday or watching the Olympics or the Jubilee.

    Far from being the “greenest government ever”, Osborne has given the green light to fracking in Lancashire, extra road building (which only the rich will be able to pay for), and an extension of airports in the south east. There was absolutely nothing in this budget aimed at getting growth by investing in new green technologies and infrastructure – a colossal wasted opportunity. There were tax breaks for oil and pharmaceuticals, but nothing for manufacturing, the only area of our economy which has been growing of late and the area which is helping the German and US economies out of the quagmire.

    Relief for council tax paid by veterans may be welcome, but there was no mention of the idea floated by Liberal Democrats (oh yes) recently that students might have to start paying it. There was also of course an announcement of further cuts to the budget for welfare, children and the disabled. Millionaires’ Budget indeed.

  2. Progressive_Liberal says:

    Firstly we should probably leave some of the partisan rhetoric at home; ‘right-wing dogma’ and the like.

    However, as is sort of suggested in the article, what strikes me most of all (although doesn’t surprise me) is what wasn’t in the budget, rather than what was in it. We knew that the top rate of tax was likely to be cut at some point during this Parliament. Alastair Darling himself said, when Chancellor, that the 50p tax rate was a temporary measure. And like it or not, there are strong economic arguments for lowering the tax rate, however (equally) strong the social justice argument is in favour of retaining the 50p rate. But the OBR report does say that there was a lot of ‘income shifting’ in tax year prior to the rate coming into force, costing the taxman billions of pounds. Having said all that it does strike a big blow to those at the end of the income spectrum; millionaires receiving a big gift in 2013, whilst those on the minimum wage (those over 21 years old at least) receive an increase of wait for it….11p an hour! A pittance.

    But to be fair to the coalition moves to close loopholes and increase the personal allowance ought to be welcome, although the latter policy is not flawless. It should be merely the first steps to improving the lives of those at the lower end of the income scale.

    But as I initially said, it is worrying that the Chancellor is merely banking on the economic growth resulting from essentially tax rate tweaking (the corporation tax reduction to 22p in 2014) i.e. supply side policy, which considering the figures for economic growth since the last election have been poor is surprising, and shows that the coalition government really is committed to ‘Plan A’. I think it would have been desirable to see a government trying to invest in its people; major infrastructure projects, widening participation for internships, apprentices and training skills for our young people – these aren’t expenditures, as many Conservatives will say – these are investments in our country! Britain also needs an industrial policy. Yes we need a competitive tax system, which gives people/businesses an incentive to come and set up shop here, but what the likes of India, Brazil, Japan, South Korea, just to mention a few is industrial policies. Government needs to work with business to help our economy evolve and compete with the emerging market economies.

    And on a more social justice note – a living wage is certainly needed, not just for the over 21s, but for all employees and interns. This would provide people’s lives with more meaning. The personal income tax allowance should be welcomed, but does not help those in part time work, or pensioners.

    So while not everything mentioned in the today’s budget was bad, there certainly wasn’t much to suggest that we’ll be powering to 3% growth over the next few years. Unfortunately for all of us, it merely looks like those most privileged in our society will be gaining the most £££, and not the regular person in the street.

    Let’s hope that Labour can provide a good, credible alternative to the coalition. It will do well not to indulge in petty political point scoring, address the actual economic issues and give those disillusioned with politics a reason to vote in 2015.

  3. […] you remember back to the budget, Osborne declared such evasion to be “morally reprehensible”. At the time I expressed deep cynicism about what actions if any would follow such fine words. The charity tax […]

  4. franklin says:

    My God Luke- you’ve hit a nerve with this one.The deranged splttuering of your right wing loony brigade is in full desperate force here.All we know about Cameron is that his folks can raise a couple of million just by selling a painting – so clearly he wants the whole piece of that estate for himself.Apart from making himself mega rich while he makes the rest of homeless and jobless (just like when he was Lamont’s chou chou) his only other definite policy is to let his pervy pals satisfy their bloodlust in the woods

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