Nick & Vince’s Budget 2010 response in full

Missed the Budget? Well, you didn’t miss much. But if you’re wondering what the Lib Dems have to say about it, then look no further.

First up, here’s Vince’s instant vdieo response:

(Also on YouTube here).

And now for the detail, as provided by Nick Clegg’s instant response to the Commons after Alasdair Darling’s budget statement:

Mr Speaker, this Budget has been billed as the preface to the Labour manifesto. Based on what we have seen today. It won’t be a manifesto but an obituary. The Prime Minister may have wanted a “giveaway budget”. What we got was a “given up budget”.

This is not the preface to a new government but a footnote to 13 years of failure. After 13 years, the gap between rich and poor has widened. The poorest 20% pay a higher proportion of their income in tax than the richest. We have had the most prolonged recession since the 1930s. And the spectacle of state-owned banks doing deals to put British people out of work. We need real change. We needed a budget that gave us honesty in spending and fairness in tax. We got neither.

The battle we have just seen between the Chancellor and the Leader of the Opposition was a depressing spectacle. A phoney war to cover up the fact that they are both the same:
Neither has the courage to come up with details of the cuts we need to tackle Britain’s deficit. Neither is being straight with people about the tough times ahead. This budget was a budget in denial about the scale of change needed. About as honest as the CV of the rt hon member for North Tyneside. It is built on growth figures that are unlikely to materialise. It is built on false comfort from a small drop in borrowing that doesn’t affect the structural deficit. And above all, it is a budget in denial about the cuts needed. We have had just waffle today.

And on the other side of the chamber we have had tough talk about the need for honesty. When they have barely a fig leaf of detail to back up their claims. They say we need more than £40bn of cuts by the end of the next Parliament. But have published details about just £2bn. Their demands for honesty come straight from the Karl Rove school of politics: make the biggest fuss about the subject where you have the most to hide.

Labour is in denial. The Conservatives are talking tough to cover the truth: they offer more of the same. We needed a budget that gave us honesty in spending and fairness in tax. We got neither.

Liberal Democrats have put our cards on the table. We have identified a first instalment of £15bn of cuts that can be realised by 2012-13. Saving half a billion a year by ending government contributions to Child Trust Funds. Saving 1.3bn a year by stopping means-tested benefits for the top 20% of tax credit claimants. Cancelling ID cards and second generation biometric passports, saving two and a half billion over the next Parliament. And making longer-term savings too, by saying no to the like-for-like replacement of Trident. Savings which we will need to start implementing once the economy is strong enough to take the strain. The Chancellor could have made some of those choices today. So could he. But what do we hear from both of them? Nothing. Lots of noise and no honesty whatsoever.

Mr Speaker, one of the government’s most shocking sleights of hand in recent months is to try to duck blame for the recession. Yes, there were global forces at play. But most of the problems started here at home. The over-dependence on the banking industry. The personal debt bubble encouraged by this government. And the over-inflated housing market, which Labour did everything in their power to stoke up. The Stamp Duty reforms today of course we welcome any steps to make it more progressive. But with 1.8m families on the waiting list for an affordable home it is staggering that there was nothing on affordable housing. And he has added this with a change to housing benefit that will make life impossible for families in high price areas like London.

Labour should stop trying to kid people about this recession. They got us into it. Only by being honest about how we got into this mess will we ever be able to get out.

Let me turn to the details of today’s budget.

The Chancellor has slightly reduced his growth forecasts against a consensus everywhere else of 2.1%. The Chancellor has spent a good portion of his speech boasting about the money he claims to have “saved” on unemployment costs and unexpected higher tax revenues. He is living in a fantasy land. This government still came in £167bn over budget last year. That is no record to boast of. Someone living off their credit cards, thousands of pounds in debt. Is not suddenly flush with cash just because his phone bill comes in cheaper than he predicted. We are not better off. We are just ever so slightly less worse off.

Even with unemployment lower than originally forecast we still have more than 2m people unemployed. And 8m economically inactive. It is sensible at a time of mass unemployment to direct money into infrastructure and jobs. I only wish the Chancellor had had the courage to make cuts elsewhere to fund this package instead of borrowing the money.

On fuel duty, I note the government’s decision to stage increases, but they are missing the point. There is a fundamental problem with fuel duty in rural areas where using a car is not a luxury but a necessity. The real priority should be help for rural areas, not just a reprieve.

One of the most shocking omissions from this budget, however, was the failure to address the systemic failures in our banking system. We bailed out the banks to the tune of a trillion pounds. And they are hoarding that money instead of lending it. Killing off sound businesses and people’s jobs. The banks are even helping support deals that put British people out of work. Like the Kraft take-over of Cadbury. The failure to get the banks lending is the absolute centrepiece of the government’s economic mismanagement.

The Chancellor today promises new bank lending targets but why should anyone believe a word he says after what happened last time he made promises like this. RBS and Lloyds were told to increase net lending by £27bn. Instead they decreased net lending by £41bn. Moving to gross rather than net lending targets is a con that will let the banks off the hook again.

The government must now recognise that its heavy pressure on the banks to rebuild their capital bases is limiting bank lending and threatening the health of the economy in the longer term. The banks end up hoarding money instead of lending it. The priority for the nationalised banks in particular should be putting money into the real economy, not into their balance sheets.

Turning to bankers’ bonuses. The government raised more money than it had expected from its tax. But that is because the banks refused to change their behaviour. It is amazing how much the banks are willing to pay to get back to business as usual. A decent budget would have set out a plan to make sure they never do.

We must ensure the high street banks on which families and small businesses depend are never again put at risk by the casino culture of investment banking. As the governor of the Bank of England has repeatedly recommended, we need to separate high street and investment banking for good.

Until this split can be introduced, the banks – all banks – will remain the beneficiaries of a unique, open ended guarantee against failure from the taxpayer, a guarantee they should have to pay for. That’s why last year we proposed a new levy of 10% on the profits of the banks until they can be split up. I will give the Chancellor credit for consistency – he has always opposed our plan. While the Conservatives ruled it out. Then ruled it in. Only for their proposed bank tax to fall apart in less than 24 hours.

Both parties are wrong. Britain is unique in the world in terms of the liabilities of our banking industry and our lack of access to a reserve currency. We do not have the luxury of time: we have to protect ourselves against a future collapse.

Mr Speaker, the other gross disappointment in this budget was the failure to make our tax system fair. Under Labour, the bottom 10% pay a staggering 48% of their income in tax while the richest pay 34%. How can he look at a system like that and say: Let’s have more of the same.

A fair budget would have transformed our tax system from top to bottom. Liberal Democrats propose the most radical tax reform in a generation. Hard-wiring fairness into Britain’s taxes once and for all. We will ensure no-one pays tax on the first £10,000 they earn, paid for by closing loopholes that unfairly benefit those at the top, a mansion tax and higher taxes on aircraft. That would mean complete freedom from income tax for 3.6m more low earners and pensioners. And £700 in the pockets of tens of millions more.

And crucially, it would be a downpayment to the British people who are about to take the brunt of the biggest fiscal contraction in post-war history. A declaration of intent: yes, there will be change, but we guarantee it will be fair. Action on tax is the only way to ensure we can take people with us down the difficult road of deficit reduction. Only the Liberal Democrats are prepared to make real changes in tax to help the millions of people who simply need a break.

Mr Speaker, after 13 years of Labour, Britain is ready for something different. As we stand on the brink of an election campaign where everything is to play for. Where the future of the country is at stake. My message is simple. This budget is the old politics. And the old politics is not good enough any more. It is time for honesty in spending. It is time for fairness in taxes. The only party that offers both is the Liberal Democrats.

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One Comment

  • That is a poor quality video, as the YouTube comments say. Vince is 100% correct, of course, but surely the format could be improved?

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