Recession broods on, the downturn’s not over
- Beer tax escalator scrapped with 1p cut in duty;
- Frackers free to turn Blackpool into The Earthquake Capital of Europe;
- Public sector’s 1% pay cap to continue till 2016;
- Corporation Tax rate to reach same rate as present VAT rate by 2015;
- Sweet Francis Adams for everyone else.
In the run-up to the 2010 General Election, a spoof poster campaign by Labour’s activists resulted in one poster being inspired by the Life on Mars spin-off Ashes to Ashes. It showed a picture of David Cameron posing as Gene Hunt atop an Audi Quattro. The poster cajoled voters into preventing a return to the 1980s. A decade which saw high inflation, great inequality, marginalisation of Northern England and the Celtic Nations, and of course, deindustrialisation.
Today’s budget has a slight whiff of 1980 about it, apart from one thing: the demise of the Beer Tax Escalator. The shift of income from the poor and middle class to the rich and super rich will continue. Incentives to boost home ownership will be extended to renters of Housing Association properties, a Bastard Son of Right To Buy. Once more, the rise in private sector employment, which they’ve trumpeted isn’t really a net gain: it is part of the continued privatisation of our public services, from schools to patient transport. Some companies have made use of the Work Programme as a source for cheap – unpaid – labour.
For persons employed in the public sector, the 1% wage cap will continue. Contrary to popular belief, public sector wage rates are often lower than private sector positions, not substantially higher. Till recently, this was a reasonable trade-off with better workers’ rights and job security compared with insecure private sector employment. In some areas, the public sector was – and still is – the only game in town, owing to inadequate private sector positions (particularly so in Northern England). What is conveniently forgotten, is that public sector employees in low to middle ranking positions will need a substantial pay increase to catch up with non-privatised private sector jobs. The pay freeze/cap/cut – in place since 2008 – led to a strike today, with the possibility of more to come following today’s news.
Today’s budget could have been a chance for increased infrastructure spending on environmentally sound initiatives. There could have been a chance to add more solar panels or build a new generation of energy efficient homes. Instead, they are offering tax breaks to make the UK’s favourite seaside resort The Earthquake Capital of Europe, by means of Shale Gas Exploration (in other words, Fracking). One where the firewater could be coming from taps in a Bispham semi, as well as the spirits bar at The Dutton Arms. Therefore, they squandered an opportunity for a cleaner, more energy efficient Britain by kowtowing to Big Oil and His Pals.
There was no new roads or electrification schemes planned. Benefits will still rise by 1% as planned from last year; there will be no extra help for the unemployed and disabled persons. Expenditure on State Benefits will be protected, financed by cuts from non-ring-fenced departments. The State Pension will increase to a flat rate of £144 per week in 2015. Though this sounds reasonable for 2013 rates, we mustn’t lose sight of the fact that fewer people will be entitled to a State Pension as the age of entitlement will rise to 67 and be determined on contemporary life expectancy rates. The £144 per week could well be cancelled out by higher fuel bills, any changes to the concessionary fares scheme, and possibly health insurance premiums three years from now.
As with the 1996 Budget under Kenneth Clarke’s chancellorship, the trifling giveaways were trumpeted with the same sort of hyperbole often reserved for the new Pope’s arrival, or the sighting of One Direction opening a Lidl store in Northallerton. The only real ‘giveaway’ (if you could call it that, as they were giveaways in the same sense of a HMV Closing Down Sale’s sale prices – i.e., derisory) was the abolition of the Beer Price Escalator. That was thanks mainly to sustained lobbying from CAMRA, but cider drinkers are neglected as the alcohol escalator remains in place (same also for wines and spirits).
The proposed increase of the income tax threshold to £10,000 (by 2015) will be cancelled out by higher public transport, fuel and food costs. Ditto the above with any premiums incurred from other privatised services. Therefore, the average voter, would still be uncertain about purchasing big ticket items. The already shaky foundations of town centre economies will be shakier still, owing to the lack of suitable support for retail premises. Even so, unlike the average voter, small businesses were given more generous giveaways. These include a £2,000 cut in employers’ National Insurance contributions from April 2014. Many small businesses may be free from making N.I. contributions. Corporation Tax will fall to 20% from 2015-16.
In a nutshell, a good budget for small business owners and estate agents, but one with a distinct lack of headline winning infrastructure projects. It was always going to be a consolidation of their previous budget. As Bryan Ferry said in 1980, the ‘Same Old Scene’. One where the average person would see very little benefit. In short, a typical Tory budget, and a flatlining one at that. Therefore, the Plan A of continued cuts is still in practice.
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Meanwhile in Tameside…
Few of us are likely to benefit, unless somebody finds shale oil underneath Hough Hill and gets a nifty tax break out of waking Dukinfield and Stalybridge residents up with an earthquake. Changes to fuel duty and the abolition of the beer tax escalator may provide some comfort, though these would be offset by continued public sector spending cuts and all the usual ‘fringe benefits’ of living in the UK (high food prices, heating bills, transport fares, Tory sycophantic mainstream press). The lack of extra help for the borough’s unemployed and disabled citizens will see continued stagnation for our borough, even with the arrival of the Metrolink. The ConDems’ Plan A hasn’t worked for Tameside, and the continuance of that will mean more of the same.
There has been no real efforts to get our citizens spending: no cuts in VAT nor incentives to improve our town centres. The rise of benefit rates and public sector wages to that of 1% per annum will discourage the borough’s citizens from going to the pubs or the borough’s markets. Further cuts to the benefit system (particularly disability benefits and increased use of sanctions), plus the trialling of Universal Credit will deflate the borough’s economy even more.
For the borough, this year’s budget was pretty much the same as previous ones under the ConDems, only without more electrification (extending the wires to Rose Hill Marple would be nice, though just as likely as The Mighty Stalybridge Celtic winning the UEFA Champions League final). A not-so-nice round number springs to my mind, unless you like the odd pint of Jaipur or True Grit, though not Strongbow, and thankful for small mercies at the petrol pumps.
S.V., 20 March 2013.