Autumn Statement: the good, the bad and the ugly

So, the Chancellor has given his Autumn Statement. Liberal Democrat reaction is likely to be at best mixed. Will people feel that the balance of tax and benefit measures is sufficient to support our claims that we are making the system fairer?

Osborne painted a fairly gloomy economic picture. The growth forecast is under 3% for the next 5 years. Austerity will continue way beyond the next election. It’s in that context that his measures must be judged.

Let’s take a brief look at the key points from a Liberal Democrat activist’s point of view:

The good – Lib Dem gains

Steve Webb’s Pension Triple Lock has ensured a 2.5% rise in the State Pension, more than earnings and inflation.

The tax threshold edges closer towards £10,000 as a further £235 rise is given from next April. In fact, we’re now at the point of no return. Because of legislation passed in the 1970s, I understand that the tax threshold has to rise to £10,000 by 2015. If we push really hard, it might happen before then. The additional rise today was a big surprise.

No removal of Housing Benefit from under 25.

No plan to remove benefits for the third and subsequent child.

Fuel duty rise planned for January cancelled. Environmentalists won’t like it, but it’s the only fair solution for rural areas where you have no choice but to drive because public transport is as good as non existent. I know that some people would put this in the “Bad” section, but I’m a highlander. And so is Danny Alexander. Tim Farron was also very vocal in calling for  this measure.

Under Labour, a higher rate tax payer could put £250,000, a cool quarter of a million quid, every year, with tax relief, into their pension fund. Thanks to the Liberal Democrats in the Coalition, that’s been reduced to just £40,000.

Significant resources going into tackling tax avoidance.

The bad

Benefits will rise by only 1% for the next 3 years. If the reports in the press were right, the Tories wanted to freeze them. I am not sure cutting the spending power of people who have nothing is justifiable, particularly as higher rate tax payers will get the benefits of the extension of the tax threshold.

The rise in the tax threshold has to be taken with the effective cut in tax credits, which only rise by 1%. Tax credits are payable to poorer people who are in work, so cutting them does not seem to be consistent with the aim of making work pay.

No Mansion Tax. Osborne’s justification, that it would be intrusive, expensive and, get this, might encourage a future chancellor to bring in more properties to its scope, was greeted with Nick Clegg rolling his eyes and grimacing to indicate disagreement.

Departmental budgets cut, but this is to include more digital engagement. That requires technology that many poorer people may not have access to.

The ugly

I expect many Liberal Democrats will be squirming at the language used by the Chancellor to describe benefit claimants. He talked about people getting up in the morning to go to work, while their neighbour on benefits is in bed. People are bound to feel that this language encourages scapegoating and resentment. It is to be hoped that no Liberal Democrat will use this form of language. Tim Farron has promised that he won’t, but then I wouldn’t have expected it of him anyway. Stephen Williams MP was very categorical on Radio 5 Live today in saying that this was Conservative language, and wasn’t what Liberal Democrats would use. My point is that in a joint Government statement, nobody should be saying these sorts of things.

The rest

Other measures in the Statement include:

  • a cut in the Corporation Tax famously not paid by large corporations such as Starbucks, Google and Amazon
  • action at an international level to try to change the way such corporations pay their taxes
  • £3bn extra for schools, roads and infrastructure investment (the Scottish Government will receive £331 million in Barnett Consequentials)
  • Ultra fast broadband extended to 12 more cities.

It’s a very mixed bag for Liberal Democrats. What do you think?

* Caron Lindsay is Co-Editor of Liberal Democrat Voice and blogs at Caron's Musings

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38 Comments

  • Richard Dean 5th Dec '12 - 2:25pm

    Yes, but the context is discussable too. Growth is less than they planned for, and will be, and maybe that’s partly their fault. On fuel duty there would have been other ways to resolve rural problems. Mansion tax would have been unworkable and unhelpful. A budget in which fault is hidden and nothing much is changing, except for the worse.

  • Paul Pettinger 5th Dec '12 - 2:35pm

    Nick Clegg has asked to be judged on the economy, and despite accounting for the Euro zone troubles, the Government’s economic policies are failing.

  • Benefits are supposed to a safety net based upon someones needs. Surely either they are set incorrectly or they need to be indexed linked ? If the accommodation, goods and services needed to meet the claimants needs increase in costs then surely so must the safety net. Tories know they would lose the argument of the level of benefits so have gone for a different approach….

    Of course the Tory press has people believing that anyone on benefits is a scrounger earning more than the CEO of Shell so this will be a broadly popular measure…..

  • liberal neil 5th Dec '12 - 3:18pm

    As someone who will gain from the tax threshold increase but lose from the tax credit cuts I’m quite happy, even if the net gain is small.

    It seems barmy to me to pay the system costs of collecting tax to then give some of the money back to broadly the same people through another costly system. Far better to just take less tax in the first place and reduce the cost of two systems.

  • Simon Beard 5th Dec '12 - 3:21pm

    To be honest I don’t mind whether we get the Mansion Tax, LVT or something else, but I do think it is vital that the Lib Dem’s get SOME concession towards the principle that extream wealth can and should be taxed, not just income. If we cannot secure this by 2015 then I feel it will be a genuine political failure on the part of our senior ministerial team, not least because it is so central to the moral justification of the Clegg – Reeves – Laws project.

  • jenny barnes 5th Dec '12 - 3:24pm

    Qt it’s the only fair solution for rural areas where you have no choice but to drive because public transport is as good as non existent.”

    So people on low incomes pay more tax because we think rural car drivers shouldn’t? Lets see. Cycle more, Travel less, Drive slower. Move nearer your job. Use remote tech/ virtual working.

  • A kind assessment would be a ‘workmanlike budget’. Less kind would be ‘tinkering at the edges’

    The modest increase in infrastructure spending is to be welcomed as is the support for smaller manufacturers.

    What is missing is any real vision of how to crank-up domestic economic activity. No big affordable housing or job creation programs while public sector borrowing costs are at a historic low. Corporation tax reductions have yet to stimulate any significant acceleration in investment and there appears little sign, as of yet, that they will.

    No Mansion Tax. Fair enough, but where was the change to site value rating for council tax and business rates, with additional council tax bands. This might have encouraged a future chancellor to rightly redistribute the tax base more equitably between income and wealth and address the alarming inequalities that have developed in both income and wealth distribution in the UK.

  • Matthew Huntbach 5th Dec '12 - 3:48pm

    Caron Lindsay

    I expect many Liberal Democrats will be squirming at the language used by the Chancellor to describe benefit claimants. He talked about people getting up in the morning to go to work, while their neighbour on benefits is in bed. People are bound to feel that this language encourages scapegoating and resentment.

    Yes, it is disgusting. My wife was out of work for three years because for almost every job she applied for she was told (in most cases implicitly, but a couple of times explicitly) “oh, you are far too qualified for this job, you’ll be able to walk into another”. The jobs going at her previous level were few and far between and almost always went to internal applicants with the public advertising just a token – this is what tends to happen when recruitment is frozen. This is someone who is a skilled administrator whose work has always been regarded as excellent by all who have employed her, and in her spare time was Chair of governors of a local primary school, turning it round from in danger of slipping into special measures into top of the Borough League table.

    There AREN’T the jobs. Maybe there are the jobs for posh white males like Osborne, but if they don’t realise how hard it is for anyone to get work if you don’t have the informal posh white male network they have, and the wealth and contacts to build your own business and the like, they need to learn it.

    What he doesn’t say is those “in bed” are most likely paying most of their benefits in rent to private landlords. Who may well also be in bed doing nothing but getting richer thanks to having had money in the first place to be able to buy up property and let it out.

    When I was a councillor I dealt with people who would come into my surgery weeping because of the high level of benefits they got. They would FAR rather have been on lower levels of benefits with lower rents, but were not due to council housing no longer being available. They were weeping because this left them in a trap – their high rents meant they could NEVER earn enough to pay them from wages, so if they went out to work it would be for nothing because what they earned would be lost in reduction of housing benefit. If their rent was the modest levels of council house rent, the sort of job they could see themselves getting would pay enough to cover the rent and leave a little left over.

  • Raising the income tax threshold is a good thing and should not be knocked, but it does need putting into perspective and acknowledged that we have rising numbers of people in part time employment and over 3 million people classed as under-employed.
    To many of these people, the rise in the income tax allowance is meaningless as they are not earning enough to pay income tax in the first place.
    The well off and high income tax earners also benefit from this rise in personal allowance.

    It is therefore very gross to hear the government using language like Osborne when he talked about people getting up in the morning to go to work, while their neighbour on benefits is in bed. This coarse language just adds fuel to the scapegoating accusing everyone on welfare as being scroungers.

    The Libdems were obviously successful in preventing the Tories from cutting welfare or even freezing, but I do worry that with inflation rising the way it is, the cost of living sky-rocketing a 1% increase in benefits is going to hit a lot of families who are already struggling very hard indeed.

    I would like to see Liberal Democrats in government condemning Osborne language towards those on welfare, it is irresponsible, especially since it will be repeated over and over through the news and media.

  • Nick (not Clegg) 5th Dec '12 - 5:55pm

    “He (Osborne) talked about people getting up in the morning to go to work, while their neighbour on benefits is in bed.”

    Actually it was worse than that. As I recall it, he described someone setting off for work and seeing their neighbour, on benefits , still asleep. One does not see one’s neighbour asleep, unless he is sleeping on the street (i.e. homeless).

  • Ruth Bright 5th Dec '12 - 6:07pm

    Caron – you are quite right about the unpleasant tone regarding claimants. My brother often has the curtains drawn in the morning because he is sleeping after his nightshift working at a psychiatric hospital. I hope he doesn’t get a brick through his window thanks to some aggrieved person inspired by yet another “call to arms” on behalf of alarm clock Britain.

  • The ugly is actually the continued economic failure of Osborne’s gamble.

  • A lot of people at the lower end of the pay spectrum are dependent on public transport. I therefore do not feel the cancelling of the fuel duty rise can be acclaimed until a corresponding halt on public transport cost rises.

    I read the article on the front of today’s Metro about people having to walk miles to get food from food banks. Many apparently are in work. Times are grim under the coalition, even for those in work. The LibDems, have alienated some of their core support in the public sector and as a lifetime supporter and civil servant( at least until the next cuts bite), it is extremely unlikely that I will be inclined to vote LD again.

  • Peter Hayes 5th Dec '12 - 7:44pm

    We have to describe things as they are – support for housing costs is buy to let landlord subsidy, family income supplement is less than living wage employer subsidy.

  • Peter Hayes 5th Dec '12 - 7:48pm

    Why the f… does this thread have an advert for Brighton inheritance tax. Do we have to depend on support from tax avoidance companies.

  • Keith Browning 5th Dec '12 - 11:26pm

    History says that companies who successfully turn things around, usually achieve the miracle by addressing a ‘thousand ‘small things that can be improved immediately, rather than a few ‘grand designs’, that takes years to plan and probably will never be completed. The problems are today and yet all the solutions presented by the politicians are grand in nature and all about tomorrow.

    Spend the £5 billion on finishing jobs that have been mothballed, make small scale improvements in thousands of schools, and on thousands of railway and bus routes. Speed up the existing infrastructure projects by adding more resources.This can be done in days and weeks, not years and decades.

    The effect of this approach would be almost immediate, reach all parts of the country and mean that no-one felt left out. It seems so obvious – why can no-one in Westminster see it. Small is beautiful…!!

  • Keith Browning,

    The words of the bard may be instructive when we face uncertain times that call for bold action:

    There is a tide in the affairs of men
    Which, taken at the flood, leads on to fortune;
    Omitted, all the voyage of their life
    Is bound in shallows and in miseries.
    On such a full sea are we now afloat,
    And we must take the current when it serves,
    Or lose our ventures.

    Julius Caesar, act IV, scene III.
    WILLIAM SHAKESPEARE

  • Please can someone advise me! I have been bedbound in my bedroom for four yrs due to my spine , two major ops and i still cant walk. I have no support, i see daylight only when the ambulance takes me by stretcher to appointments. I only ever see a doctor and nurse as when you end up disabled, all the friends leave you so i dont have visitors. I have no disabled facilities and have to sit with my toilet seat down with a pillow on to eat my meals as i have no proper chair, i can only sit for a few mins. I cant get a wheelchair in as there is no space to wheel one in here. I dont have tv and i have to just lie here with my radio. Im crying as its the first time i have admitted im disabled. I have been too proud for too long. Does anyone know who i can contact as im in great need of help to maybe get put in a bungalow. Im not old neither! When a occupational therapist came they gave me a pick me up and nothing else. I have no where to wash as i cant get in the bath plus the toilet is wedged against the bath. I have not put in for disability benefit as i was praying my last op would work. Im scared and on top of that im caring for someone with learning disabilities and i get carers allowance. What happens if my benefit gets stopped next year. Im in a lot of pain and im so scared and dont know what to do. I am thinking of ending my life as i cant take this room for one more year. My life is rubbish. Im sorry but that osbourne has really upset me, no i dont sleep all day, not my fault im bedbound, i can walk 8ft and thats my lot. My eyes are suffering due to the dim light in here and i have to take massive doses of vitamin d as it gets nothing due to being in here for four yrs.

  • Martin Pierce 6th Dec '12 - 8:12am

    Joe Bourke – so…. time to kill Caesar! And Deputy Caesar at the same time?

  • Martin Pierce 6th Dec '12 - 8:14am

    We may get all sanctimonious about Osborne’s description of benefits claimants, but the ghastly Alarm Clock Britain implied exactly the same thing

  • Keith Browning 6th Dec '12 - 11:54am

    @ Joe Bourke

    ‘et tu Boris et Vince..!!’

  • Tony Dawson 6th Dec '12 - 5:06pm

    @jade

    “Please can someone advise me!”

    Jade,

    because you are disabled, you are entitled to a full multi-disciplinary inter-agency assessment of your needs for support: email your local social service authority asking for this, explaining your situation fully and openly copy in your MP’s office and your local ward councillors.

    You should consider making an application for disability grants/benefits: clearly this is depressing if you had hoped to improve but if your prognosis is poor you deserve appropriate financial support.

    I do not see any reason, from what you have put in there, why you should lose any benefits next year or any other time.

    You might also seek more local advice from CAB/welfare rights people in your area.

    Tony Dawson

  • Once again the Tories are hammering the poor and letting the rich get off lightly.
    It is not so much Osborne’s language as tohis attitude and we have not stood up and roundly condemed it.
    Petrol prices not being put up is useful especially for thos living in rural areas where they need their own transport to get to work because of inadequate and costly local bus services. Also the increase in tax allowance but the increase in food prices gas and electricity has gobbled up all of that before it is even introduced.
    Cuttin benefits for the least well off is not an answer especially to the people that are in work and trying to keep their heads above water. The vast majority of people who are out of work are there because there are not jobs available not because they dont want to work. Cutting back on their benefits does not help the situation.
    The Chancellor has created a new Green Investment Bank forward thinking one might say but then he then says that they cannot borrown money which could hgave been used for investment in various green projects like wave power till the national debt is falling. How many of us will be alive to see that day??
    We have companies saving millions in tax and there is little or nothing being done to rectify this. Groups like Amazon
    are saving millions. He could have slapped a sales tax on them which would have brought in millions.
    The little investment that Osborne has put in is welcome but as usual to little and to late , he worries about our triple A rating with companies that rated junk bonds as worth having. Would you want your house rated for fire safety by a pyrotechnic maniac.
    If he had the courage a good dose of Keynesian economics would move things on. Investment in our ageing infrastructure would put people backinto work money into local shops and above all taxes into the exchequer.
    I live more in hope than antisapation

  • Helen Tedcastle 6th Dec '12 - 6:28pm

    I agree with Liberal Eye and others who have condemned Osborne’s language to contrast those on benefits ‘sleeping’ while ‘strivers’ go to work and see closed curtains next door. It was a deliberate move to whip up resentment, even scapegoating of the poorest and/or those looking for work.

    Osborne’s attitude reminds me of the worst rhetoric of the Thatcher years – it’s disgusting and Lib Dem Ministers should condemn it explicitly and risk the false ire of the Tories. Just saying ” I wouldn’t use that language” lets Osborne and his ilk off the hook. Divide and Rule tactics have been used by Gove aswell in Education since 2010 and the top of the Party only (apparently) woke up to it quite recently.

  • “He [Osbourne] talked about people getting up in the morning to go to work, while their neighbour on benefits is in bed. People are bound to feel that this language encourages scapegoating and resentment.”

    It may be my imagination but I’m sure I’ve heard Nick use similar phrasing. It was linked in to the “Alarm Clock Britain” phase.

  • er, so what do people suggest we do about the people (I see them regularly) who would rather live off the efforts of others, rather than bother to do some work themselves?

    And many of these people were equally feckless and idle when every second shop or cafe in town had cards in the window seeking staff.

  • “er, so what do people suggest we do about the people (I see them regularly) who would rather live off the efforts of others, rather than bother to do some work themselves?”

    Something that doesn’t involve penalising the majority of people who don’t fall into that category.

  • Crewegwyn,

    “er, so what do people suggest we do about the people (I see them regularly) who would rather live off the efforts of others, rather than bother to do some work themselves?”

    Three things:

    1. Citizens Income tax credit of £61.50 per week.
    2. Minimum Wage Job guarantees
    3. Council house tenancies, housing and other benefits available only to the employed, disabled and needy pensioners.

  • Thanks to our Lib Dems in government for securing a small 1% increase in our safety nets. While taking into account rising prices it will be a small cut, it is much better than nothing. Our struggling strivers need the safety net.

    The jobseekers allowance, currently £71 per week for unemployed nurses and other professionals, will go up by 71pence. This is small change that makes a big difference – for example, not having to cut all fruit and vegetables from your diet.

    Im informed that bills such as the electricity bill, will rise by 9.9%. Gas bills will rise by 6.3%. This is still a smaller rise than the last few years.

    Could the government take action to limit price rises in electricity and gas bills in the same way as it has to our struggling strivers? This would make these cuts fairer, and also help others to heat their homes adequately.

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