Thursday, 24 June 2010

The Budget lies unravel..

And little by little we see how the lies about 'fairness' being instilled in the budget are bought crashing down, no wonder the Lib Dem's looked so glum. All the coalition did was re-write the past and instill fear of the future to make way for their terrible policies which, much as they like to claim, weren't 'unavoidable' at all.

Now I'm no economist, I've never studied it at all, so I'll leave all the fancy calculations to the clever people at the IFS (probably the most respected impartial source, I think most people would agree) and base much of what I say on their report. That's a better way than me make silly mistakes in trying to understand it myself.

Talking about Nick Clegg and Osborne claiming the budget is 'progressive' (i.e. will hit the richest hardest) the report says 'That claim is debateable' and in fact only holds true because the government were factoring in measures already taken by the previous Labour government and because it looked only a little into the future. It says if you look further into the future and discount changes Labour made (i.e. Look just at what the coalition has proposed) then the budget 'looks less progressive - indeed somewhat regressive' and will hit the poorest hardest. So really, the only good part of this budget is what Labour already did! George Osborne claiming the coalition was a progressive alliance was possibly the most humorous thing of the new government to date, more than Nick Clegg's undying nodding in the background. No-one agrees with Nick anymore.

And then we have the travesty of the idea to raise VAT, I expect these kind of 'hit the poor' ideas from the Tory's but to come from the Lib Dem's is the most hypocritical thing in the world, and for them now to claim 'they never ruled it out' would be funny if it wasn't such a bad shift towards the right for their party. (See the picture of the Lib Dem election poster below if you're not sure why.)

VAT is a regressive tax, it hits the poorest hardest because the lowest incomes pay a disproportionately higher percent of income on goods that are taxed, and now they'll be paying even more. Osborne said it was 'unavoiadable' and Clegg said it was either this or cut schools and hospitals. What a load of tosh. Its only 'unavoidable' for Osborne because of the £12bn of other tax cuts that he announced and the fact he didn't want to increase tax on the richest in a meaningful way. (That's also in the IFS report) There are plenty of taxes other than VAT which are a lot less regressive and could have been used to fill the hole if there was one, Income and National Insurance would surely have been better ideas than VAT?

It would be nice if some Lib Dem's refused to follow their Tory master and voted against the budget but somehow I don't see it happening, power's got to their head. And as for the Tory's, this isn't an unavoidable budget. We all accept cuts have to be made, but not in the way you're going about it. It's completely the wrong way and after your disasters over the last few years I don't see how anyone can trust them to make sound economic policy. Its an ideological budget, with the facade of being an 'emergency' one so as to soften us up for the horror to come in the spending review.


Liam said...

Nicely written as ever.

Couldn't disagree more though!

How can you criticise them for not being a progressive party and in the same sentence say "the only good part of this budget is what Labour already did". Surely this is the definition of a progressive party, they are willing to accept ideas from a wide cross party range, what Labour already did was the bare bones of a serious budget, never outlining where they would cut, which everybody knows they have to.

Yes VAT is a regressive tax, but it's a tax essentially on luxury goods, it's an extra £11ish on a £500 TV, it's not massive, economists and the public (looking at consumer confidence) said it didn't matter when it went down 2.5%, suddenly it goes up and people go crazy, one day when the government has sorted out Labour's legacy of debt and borrowing it will return to a lower rate.

Chris said...

Obviously we'll have to agree to disagree but what's interesting is no mention of Lib Dem's.

Are you with me in thinking a lot of what they're doing is just clinging to the coattails of power and throwing out principles along the way?

Liam said...

Totally, career politicians at their best.

Quite shocking seeing Nick "Churchill Dog" Clegg.