Budget 2014: More Thatcher, Less Fairness

by Ray_North on March 19, 2014

Unknown-4Ok – what are the headlines.

Removal of the 10p tax on savings; increase in amount that isn’t taxed from a pension lump sum; reduction in duty on beer; removal of the tax on fuel; increase in the rate at which people start paying tax from £10,000 to £10,500; increase in the amount that mid ranking earners pay the 40% rate of income tax from £41,450 to £41.845 rising to £42,285 next year.


Spending on welfare has been capped at £119bn for the next two years.


The cuts in public expenditure will continue, as Osborne, proudly, ploughs his austere path.

So, what does this mean?

Politically – it is clearly a Tory budget, a budget designed to give a little bit to those who the Conservatives see as their natural voters and who may be perhaps wavering a bit towards UKIP – that is pensioners with savings, people earning over £40k per year, and those who still have a bit put aside and have seen a very meagre return on their savings.

Politically, it is also a budget with very little of substance that Osborne was able to deliver without a great deal of fear, because for him, the most important message he is able to deliver is that the economy is now in growth and the deficit is technically coming down.

But, what does the budget really mean?

Well, it means that this government, even though the economy is now growing, will continue to do absolutely nothing to really give it some impetus – with growth still fragile, now, surely would have been a good time to actually put money into the pockets of ordinary people, perhaps with a reduction in VAT or an increase in welfare spending.

But no.

Osborne won’t do that because the important thing for him is the ideologically driven desire to cut public expenditure, reduce the size of the state, and cut taxes for the rich in the hope that this alone will stimulate the economy. (I don’t accept that the piffling increase in the lowest rate of tax from £10k to £10.5 will do anything for either the lowest paid or the economy as a whole).

It is also a budget that will disproportionately assist those who are extremely wealthy, as Ed Miliband put it properly today in his feisty, if a little predictable, response, a millionaire city banker will be £20,000 per month better off as a result of tax cuts, but nurses are refused a pay increase of £200 per year.

So, even though the budget may offer a little bit of help to well off pensioners with savings, a tiny bit of help to the middle classes earning around £41k and a minuscule amount for drinkers of beer and spirits, it will do nothing if you are a teacher a nurse, a social worker, a single parent, a poor pensioner or a member of the unemployed. In particular it will do absolutely nothing if you are young and aspire to something better.

Osborne said it was a job for the doers, the savers and the makers. Well, yes, that’s right, but only if by doers, he means those who do have a comfortable income, who have saved a load of money in the bank (and I mean load) and who continue to make money while most of the rest of us suffer.

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