Emergency Budget, was it worth waiting for?

Tuesdays Emergency Budget, delivered by the Chancellor of the Exchequer, George Osborne, on behalf of the Coalition Government, was probably the most political, in every sense of the word, that I have ever heard or, even perhaps any of us, will ever hear again.

The Chancellor set himself the goals of cuts with care and fairness at the heart of the budget. Did he succeed?

I am afraid we might have to wait a little while for the details become apparent, under Labour, the ‘devil was always in the detail’ and close inspection frequently uncovered vast expenditure or borrowing, kept below the radar in the Budget Speech itself. Not much chance of this here, but embarrassing detail may yet be revealed.

Before the election, many had considered George Osborne, too young and light weight, to boot. He has emerged from the experience of his first Budget with his reputation enhanced, as a serious heavyweight political player. At least we now know, he is no ones fool and indeed if the future is kind to him, may even be a good Chancellor as far as these things are judged.

Political considerations run through the Budget like lettering through rock. He has a fine line to walk if his claims that his Budget has fairness built in, is to survive close inspection. It will have to deliver, the squeeze on the public sector and on benefits must appear fair, once implementation is under way.

We have discovered recently, that Labour’s concealment of the true position before the election was over, was basically a con trick, even the loan to Sheffield Forgemasters would have been withdrawn if Labour had been returned to office. Labour’s breathtaking cynicism has been exposed and this area disproportionately adversely affected. Perhaps this explains the fact that Labour in Rotherham, is held in frank contempt,  especially vitriolic are those who voted Labour recently it seems.

We will all welcome the increase in basic rate tax allowances and the linking of pensions to incomes once again but the increases in value added tax, VAT, from 17.5% to 20% a rise of over 14% in this most regressive of taxes will impact most heavily on those already at the bottom of the pile.

The freeze on Council Tax next year is to be welcomed, because it sends a message to all local councils that they will not be able to fleece the Council Tax payers to cushion the ending of local council profligacy. No small wonder then, that the ‘Consultants’ are already ensconced in council offices, desperately looking for cuts as I write and Councillors are reported to be unusually glum!

The 25% reductions required of parts of the public sector and the 2 year moratorium on pay rises for the over £21,000 earners, will seriously impact on spending power amongst such a large body of workers that further decline in Rotherham’s local economy is, I am afraid, inevitable in the short and medium term as spare cash dries up in our pockets and reduces still further local spending power.

One of the functions of this Budget, though not explicitly stated, is to bear down on the problem of personal debt, which is so high, that it must be brought down, though not without much pain for those affected. The costs of servicing all of this personal debt is so large that this alone could stifle any spending driven retail business recovery.

It is already clear that the overall balance of this Budget is not neutral in it’s effects, the bottom segment of society will be required to pay a disproportionately high price because of the changes announced yesterday and therefore I believe it to have failed, in it’s fairness criteria, because overall this Budget is a regressive one.

Rik

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