The Budget: the Liberal Democrat influence

Earlier today the Liberal Democrat Press Office’s Phil Reilly tweeted, “Income Tax cut – from the front page of the @libdems manifesto to the pockets of 25m taxpayers”.

Certainly better to pick from the front page than the back page, as announcing a barcode would have been lacking a little in interest (except, perhaps, to one of my former economics lecturers, who once tried to persuade us that the checksums on barcodes matched up with a warning from the Bible and predicted an imminent Second Coming).

That however wasn’t the only major policy was a distinct Liberal Democrat flavour to it. So too was the news about pensions. As Stephen Williams MP put it, “Proposals for a £140 flat rate pension, together with the Lib Dem commitment of restoring the earnings link, will ensure our pensioners get a fair deal”.

HM Treasury logoBoth of those announcements were unsurprising, but one decision that had been up in the air was over the Green Investment Bank and how much power it really would have. George Osborne’s previous strange absence from the debate was put to rest when he announced a series of pieces of good news on the Green Investment Bank: starting a year earlier, £2 billion more in funds and, crucially, it can borrow. As Paul Waugh put it “Big victory for Cable”, not to mention Chris Huhne and Nick Clegg, who had taken the lead in settling the internal debate over how much powers to give.

Amongst the details was success for the long-standing Liberal Democrat calls for water rates relief in the South West, though overall the details did not add up to a particularly green budget, Green Investment Bank aside. The IFS’s initial analysis is that, “The Chancellor also insisted that green taxes will rise as a proportion of total receipts. This remains the case on current Treasury forecasts, but by the narrowest of margins”. Some of the non-financial measures, such as the new standard for zero-carbon homes, give the Budget a greater overall green tinge than the pure financial numbers show. How deep that tinge is will depend on how measures such as the presumption in favour of sustainable development pan out when the details are settled.

Here’s the email from Nick Clegg to party supporters about the Budget:

Today the coalition government has announced a budget that will return the UK to sustainable and balanced economic growth and which puts helping Alarm Clock Britain at its heart.

We are increasing the income tax threshold by £630 to £8105; lifting hundreds of thousands of low income earners out of paying income tax and putting £126 back in the pockets of low and middle income earners. This is in addition to the last budget that took nearly a million of the lowest income earners out of tax and made millions of hard working individuals £200 better off. We are making a real difference in people’s lives – from the front page of our manifesto to people’s back pockets.

Alarm Clock Britain will be further helped by the measures we have taken to give motorists a fairer deal. We are shifting taxation away from the pumps and onto the broader shoulders of the oil companies instead – with fuel duty being cut and taxation on oil companies rising.

At the same time we are making the wealthy pay their fair share with increased measures to tackle tax avoidance, higher charges for non-doms and a special tax on private jets. This budget also places green growth front and centre – the Green Investment Bank will begin operation next year with £3bn of capitalisation, delivering an additional £18bn of investment in green infrastructure by 2014-15.

We were left a toxic economic legacy by Labour with a record deficit and debt. Under Ed Balls Labour have no answers and solutions to the mess they left. The difficult decisions we have taken in government have rebuilt confidence in Britain’s ability to pay its way, kept interest rates lower than they would otherwise have been, and have provided the stability that business and individuals need to invest in the UK’s economy.

There are no easy decisions in this budget. But we are delivering a budget which will mean that that those who can pay more will; and those who are working hard to make ends meet will get a helping hand. This budget is progressive, green, liberal and what our country needs at this time.

Earlier in the day Danny Alexander took to YouTube to talk about the Budget:

Read more by or more about , , , , , , , , , or .
This entry was posted in News.
Bookmark the web address for this page or use the short url http://ldv.org.uk/23547 for Twitter and emails.
Advert

23 Comments

  • I’m not sure the announcement on zero carbon homes can really lend the Budget a green tinge…the standard has been drastically watered down. Developers are thrilled as it will cost 85% less to build a ‘zero carbon’ home, but sustainabilty experts are livid. They say that ‘zero carbon’ is now a complete misnomer and that the new standard makes a mockery of the ‘greenest government ever’ claim.

  • Everyone seems to have missed that gem from Osbourne about the 10% reduction in inheritance tax if 10% of the estate is given to charity. Work it out, this is a cut in inheritance tax dressed up as charity. Its good for a charity but its also means that the very wealthy will lose less of their estates net.

    I thought the inheritance tax cut was dropped by the Tories in the coalition formation. Were the Lib Dems not against a cut in inheritance tax? Its a joke.

  • In the hour or so budget coverage I heard on Radio 5L I didn’t hear a commentator once refer this as a Lib Dem scheme/success etc.

  • Nick Clegg, please for the love of gods stop this constant Labour bashing. It makes you look petty and does more harm to the Lib Dems in coalition and makes it much harder to argue that they have been a taming influence on the Conservatives.

    We get it. The deficit is bad, we get it it needs dealing with, even Ed Balls agrees on that point. I personally think doing it sooner rather than more spread out, making cuts for a longer period of time and constantly taking money away just as people have already adjusted to having less (a sustained ‘many small cuts’ programme as opposed to a decisive but painful one) is worse than the way it’s being done now, but the fact remains that the economic crash came about as a world wide phenomenon, and whilst Labour must take some blame for their part in deregulation and focus on the financial sector, the fact that we have a high deficit (which only bloomed from 2008) is because they were trying to deal with the recession without causing massive losses to public sector services and jobs at a time when the economy was even less able to cope with it (and whilst public confidence was at an all time low). I seriously doubt any government would have been able to keep the deficit down without massive repercussions in that situation.

    So argue what you will about how the country should be run. I’m with you on the whole need to shift priorities, and that Labour failed to do that whilst in power… I’m with you that the deficit needs cutting and that it’s painful. I believe that had a Labour / Lib Dem coalition been possible then the cuts could have been dealt with slightly better, falling more on the rich than they are, and if the Lib Dems had managed to increase their vote by more than 1% and actually be the stronger party in parliament then this would have meant an even better resolution to the cuts problem. But let’s cut the crap about ‘toxic legacies’ shall we, it just makes you sound like a Tory spokesman, rather than the ‘new, plural, politics’ Lib Dem Leader I believe you actually want still are.

  • “Everyone seems to have missed that gem from Osbourne about the 10% reduction in inheritance tax if 10% of the estate is given to charity. Work it out, this is a cut in inheritance tax dressed up as charity. Its good for a charity but its also means that the very wealthy will lose less of their estates net.

    I thought the inheritance tax cut was dropped by the Tories in the coalition formation. Were the Lib Dems not against a cut in inheritance tax? Its a joke”

    DJ, whats how is this an inheritance tax break? If the 10% is given to charity instead of to taxes then it is still lost to the person with the inheritance, they gain nothing from it, it just means that the charity gains.

    10% to charity, or 10% to tax …. I don’t see any option to keep that 10% anywhere in the proposals, so how does it benefit the inheritor?

    I very much doubt the Lib Dems are against a wealthy inheritor giving 10% (or more, as the policy is worded) of their inheritance to a charity instead of as Tax.

    Of course this will depend on the rules about what charities are eligible for this… and what measure are in place to stop this being abused by people who just set up a charity themselves to pay it to.

  • Oh dear god! Nick is still using Alarm Clock Britian.
    Is there nobody around him that isn’t a yes man to tell him how silly and widely mocked that phrase is?

    The income tax threshold might be a win if it wasn’t for the VAT rise and the decision to uprate direct tax by the Consumer Prices Index measure of inflation, not Retail Prices Index (RPI) from 2012.

    Mid to long term, the longer Libya goes on the more volatile oil prices will be and the news about Portugal tonight raises the spectre of another EU crisis in the Eurozone which might make Eurosceptic Tories happy but will do nothing to help the already downgraded growth figures.

    At the end of the day the Budget headlines and spin are soon forgotten and it’s whether the public feels better off or not. Betting everything on George Osborne’s strategy for the economy was always going to be risky.

  • Whilst I’m ranting. Stop banging on about Alarm clock Britain. I don’t personally want you to be standing for them… they have jobs, they have money, maybe not as much as they like, and there is no guarantee they even care about those who are less well off. Alarm clock Britain can wake itself up, get it’s own coffee and get to work by itself, it doesn’t need your help. If you really want to help them and everyone else as well (who have just as much right to benefit from their government) then help raise the quality of life for those who are poorest. Stand for those people, the ones with no homes, with no money, no prospects and no hopes. The ones who don’t believe they can get an education who have been disenfranchised by the majority of ‘Alarm clock Britain’ and by the systems of society. Stand for these people and help them integrate and be a part of Alarrm clock Britain themselves. And stand against those who take advantage of anyone else. Stand against fear and scapegoatism, stand against the tax system allowing the wealthy to pay less as a percentage than the worse off, and stand againsst companies that have no regard for employee welfare or advancement.

    Alarm clock Britain already has their alarm clocks. How about stop-watching them and start-watching out for those that really need you.

  • Liberal Neil 24th Mar '11 - 8:53am

    @Alex – much as I agree with you in disliking the ‘Alarm Clock Britain’ phrase, the underlying point, that many people working on fairly low incomes are struggling, is a valid one.

    For example, during the last few years, nearly the entire growth in children living in poverty was in working households.

  • The Lib Dems seem to have supported using CPI to raise tax thresholds in future. This is going to wipe out all the gains from raising personal tax allowances. Some Lib Dem victory then. I wouldn’t be bragging too loudly about it.

    As for the carbon price floor – that’s nothing more than a handout to the nuclear industry.

    Apart from an “Enterprise Zone” in Sheffield, and some help to Lib Dem constituents in the South West with their water bills, what the hell can the Lib Dems really claim from this budget?

    Even Danny Alexander’s fuel price “victory” is wiped out by the increase in VAT. It’ll be forgotten in a week’s time.

    It seems (certainly by the look of this website) that the Lib Dems have left policy to the Tories and are pinning all their hopes on the AV referendum.

    Oh dear.

  • Liberal Neil 24th Mar '11 - 4:40pm

    @Fiona – using CPI to raise thresholds in the future doesn’t wipe out the impact of raising the basic allowance for most taxpayers if the basic threshold keeps rising towards the £10K level. In fact the vast majority of taxpayers will continue to be better off with only those at the top end losing.

  • “We are increasing the income tax threshold by £630 to £8105″

    A small raise in the tax threshold is subverted by VAT rises and other cost increases (inflation outstripping earnings/benefits. It may sound nice for a very short period of time but it won’t make a blind bit of difference people will still feel a lot worse off.

    I thought Ed Milliband captured the feeling with “Every Tory tax cut ends up costing people more!”

    Clegg says “Alarm Clock Britain will be further helped by the measures we have taken to give motorists a fairer deal. We are shifting taxation away from the pumps and onto the broader shoulders of the oil companies instead – with fuel duty being cut and taxation on oil companies rising.”

    He obviously hadn’t heard the numerous reports that petrol stations had upped their prices just in time for the budget by no less than…… 1p. I wonder where they got that figure from.

    Anyway, do we LibDems not care about the environment anymore? I know the Tories don’t but us? When did this happen?

    I actually despair at what’s being done to our party and what we’re happily putting our name to. Yes, I know there are a tiny minority of Mont Pelerinists (this translates into Thatcher/Reagan/Pinochet type liberalism) but how has our party come to be represented as this monster with no care for those who are poor, disabled or unemployed. We’re suggesting that employee rights should be weakened to boost growth albeit straight out of Osborne’s mouth yet we know that this has not worked in the past.

    For that reason, Labour are actually better than us because at least they appear to care for the groups of people needing support.

  • @Liberal Neil

    “….using CPI to raise thresholds in the future doesn’t wipe out the impact of raising the basic allowance for most taxpayers if the basic threshold keeps rising towards the £10K level.”

    Yes, but this tax rise is subverted by the VAT rise, inflation/wages, benefits cut, etc, etc, etc.

  • From http://www.telegraph.co.uk/finance/budget/8401761/Budget-2011-using-CPI-to-calculate-tax-explained.html
    “The biggest hit will be on National Insurance. From April 2011, National Insurance is payable on anything above an annual salary of £7,748, at the rate of 12 per cent. So for someone earning £12,000 their national insurance bill will be £572.64.
    If the Government had stuck with RPI, their bill would be £510.24 next year. But Blick Rothenberg, the accountants, estimate that it will increase to £547.68, if the threshold increases in line with CPI — a £37.44 higher bill than otherwise it would have been RPI.”

    As I said, wiping out any gains, along with (as others have pointed out) VAT and inflation, and benefit cuts.

    Well done the Lib Dems!

  • Suggest you check out the excellent letter by Tony Greaves in today’s Guardian (it’s also on their website) about the changes in planning rules and their potentially disastrous environmental (and political) consequences. They also make an utter nonsense of “localism”!

  • MacK (Labour) 25th Mar '11 - 9:46am

    So, Osborne and Alexander raise the tax threshold and give the peasants £45 a year (less than a pound a week) more if they’ve got a low paid job. Yet the Institute of Fiscal Studies estimates that the recession is reducing the average houshold income by £360 a year. And then, of course, there are all those who haven’t got a job or any prospect of a job. Meanwhile, greedy bosses and capitalists get huge cuts in Corporation Tax. This must be the Liberal Democrat influence I suppose.

  • I seem to remember everyone banging on about Stealth Taxes. Seems there are a few hidden away

    http://blogs.channel4.com/factcheck/fuelling-the-treasury/6051
    http://www.guardian.co.uk/uk/2011/mar/23/osborne-accused-of-stealth-tax

    and of course not forgetting robbing pensioners of £100 a year from their Winter fuel allowance.

  • ““We are increasing the income tax threshold by £630 to £8105″

    A small raise in the tax threshold is subverted by VAT rises and other cost increases (inflation outstripping earnings/benefits. It may sound nice for a very short period of time but it won’t make a blind bit of difference people will still feel a lot worse off.”

    The extra £1000 increase announced last year also comes in to effect from April 2011. So that’s now an increase of £1630 in personal allowance – or £326 a year – or £27 a month.

    To wipe out just the £1000 tax threshold increase you would have to spend over £650 a month, or £8,000 a year on top VAT rated items. I personally think if you’re spending £650 a month on top vat rated items then you are not amongst the people that the raise in threshold is meant to help out.

    I agree that the financial situation in this country, including and especially, inflation, is making the benefits of raising the personal threshold a lot smaller in real terms, but it is still the right thing to do. Eventually we will be in a different economic climate, and making people on lower incomes pay less, and people on very small incomes pay much less, in income tax is right to do in any financial climate.

    Remember Labours last raise in thresholds was accompanied by, and to help mitigate, the removal of the 10% tax band.

  • The elderly are being hit hard by this budget especially in the way that the over 65 tax allowance differential vis a vis the personal allowance is being eroded.

    Then there’s the ‘secret’ cut in the Winter Fuel Payment to over 65s and over 80s – that really could be a killer.

    On top of all this the miserly interest rates being paid on savings means real pressure for many retired people who probably thought they had got their retirement ‘sorted’.

  • And then, of course, there’s the extra 3 per cent of income that public sector workers will be paying on their pensions.

  • Seem that Nick Clegg isn’t on message.

    His gaffe where he was caught saying he ” would have nothing to disagree with David Cameron on” – Well he was a Tory at University so maybe that’s why ;)

    Now he seems confused about Winter fuel payments and trying to spin his way out. http://www.bbc.co.uk/news/uk-politics-12866465

    On another note we had the local Lib-dems canvassing this morning asking if they could put a poster up again. Told him it wasn’t at all likely….

  • Margaret Jensen 28th Mar '11 - 8:28am

    Winter fuel allowance? How very discreet of the chancellor not to mention in his budget speech that the winter fuel allowance will be cut by 25% for the over-80s and 20% for the over-60s. With the increases in oil,gas and electricity prices there should be a quantifiable rise in the “pensioner” mortality rate next winter. Worth comparing with Scandinavia – harder winters, lower mortality rates, better pensions.

  • I know this is little to do with this thread but ——— I have searched this site for any discussion of the massive anti government march on Saturday and I can find nothing. Is it my incomptenet use of the search engine or are you really unable to even mentiuon the massive anti lib dem feeling of half a million protesters. To think, not long ago, before you became the establishment, you would have been out there too. I speak of one of many people in the South who voted Lib Dem and will never do so again

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • User AvatarRoland 28th Nov - 2:22pm
    Jonathan - I'm not sure if I am misinterpreting the result, merely trying to shed some light on the thinking behind a particular group of...
  • User AvatarWilliam Summers 28th Nov - 2:20pm
    A blog post on whether or not you should have done a blog post on another blog post. Political blogging has finally eaten itself!
  • User AvatarPeter Watson 28th Nov - 2:20pm
    @Paul Walter "Nick Clegg is a great leader and it would be most unwise to ditch him this side of May next year." And the...
  • User AvatarDavid Evans 28th Nov - 2:19pm
    As Jo Grimond said ...
  • User AvatarDavid Evans 28th Nov - 2:19pm
    @Denis Loretto - As Jo Grimond, liberals should be on the side of the governed, not the governing. Nick's unwillingness to do this when in...
  • User AvatarManfarang 28th Nov - 2:16pm
    Tez “Without education, we are in a horrible and deadly danger of taking educated people seriously.” As I said get to the library.