Opinion: A budget to make us angry

Frankly, this Budget is ghastly. There are some consolations such as progress towards the 10k tax allowance, but overall it’s awful.

I don’t blame Labour for everything. While they made mistakes, they were right to bail out the banks. And it is true that most of the pain is due to the international economic crisis.

But Labour did make this crisis worse. After a few years of financial restraint, they flooded public services with money. They should have increased the spending more gradually, and coupled it with reform to improve productivity. Instead, productivity fell. This isn’t hindsight, the point was made at the time: there was so much money going in that the departments didn’t know how to spend it.

Former NatWest chief executive Derek Wanless wrote a report in 2002 on the NHS. He said: “Money on its own is not enough and provides no guarantee of success – it is essential that resources are efficiently and effectively used. Resources and reform must go hand in hand – both are vital. Neither will deliver without the other.”

But reform didn’t happen.

The NHS has dodged the bullet of real-term cuts for now.

Instead, welfare provision to the poor will be hit. I hate this. But when we are borrowing one pound for every four that the state spends, excruciating pain is unavoidable.

If Labour had kept close to a balanced budget during the boom, that would have helped in three ways:

  • If their deficit in the good years had been less than £10 billion, rather than £40 billion, that’d mean £30 billion less of cuts now.
  • The private sector would have been larger, and would now be better placed to take on new employees at a time when the public sector has to be cut back.
  • The financial markets would have had more confidence in our ability to handle our deficit, which would have reduced the need for drastic cuts to keep market confidence.

Some on the left seem to think that a budget deficit is a progressive policy. Far from it. It takes from future generations to pay the bills of today’s. Britain will be poorer over the next few years, which means that Labour’s deficits from 2003 were Robin Hood in reverse.

I’m also angry with Labour for their use of government policy to wrong-foot the opposition.

Were their authoritarian policies primarily driven by a desire to reduce crime or terrorism? In my opinion, they were not. Their main motivation was to paint the opposition as being soft of terrorism.

With similar opportunism, they refused to prepare the public for the budget pain that would be necessary. In an opposition political party, such reluctance would be understandable, in a government, it was irresponsible. A year ago, both the Lib Dems and Conservatives spoke of the seriousness of the budget crisis. The government did not do the same.

Labour claimed that it was economically necessary to delay a public spending review until well after the election. I don’t believe them. A review, even if it was describing projected cuts in a years time, would have reassured the markets that the government was serious about tackling the deficit. Such reassurance would have meant lower interest rates, and lower rates for government borrowing. Instead, they did no more than the opposition parties, and vaguely spoke about £44 billion of efficiency savings.

Labour claim that they would have waited until 2011 before cutting. Again, I do not believe them. Once the election was out of the way, they’d have claimed the international situation had changed and started cutting right away, and cutting savagely. Their calculation would have been, better to cut four years from the next election than three years.

So, no. I don’t blame Labour for the whole economic crisis. They didn’t create the catastrophe. They just made a terrible situation, somewhat worse. And now they are trying to make political capital out of a situation that they are, in some part, responsible for.

That’s enough reasons to be angry.

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  • Andrea Gill 24th Jun '10 - 3:18pm

    Hear, hear… almost closed my browser thinking “Uh-oh, tabloids will have a field day with this one” until I read on… 😉

  • George Osborne, David Cameron, Nick Clegg and Danny Alexander come up with a budget that you describe yourself as ghastly and your response to it is to write an article in LDV saying how angry you are at the Labour Party for the budget your party is supporting.

    Maybe you’re right, Maybe Alastair Darling would have delivered a similar budget, maybe he would have cut hard on the poorest in society as the Coalition have done. I cannot prove that he would not have if Labour had won the next election. But I know that if he had I’d have ripped up my Labour membership card and probably joined a party like the Liberal Democrats who I thought believed in fairness. It would have been a betrayal of the Labour movement for Darling to have delivered Osborne’s budget and would have destroyed the Labour Party forever.

    Why aren’t you angry at the people that betrayed your values, not the people that you think might have betrayed them if given a chance.

  • John Clough 24th Jun '10 - 3:31pm

    The 10k tax threshold is a red herring in terms of helping the lower paid as David Willetts demonstrated as long ago as June 23rd 2005 in an article in the Times. I am most angry about the Lib Dems lying about their opposition to the rise in VAT which won’t be forgotten quickly by the electorate, who will find it difficult to believe a single word they ever say again.

  • Wanless was one of the Directors at Northern Rock.

  • David Morton 24th Jun '10 - 3:46pm

    A classy, well written article which is unarguable as far as it goes but… Labour set out a frame work for its cuts which Darling accurately described as being more severe “Than Thatcher”. This would have halved the deficit over four years. Now we have a coalition budget which will close the defict over a similar period. This will mainly be achieved by signifigantly deeper cuts than Labour ( say they ) would have made.
    I won’t go into the rights and wrongs here but this is huge, existential, brand defining and altering stuff that will quite literally alter the shape of society for some and set the parameters of individual liberty through capacities expanded and contracted.

    Its the kind of big societal choice that comes around once very two generations and makes people tear up or sign up membership cards. It makes people vote, march, compose, laugh, cry and believe me die.

    If any member of the party thinks it can sustain this societal choice for 5 years by just saying TINA and it was Labour wot done it then they are in venial self denial.

    Existential defination on this cale is the stuff of poetry, art, religion and song. If the party wants to have a hand in this scale of change then its going to need to fight a kulturekampf for it if its what it really believes in.

    Which is the question. Does it believe in it ?

  • Andrea Gill 24th Jun '10 - 3:52pm

    @DM Andy: Aside from the fact that this is a coalition government, I joined the party precisely because they campaigned on the need to be honest and constructive about the need to cut spending, the size of the public sector, the need for decentralisation and the need for rebalancing the tax and welfare system.

    I know Nick Clegg’s call for savage cuts last year were a shock to some party members on the left, but cuts are necessary and I feel our party – even just as a minority partner in a coalition – has more chance of actually achieving the necessary in a less painful fashion than any other party on their own.

    To be frank, I felt sick when a Lib/Lab coalition was on the books all of a sudden – While I am hopeful that Labour will come to their senses at some point, I just do not see how our call for cuts and restructuring could possibly have been implemented alongside a tired Labour government whose ideology on state vs localism, and economical approach so vastly differs from our own.

  • Yeah, Labour caused the sub-prime mortgage crash.

  • You forgot one other thing Labour didn’t do: put in place a more effective regulatory regime for the financial sector. Gordo (remember him?) Admitted such

  • SomeRandomHash 24th Jun '10 - 5:29pm

    @ George

    There are some consolations such as progress towards the 10k tax allowance

    The £1000 personal tax allowance rise is being used as an argument for the ‘progressive’ part of this budget and has been oft repeated by Cameron, Clegg & Cable however many in politics and the media seem to have very short memories (or convenient amnesia)

    Many people assume that there is an easy way of cutting taxes and helping the poorest people — we should raise the income tax allowance. At the moment people start paying income tax at about £5,000 a year. What if we increased that to £10,000 a year — wouldn’t that transform the situation of the poorest people?

    It is true that poor people pay a shockingly high amount of tax. The richest 20 per cent of households lose 35 per cent of their incomes in tax. The poorest 20 per cent of households lose 37.9 per cent of their incomes in tax. In fact the poorest 20 per cent pay a higher proportion of their incomes in tax than any other slice of the population. No one seriously planned for this bizarre outcome.

    But the tax that poor people pay isn’t income tax. The poorest 20 per cent of households sacrifice 28.5 per cent of their income in indirect tax, of which the biggest single item is VAT. All direct taxes take 9.5 per cent and of this the biggest item is council tax, which takes 4.6 per cent. Income tax, taking 3.5 per cent of their income, is responsible for less than one tenth of the taxes paid by the poorest fifth of households.

    If we really wanted to cut the taxes poor people pay we would be looking at indirect taxation. But big cuts in indirect tax would be very expensive. And if they were financed by increasing direct taxes, we would undermine incentives to work. That may be why I don’t detect a great desire in any political party to reopen issues such as the rate of VAT.

    From The Times June 23, 2005 by David Willetts (Conservative)

    So the overall Lib Dem objective of a £10,000 personal allowance won’t make a difference unless indirect taxes are sorted out too, and as we can already see the chances of this happening are virtually NIL.



  • @Andrea Gill
    If you joined the Liberal Democrats because you thought the state was bloated then that’s a completely rational approach to take. I apologise for making it sound like I was saying that the Coalition had betrayed all Liberal Democrats, when I said you I was referring directly to George Kendall.

    You see, what George has done is set up a straw man, by saying that Labour would have been as bad so what the Liberal Democrats have done is somehow okay. I pointed out that if Alastair Darling had delivered this budget it would have destroyed the Labour Party.

    @Chris Lovell
    Fair point and I did indeed leave the Labour Party for a time, 2001-06, I ended up not joining the Liberal Democrats because that would have felt like betraying the people at local level that I had worked with for many years and didn’t have a quarrel with.

  • Stuart White 24th Jun '10 - 5:53pm

    Yet another evasive article at Lib Dem Voice.

    Let’s say you are right and that we are in an awful fiscal hole because of the Labour party’s spendthrift ways.

    The issue is how to get out of the hole.

    Two ways: tax increases or spending cuts.

    The government has gone for putting the bulk of adjustment on spending cuts (roughly 80/20), something which will inevitable hit the most vulnerable harder than putting the adjustment on tax.

    That’s not something Labour did. A government you support did it.

    And let’s say, for the sake of argument, Labour would have done the same in broad terms. Why would that be in any way relevant for a Lib Dem evaluation of the budget?

    You have your own values, and the 80/20 strategy needs to be assessed against those. If you are a classical liberal, doubtless it looks fine. If you’re an egalitarian liberal it does indeed look ghastly…

    The one thing that annoys we social liberals in the Labour party is the way Lib Demmers won’t face up to their own responsibility for what happens when they are in or share power. This article, like so many contributions to Lib Dem Voice recently, is a model of responsibility evasion.

  • @Andrew Tennant
    If you’re happy that’s great, but be clear what you are happy about, a budget that makes the working poor poorer. That’s not Labour’s doing, that’s the coalition’s policy. There’s not a paper’s width difference between the Liberal Democrats and Conservatives now.

  • John Fraser 24th Jun '10 - 6:29pm

    Sorry….. this article does not make sense . We can’t keep blaming Labour for our decisions and misdeeds . We decided for various reasons that the most exteme mainstream party inWestern Europe were an acceptable coalition partner and we must now take responsibility for our actions or critisise ourselfs and our leaders directly .

    Our manifesto was NOT costed with regards to the extent of the cuts so we cannot single ourt Labour for not specifying what they would cut.

    This ‘labours all to blame ‘ argument is becoming rather sad (whatever happened to the ending of yaa boo politics . In the context of a massive world recession they got things right and wrong.

    (25 years in the Lib dems and never been more embarassed to be a member than today )

  • Andrew Suffield 24th Jun '10 - 6:53pm

    Two ways: tax increases or spending cuts.

    You can’t increase tax very much – putting up the rates more than a little just results in tax avoidance (people stop engaging in taxed activities). Certainly not by anywhere near the amount needed. It was always going to be primarily spending cuts. All three parties campaigned on a manifesto of large spending cuts and small tax increases. The variation between them was just a few percent.

    If you’re happy that’s great, but be clear what you are happy about, a budget that makes the working poor poorer

    Citation needed. Protip: poor people don’t pay VAT because there’s no VAT on essentials, and poor people don’t have enough money to buy all the essentials they need (that’s what “poverty” means), so they don’t spend money on anything else either.

  • George Kendall 24th Jun '10 - 8:13pm

    @DM Andy.
    Have another read of my article, I think you missed the main point.

    I’m not criticising Labour that they would have introduced a harsh post-election budget. In fact, considering the developing crisis in Europe, I think they’d have been foolish not to.

    I’m not angry with Labour for their policies over all of the last thirteen years. In the first few years, they showed commendable restraint.

    I’m not attacking all Labour politicians equally. Some were uneasy about deficit budgeting in a boom, and some did argue that, for an improved welfare state to be sustainable, extra money must be accompanied by reform.

    But I am attacking Labour for running deficits from 2002, for reduced public sector productivity, and that too high a proportion of the growth in the economy has been in the public sector.

    And I am attacking them for failing to take on the responsibility of government. It’s not the job of an opposition to tell the hard truth. It is the job of the government.

    Darling was an honourable exception. But the refusal of the leadership of Labour to level with the public about the severity of the economic situation was irresponsible.

    It weakened the UK’s credibility in the international markets, and it has poisoned political debate, making politicians in all parties reluctant to be frank with the public.

    @John Clough and @SomeRandomHash
    I like the move to a 10k threshold, less as a redistribution of cash to the poor, more as a redistribution of incentive. The Tories went on endlessly in the ’80s about the need to increase incentives for the rich. I was always furious that they didn’t apply the same principle to the poor. But, as I say in the article, it’s only a consolation.

    @David Morton
    Thankyou for your comment. Very eloquently put. Poetic, even.
    You’re right. This article isn’t a critique of the budget and was never intended to be. The budget was only two days ago. I don’t envy politicians who have to respond within an hour. I won’t be giving a considered response for quite some time yet.

    While Labour’s regulatory failures were a mistake, I think the Tories would have done the same, so, in the context of a coalition, it felt like a cheap shot. I wanted to identify things that were, unambiguously, Labour’s responsibility.

    @Stuart White
    How to get out of the hole is certainly a crucial question. There’ll be many other articles that address it, but the point of this article is to ask how we got into the hole.
    I don’t blame Labour supporters like yourself for evading this question. Considering the obvious answers, that’s understandable. But I won’t apologise for asking it.

    @John Fraser
    You’re right that there’s a risk in spending too long blaming the previous government. It was embarassing after 1997, when we on the centre-left kept on blaming the Conservative government for years and years.
    But it’s only a few weeks since Labour left office. After Labour have levelled their firepower directly at us, it would be absurd not to keep reminding ourselves of why we are where we are.
    I also wrote this post because what the coalition leaders said didn’t resonate with me. Of course they have to sell the budget. But I hate the idea of savage spending cuts. I always knew I’d hate it. But as soon as I learnt that one pound in four of government spending was borrowed, I knew something like this would happen. If it is inevitable, and the last government are partly responsible, then Labour ministers shouldn’t be allowed to pretend it was nothing to do with them.

  • George Kendall – but you’d have thought that the Labour Party ought to have taken a tougher line with regulating the banks (you expect Tories to be laissez faire about such things).

    The additional point is how much of our tax take, an increasing amount every year as the deficit racks up, of course, is going to be spent on debt interest rather than on investment or services. That is Labour’s real legacy.

  • Andrew Suffield wrote: “You can’t increase tax very much – putting up the rates more than a little just results in tax avoidance (people stop engaging in taxed activities).”

    As I recall, the Liberal Democrats called for a major crackdown on tax avoidance in their manifesto. In the HoC the other day, a Treasury Minister stated that tax avoidance cost the UK £40 billion per year (and some people think that’s an underestimate!). Make some inroads into that figure and you can significantly cut the budget deficit.

  • John – no, they called for a crackdown on tax evasion. Tax avoidance is perfectly legal – its the arranging of one’s tax affairs in accordance with tax law to minimise one’s tax liability.

  • Hi George

    Thanks for your clarification. It was not the length of time we have been blaming Labour that has started to irritate me just the childish vitreol some of the parties press releases have been using . Hey call me old fashioned but I actually supported Nick in the debates when he said he wanted to bring an end to Ya boo politics. I would hate to find out that we didn’t actually mean it .

    The more paranoid and defensive we sound the more the public and party members will believe there is something to hide.

    can’t remember it being Ashdown style to eneter the blame game when the Tories got ejected in 97 (though I could be wrong) .

  • Sorry, but cut to the poor are no way to solve this, not in a fair society.

    How much did each of you spend on lunch, coffees etc while you were out at work?

    According to Unite, if I were on the dole right now I’d be just short of ten pounds a day. From that I’ve a contribution to make towards rent and community charge. Electricity, gas, phone, toiletries, cleaning materials, bus fares to visit the relatives (visiting my elderly aunt every week would simply be impossible), food, TV license, household items that might be needing replaced – those tin openers never last! The phone would probably have to go as would the TV – take a pick, food or TV license?

    We are trying to justify cutting the means someone has just to survive on what many of us can spend in a coffee shop just for a bite to eat and a coffee?

    We are cutting the weekly income of the poorest in our country because the bankers ran amok or because it is political ideology. That weekly income isn’t much more than what it costs me to buy a bra that fits. We’re having these cuts and those responsible are not standing in court! If what went on in the city wasn’t a crime then what is?

    Rather than spending money hunting down a young dad who takes the chance of a tenner to supplement his dole money, I reckon we’d find a lot more if we simply closed down the tax havens and regulated the awful accountancy practices. Focus where the big money is if you mean business, focus where there is less if you seek ideological propoganda.

  • Well I have supported the Liberal democrats all my cognent life (relatively short). Although i thought the decision to enter a coalition with the Conservatives was wrong (I think a Conservative minority government would have been best both for the country and the lib dems)… I decided to continue supporting the Liberal Democrats because at heart I am a ‘liberal’ above anything else.

    That said, I have become progressively more disapointed with the Liberal Democrats over the last couple of months. Firstly there are the scandals…. when the party made such a silly attempt to appear squeaky-clean before the election. Then there is universities. That really annoyed me. This coalition is mean to be about ‘compromise’, ok, a compromise would be to keep university fees at current levels instead of reducing them. Instead the Lib Dems shrugged off their least-valuable support base…. the students… and are complicit in raising university fees (in that they will not vote against a rise).

    Then there is the fact that every time I have seen a member of the lib dem leadership speak in public, peoiple I used to admire like Vince Cable, they have completely reversed the economic opinions they held throughout the general election. This VAT increase is just one of those things. The leadership is so eager to appease the Tories that they are now saying they supported these regressive polciies all along.

    Then there is this god-awful budget. I can’t tell you how much it irritates me that Clegg keeps on calling it ‘progressive’ when it is quite clearly regressive in that it targets the poor more than benefitting them. The net affect to the poor, taking into account raising the tax-threshold, is quite clearly more dire than it needed to be.

    There was a choice in joining this government, and a choice in accepting this budget. The truth is that the leadership of the party moved to the right to the extent that they occupy the exact same, neo-liberal, ideological ground as David Cameron. I think they wanted this coaltion because it suited their small-government agenda…. despite the fact the Lib Dems were portrayed as tot he left of New Labour the entire election.

    Perhaps the most annoying thing about all of this has been the way that some people have shirked responsibility or tried to blame the failings of the party on Labour. I don’t support Labour, I’m glad it’s gone, but article like this are so useless and very, very annoying. There is a deficit- FACT… Labour now has little influence on how that deficit is tackled- FACT. The party went along with the Conservatives pretty much 100% except for some piddling tax threshold rise- FACT. This is a problem for the Lib Dems and whether we as Lib Dems view ourselves as a left-wing party that supports civil liberties… or a neo-liberal party which is rapidly becoming indistinguishable from both the right-wing of New Labour and the left-wing of the Conservatives.

    All these red herrings and this prevarating (shown in this article) are nonsense. Labour is not in government anymore… people won’t buy ‘our decision are their fault’ in 4 years time.

    Unless somethign changes I probably will be voting for the green party. I hope to support the Liberals again when they return in actuality to the kind of ground that they campaigned upon in this election. I hope (and think) that others will join me in not voting for the party until it actually occupies the political ground it campaigns upon occupying. The ‘Labservative’ slogan has become so hypocritical now.

  • The more that the finger is pointed at others the more the party looks hypocritical.

    There were massive posters before the election warning of a ‘VAT bombshell’. The Lib Dems constistenly warned against making cuts this year.

    That is simply good economic sense… as VInce Cable would testify… instead of the ideological drivel the party is signing up to with George Osbourne. Many leading economists have warned about making cuts this year. Anyone catch newsnight where the Japanese economist showed that in Japan’s example lowering spending prematurely was disasterous.

    The IFS claims the budget is regressive… but Clegg keeps lying to me. Should I trust the other Lib Dems?

    People are also claiming that the deficit was larger than they predicted, but that is not true… as Alistair Darling said (and I am no big fan) the budget deficit is lower than predicted).

    None of this has anything to do with the methods by which the deficit should be cut. Blaming Labour does not justify regressive policies.

  • “I don’t blame Labour for everything. While they made mistakes, they were right to bail out the banks. And it is true that most of the pain is due to the international economic crisis.”

    Well I disagree with that ! For a start, if Labour hadn’t mucked up so badly, we wouldn’t have had to bail out the banks – besides which the way it was done means they carry on much the smae as ever and the ordinary people pay the cost. Secondly, Labour contributed to the international crisis and left the UK very poorly prepared for it.

    Gordon Brown self-deception – on PFI not being borrowing, on inflation being low (while house prices soared), on the poor being better off as he increased the poverty trap, on protecting the “vulnerable” when in fact it was often featherbedding scroungers are all entireley awful.

  • Matthew Huntbach 25th Jun '10 - 10:43am


    Take what you said, but when the people had the chance to vote for this, they didn’t. We wouldn’t be having this discussion had the LibDems been the largest party, it would be a LOT more towards what you want. But people voted Tory in large enough numbers to put the Tories in control. That’s democracy – it doesn’t always give you the results you want, too many people have damned stupid ways of voting (i,e. anyone who votes Tory who isn’t in the top 5% wealthy i the country) and worse still to many people don’t vote at all so letting those who do vote have more impact with their damned stupidity.

  • Remember before the election, when people on this site were vigorously defending proposed tax threshold rises against the charge that their distributional effects would be regressive – on the basis that complementary action would be taken to ensure that the incomes of the very poorest (those who don’t earn enough to pay income tax) didn’t fall even further behind median incomes, thus driving up levels of inequality and of relative poverty?

    The only such measure I can identify in the budget is the Tax Credits increase for poor families. Meanwhile, various measures pull in the opposite direction – notably the VAT increase and changes to benefits.

    In other words, we’re left with a ‘worst of both worlds’ scenario. We have Lib Dem policies which no one ever denied were regressive considered in isolation, but which – rather than being balanced out by progressive Lib Dem policies aimed at helping the poorest – are now compounded by regressive Tory policies that hit the poorest hardest.

    The decent thing to do – if you felt there was no option but to increase VAT & cut benefits for the poorest – would have been to drop the commitment to tax threshold rises on the basis that in that new context, they would simply serve to make the overall package of tax & benefits changes more regressive.

    (Of course, it’s flatly absurd to claim there was no alternative to raising VAT – the alternative was simply to raise other, more progressive taxes instead.)

    …and here’s another ugly fact: given that the CGT increase is not set to raise as much as you thought, while other taxes on the rich (e.g. the Mansion Tax) have been dropped entirely, the tax threshold rise has actually ended up being funded not by tax rises disproportionately affecting people RICHER than the people who benefit from it, but by tax rises disproportionately affecting people POORER than the people who benefit from it. You are literally taking money out of the pockets of people living in poverty and handing it to basic rate taxpayers – redistributing not from the top to the middle, but from the bottom to the middle.

    Yes, the deficit needs tackling – but not this fast, not by squeezing the poor this hard, and not in a way that drives unemployment up and growth down. It’s absurd to think you’re acting as some kind of restraint on the Tories by pushing through your own cuts to direct taxation; that’s stepping on the accelerator, not the brake!

  • George, you are being very disingenuous when you state – ‘ Former NatWest chief executive Derek Wanless wrote a report in 2002 on the NHS’. Derek Wanless left NatWest (or rather he was oiusted) in 1999. He then joined Northern Rock, from where he was again ousted in 2007, following the run on Northern Rock. Derek Wanless was the Rock’s Head of Risk, and his actuarial assumptions were roundly condemned by the Treasury Select Committee. Why George, should we now give any credibility to his assumptions in the 2002 NHS Report, which you cite ? I am sorry, although Wanless is to prudent actuarial forecasting, what Julian Clary is to cage fighting.

  • Will Simon Hughes please tell us whether he intends to table an amendment to make the Lib Dem Cons appalling budget fairer for the poor or not? If he goes on vacillating we’ll suspect him of being an authentic Liberal Democrat!

  • Yellow Bird 25th Jun '10 - 2:48pm

    If the country’s finanical position is so bad, why does the top rate tax band continue to only begin at £150K ? And why is corporation tax FALLING ? And why are measures against the banks being introduced only slowly ?

    The economic problems appear to be a fig leaf for an ideological distribution of wealth to make the poor poorer and do little damage to the rich, so that social inequality increases, much as it did under Thatcher.

    It is grossly hypocritical listening to George Osborne saying, ‘We are all in this together’.

    The only thing which is worse is seeing those of my Lib Dem colleagues who got into Parliament this time trying to defend this budget as ‘good’, ‘right’ or ‘necessary’ or worse still ‘fair’.

    If they said, ‘we only have a minority of seats, we couldn’t stop this’ I would have a much better of view of them. Hearing certain Lib Dem MPs trying to justify this hard-line Tory budget in which single parents, the disabled, public sector workers and those on low incomes fare worse than Osborne’s Eton-educated chums in the City makes my blood boil.I don’t know anyone disabled who has anything good to say about this budget.

    I stood as a PPC and now I’m not sure I’d even want to vote Lib Dem after this. Increased scoial inequality between the richest and the poorest citizens of our country is NOT the platform I stood on.

  • I’ve just had an email from Hargreaves Lansdown pop into my email box (I have a personal pension pot from them) explaining how benign the budget is and in fact in many ways it is advantageous it is to higher rate tax paying investors and how to take advantage of opportunities within the budget to make some more money. Says it all really, this giant of the financial advice world are hardly Labour Party propogandists.

  • It is completely absurd how people are now attacking the last Labour government of being ‘right-wing’ when the party is sigining up to right-wing actions that Labour would not have. It is not necessary to close the deficit in four years…. it is simply a crisis being manipulated by the Tory right to enforce their own neo-Liberal agenda. Since the lib-dem leadership all seem to be a bunch of neo-liberals now I’m not suprised they shamefully tried justifying the budget as progressive when they campaigned against it the entire election. I won’t support Labour… but I can’t bring myself to support the Lib Dem party in its current ideological stance.

  • My concern as a LD support is the Disability Living Allowance changes.
    It seems both Liberal Democrat and Conservative MP’s think this is an benefit for being out of work whereas it is to assist those with a disability meeting the additional costs being disabled incurs such as aids, personal support , transportation etc regardless of their being in work or not. Some claimants are disabled children in school with statements of special education needs plus without it many disabled workers would struggle to get into work.
    To the best of my knowledge the majority of new claims for this benefit are for three years or less after which the person has to reply and in each case the forms are checked over by DWP staff, doctors and other specialists written to who know the persons condition and cases approved or rejected on that basis. Presently just over a half of all claims are turned down.
    The number of people who have indefinite lifetime claims is low and are usually for permanent chronic conditions or disabilities from birth/childhood that are unlikely to change such as a person who is blind, has cerebral palsy,Traumatic inflammation of joints, are deaf etc.
    Presently the medicals for Employment Support Allowance undertaken by Atos for the DWP are experiencing a 40% reinstatement rate after appeal which as based on closed questions. Just imagine the stress individuals are put under trying to prove their illness.
    My concern with this proposed testing of DLA is this: Will a similar style of medical be adopted that is failing many who are too ill to work be adopted?
    Given the variability on a day to day basis of some peoples conditions will Liberal Democrats insist on full consideration for this and will those who are with permanent disability of a chronic nature be exempt from either testing or three yearly tests as they are not likely to improve short of a miracle.
    My support could easily be lost on how the LDP handle this.

  • George Kendall 25th Jun '10 - 4:24pm

    @Sunny Hundal

    You ask my position on cutting now. At a risk of moving off the topic of my post – which is about Labour, I’ll try to answer.

    Prior to the election, I wasn’t personally convinced by LibDem and Labour arguments that we should wait for a recovery before cutting. Since the Greek crisis, I’ve come round to the view that immediate cuts are necessary.

    Defence against a Greek-like crisis is the main argument, and a compelling one. This isn’t a problem for countries like Japan and China, with trade surpluses. It isn’t a problem for the USA, when the dollar is the world’s reserve currency. If I were in those countries, I would not be arguing for immediate cuts. But it is a serious risk for the UK.

    In addition, if we continue racking up huge deficits, it reduces our room for manoeuvre in the future. Our finances took a massive hit as a result of the international financial crisis. I think that stimulus was the right decision. If we can get our finances back in order, we’ll be much better placed to weather any future storm. And I fear the Greek crisis is only the first.

    I’m not a zealot. I can see arguments both for delay and for cutting now. But, on balance, I think acting now is necessary.

    As to why I think Labour would have cut immediately, there is no proof, but there are several strong indications. Most of Europe has reversed its position – I think it’s unlikely Labour would not have shifted with the new consensus. We learnt from Vince Cable, on Question Time, that Labour were already implementing serious cuts in his department before the election – they just hadn’t announced it.

    If Labour were a party with a track record of honesty and a dedicated commitment to setting aside party interest, I might believe them when they say they’d have delayed cutting immediately after the election. They don’t. And as the electoral cycle gives any new goverment a huge incentive to get the hard decisions out of the way immediately, I’m pretty sure that’s what they’d have done. Do you really think they wouldn’t?


    Wanless’s report, commissioned by Gordon Brown was widely welcomed at the time. Indeed, the King’s Fund commissioned a further review in 2007.

    In 2007, the Guardian billed him as “the saviour of the NHS”.
    [ http://www.guardian.co.uk/society/2007/sep/12/guardiansocietysupplement.health ]

    When Labour started massively increasing NHS funding, Wanless’s report was central to political debate. If you think his mistakes at Northern Rock mean his 2002 report was complete bilge, then you’re effectively saying the King’s Fund, Gordon Brown, and most experts at the time were complete idiots.

    Far from it being disingenious to refer to the report, it would be disingenious to talk about Labour’s 2002 policy on the NHS without referring to it.

    Demand for health services is, potentially, infinite. For those, like me, who would like the NHS to survive in the long-term, this is a major worry. At the time, Labour was urged to use the incentive of extra money to persuade the unions to agree to reforms. The 2002 spending increase was a once in a generation opportunity. Labour didn’t take it.

    As a result, our national budget is being spent less efficiently than it should be. Which, now the downturn is forcing cuts, will mean heavier cuts elsewhere.

    And his failure to improve productivity in the NHS was matched by similar failings across the public sector.

    If I were an optimist, I would think that this lack of productivity means the new government can cut waste without hurting frontline services. But, I’m afraid, productivity can’t just be improved with a scalpel. The opportunity to improve productivity was over the last seven years, and was missed.

    @mma, @Rob

    There is certainly a very serious debate to be had about whether the budget is taking the cuts too far, and there are several threads on this site which deal with that question. But my post doesn’t.

    At a time when the Labour leadership have launched their full fire on the LibDems, this post addresses the question, how far are Labour responsible for this crisis?

    In part, this post was a challenge to Labour contributors to this site. In part, I’ve given Labour the benefit of the doubt. For example, I’ve not attacked their record on bank regulation. I was hoping, but not expecting, that Labour contributors might engage in the detail, and either admit where their government made serious mistakes, or provide detailed arguments that they did not.

    How Labour responds to this challenge is of huge significance, because it will shape the future direction of the party. Are they going to address the budget crisis, or simply attack the coalition?

  • It now appears that Simon Hughes may not be tabling an amendment to ameliorate the effects of the unfair Lib Dem Cons budget cuts on the poor. That is an enormous shame. I always had huge admiration for Mr Hughes whom I believed was an ally of the poor and the disadvantaged. It appears that the orangebookmen have gagged him. For a fuller report follow the link below.


  • @Andrew Tennant – obviously the IFS and HM Treasury will deal with averages, but I’m fascinated to know how you’ll be much better off.

  • George – further to your riposte at 4.24pm. So, you consider the views of The Guardian, The King’s Fund and Gordon Brown above reproach ? Just a few million voices may disagree with you on that ! A little bit of history for you. Blair had rashly blurted out on the BBC Frost program in 2001 that he would increase NHS funding to Euro levels. An incandescent Brown, had not been forewarned, and he was concerned that the necessary tax hike would damage his reputation for prudence. Brown decided to seek what he called the ‘intellectual justification’ of a commissioned report, to help sell his proposed tax rise. Derek Wanless (plain Derek then) was considered a suitably compliant stooge. Wanless duly obliged by signing off Brown’s script, and was duly rewarded – arise Sir Derek ! In 2002 there was much lampooning in the press over the number of times Wanless’ name was mentioned by Brown in his Budget speech. “Wanless says this “- “Wanless recommends that”- ” Wanless advises” etc, etc. It was all to divert attention from Brown. He didn’t want to shoulder the blame for increased taxes, and was happy to use Wanless as his justification. Sadly, although predictably, there were insufficient spending caveats in the report, and GP’s, Consultants and Mandarins fed well at the filled trough, at the expense of Nurses and front line services. Just look at how the salaries of the NHS upper echelon have increased since 2002, and compare that with the rises given to rank and file staff. Wanless is a Curate’s Egg, and you cannot just pick the bits you like. If an egg is part tainted, it is all tainted – that is the moral ! Wanless cost the UK billions of pounds through his actuarial incompetence and greed at Northern Rock. That’s money from my pocket, your pocket, and money from yet unborn generations. Please, do not offer such unctuous deference to the Wanless Report. He was merely a compliant stooge for a failed Chancellor who sought justification for tax rises. The decision to fill the NHS trough was made before the Wanless Report, not afterwards. It is crucial to understand that distinction George. http

  • Just a snippet from the televised Treasury Select Committee Inquiry into Northern Rock. This one features, as a winess, your NHS saviour George !

  • @ Andrew Tennant
    Ah, yes. The working or deserving poor. The new sub-class the Tories and their Lib Dem supporters have defined within the cultural hegemony and which they hope will become oppositional to the non-working or undeserving poor who they have characterised through their right wing media as parasites and scroungers. I don’t begrudge you or any impoverished workers a few hundred extra quid a year, but I would ask you to reflect that your perceived gains have been achieved at the expense of those who are nearest to the bottom of the heap. It is estimated that the refusal to extend the eligibility of free school meals is going to deprive the poorest families of £600 a year alone. And then of course there are the other measures: the linking of benefits, tax credits and public sector pensions (Average £4000 a year) to consumer prices rather than the retail price index; Sure Start maternity grants to go to the first child only; cuts in housing benefit; abolition of the baby element of child tax credits; the freezing of child benefit; cuts to help the jobless; cuts to the disability living allowance; etc, etc. Oh, and of course, a hike in the Standard Rate of VAT to 20%. It is in the interests of the Tory ruling class to convince the poorest that it is only common sense that they should bear the costs of the crisis created by that ruling class. Meanwhile, the real parasites, those ruling class gamblers who caused the crisis get off scott free.

  • GET A PERSPECTIVE, PEOPLE! There will be 25% cuts to departmental spending over a whole parliament. Labour had planned 20% cuts in its Budget in March. So what we are talking about is 1% cuts a year extra than Labour!!!!

    Plus, Labour was planning to carry on with lots of wasteful things most people here would disagree with: benefits for people earning £60K, ID cards and other wasteful IT projects etc, so the 1% would have been eaten into, narrowing the difference.

    A Labour Budget would have had an ever bigger blackhole because they hadn’t planned any tax rises, like the coalition has.

    Did Labour propose to reverse their unfair capital gains tax cut? Nope. Did Labour propose to increase corporation tax? Nope. Did Labour even back the bank levy? Er… nope. They wanted to ‘wait for international agreement’.

    They would have had to increase VAT too, or else slash and burn services by far more than the coalition.

    So a vote for Labour would be a vote for BIGGER frontline cuts, and for chucking money at people already rolling in it. Great! There is NOTHING virtuous in spending per se, it depends WHAT you spend it on.

    On tax, we should be proud we’ve got the Tories to increase capital gains tax after LABOUR cut it, and to increase tax credits for the poorest children. A VAT rise that preserves zero-rating for food and other essential items, combined with an income tax cut, is essentially progressive. Income tax cuts give people choice on how they spend the money they take home.

  • @George @ Mack
    ‘Meanwhile, the real parasites, those ruling class gamblers who caused the crisis get off scott free’.

    That brings us very neatly back to Sir Derek Wanless, Ex-Head of Risk at Northern Rock. Still holds his tainted Knighthood, still not barred from future directorships (as recommend by Vince Cable), still Chairman of Northumbrian Water, still sits on the Board for Actuarial Standards, still revered by George ! – YET his DNA is all over the multi-billion pound banking crisis. I guess this is what you mean by gettiing off ‘scot free’ is it Mack ? Yet, if an OAP cannot afford their inflation busting council tax, on a fixed pension, Magistatres will send them to prison !

    Who said ‘Life’s not fair’ ?

  • Like George Kendall, I’m not happy with the budget, but am prepared to suspend judgement on the LibDems in coalition. As a social democrat, I’ve felt disenfranchised by Tory and Labour governments, and have consistently voted LibDem for many years, and hope the millions of us who’ve done this won’t be let down.

    All main parties claim to support fairness, but to me this means reducing economic and social inequality. The last government made some attempts to stabilise economic inequality, but I fear that social inequality has continued to grow. Future historians may see the last 30 years as an age of reaction.

    Tony Judt’s attempt at a correlation between economic inequality and various social evils in a number of countries, in ‘Ill fairs the land’, might be worth reading. Like Judt, I think our policy on education, which I feel is the key to social mobility, has been disastrous, and it seems it will get worse. It might be worth looking at the German education system, and Article 7 of the German Constitution , which anyone with internet access can easily do.

  • Anthony Aloysius St 27th Jun '10 - 11:53am

    Lee Baker

    Your claims about Labour’s plans are inaccurate in many respects. But in any case, it’s getting very tedious hearing Lib Dems trying to blame everyone else in sight for the actions their party is taking now.

    The point is that the choices that have been made by the coalition mean that the poor are going to be worse hit than those on middle incomes, and that is the opposite of the “fairness” agenda the party claimed would be its overriding priority in government.

  • George Kendall 27th Jun '10 - 3:02pm

    Hi Paul,

    Nice to read a comment that chimes with how I feel.

    Too many of the responses to the budget have been from two extremes. Some, writing in reaction to the budget, appear to be in denial about the seriousness of the situation. Others, in reaction to unrealistic criticisms of the budget, try to pretend the cuts won’t hurt. It’s part of the bearpit nature of the open internet, that we are reluctant to admit honest reservations, because we don’t want to concede ground to our opponents.

    I’d like to be more honest, but I’m still reflecting on the budget and even more on the likely forthcoming spending review, and I’m not yet ready to give a considered opinion. However, I’ll have a go at responding to one of your points.

    The last government did introduce some regressive measures, such as substantial increases in council tax, but, on balance, its tax and benefit measures were progressive. Despite this, the gap between rich and poor has widened.

    Progressive measures are possible when you have extra money to spend, but, unless we move to means-tested welfare state where the middle class pay for public services, cuts are going to hurt the poor, because the poor need the state more than the well-off. I fear, in a situation that demands deficit reduction, all the LibDems could ever hope for was a less regressive budget.

    Like most of us, I have at times thought big tax rises for the city and the rich was the obvious answer. But if, in a globalised world, the expert advice is that this would only reduce tax income, we’d need to be very sure those experts were wrong before going ahead. The last thing we should do is introduce measures that reduce revenue, make the deficit worse, and result in even deeper cuts.

    At times, this makes me despondent. But it doesn’t mean progressives can’t make a difference. If all we can do is slow down the growth in inequality, it’s still worth doing.

  • Anthony Aloysius St 27th Jun '10 - 11:07pm

    “Progressive measures are possible when you have extra money to spend, but, unless we move to means-tested welfare state where the middle class pay for public services, cuts are going to hurt the poor, because the poor need the state more than the well-off. I fear, in a situation that demands deficit reduction, all the LibDems could ever hope for was a less regressive budget.”

    And why, if things are so desperate, shouldn’t we “move to means-tested welfare state where the middle class pay for public services”? Wouldn’t that be preferable to making the poor bear a disproportionate share of the burden? Is the real reason that both coalition parties feel that the middle classes are “their” people, and the poor will vote Labour anyway, so they may as well take a hit?

  • @ George says – ‘It’s part of the bearpit nature of the open internet, that we are reluctant to admit honest reservations, because we don’t want to concede ground to our opponents’.

    I have to disagree. I genuinely believe that internet blogs are fertile ground for exchanging honest forthright views, warts ‘n’ all. It encourages just the type of open, incisive, and generally courteous debate, that is so often thwarted through self consciousness in alternative forums.

    @George says – ‘the expert advice is that this would only reduce tax income, we’d need to be very sure those experts were wrong before going ahead’.

    Perhaps these ‘experts’ are merely lobbyists for the City plutocracy, harbouring an undeclared interest. In other words, in the well worn words of Mandy Rice-Davies, ‘they would say that wouldn’t they’. We are never going to have international tax harmonisation, and the brain-drain factor would be inconsequential. What we can do is apply ever greater pressure on tax havens, to prevent these sunny places for shady people flourishing. If tax avoidants are then prepared to emigrate, dragging their families with them, in order to maximise by any means a discretionary income that already provides for all life’s whims and luxuries, then let’s wave them goodbye, and whisper good riddance !

    The sage words of Adam Smith :
    —The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion —

    Perhaps this is where Vince Cable got his mansion tax idea from ?

  • George Kendall 28th Jun '10 - 6:31pm

    This advice, that too high a top rate reduces revenue, isn’t from lobbyists for the city. It is from independent thinktanks and the private advice of civil servants.

    The ubiquitous IFS have produced a briefing paper on this.

    The paper was a response to government plans to raise the top-rate for those earning £100,000 or more to 45%. They estimated this would probably reduce revenue.

    This kind of advice is the reason why, for many years, Labour and the Lib Dems were reluctant to propose a higher top-rate.

    In the wake of the scandulous behaviour of some in the city, there’s been a yearning in the British public to punish these super-rich. Which is why, for political reasons, the coalition aren’t going to reverse the, now 50%, top rate.

    It would be nice to think that the only way city fat-cats could escape higher taxes would be to exile themselves to some obscure tax-haven. Sadly, this isn’t the case.

    As for property taxes. Personally, I was never a fan of the mansion tax. It seemed to me to be an unnecessary complication. Much better to reorganise council tax to make it much less regressive.

  • George Kendall 28th Jun '10 - 6:45pm

    @Anthony Aloysius St
    ‘Why, if things are so desperate, shouldn’t we “move to means-tested welfare state where the middle class pay for public services”?’

    The logical outcome of that might be for everyone above a certain income to pay for school, pay for hospital treatment, etc. It’d be the end of the NHS as we know it.

    Right-wing Tories would love that. Most left-of-centre politicians are desperate that this doesn’t happen, though not necessarily all.

    If we have a welfare state which is only free for the poor, and the middle class have to pay their own way, it might lead to the situation in the USA, where the well-off remorselessly vote for lower taxes, to leave them more to spend on their own welfare.

    Right-wingers would salivate at the prospect.

    Of course, it doesn’t necessarily have to be that stark a choice, but it’s a complex, and extremely controversial area. So far, none of the parties is touching it with a bargepole.

  • Anthony Aloysius St 28th Jun '10 - 10:00pm


    “Right-wingers would salivate at the prospect.”

    Well, the right-wingers in the Tory party don’t seem to be salivating at the prospect of means-testing child benefit, so I’m less than convinced.

    By the way, I left some comments about the IFS’s grouping of households by expenditure on the “Making VAT fair”. Judging by your latest contribution to that thread, you seem to have missed them. When you have a chance, I’d be interested in your thoughts about whether the lowest expenditure decile can really consist of “poor” households, considering that on average their income appears to be three times higher than their expenditure …

  • John N Clarke 30th Jun '10 - 5:56pm

    I have already cancelled my TV licence subscription as a protest to the incoming budget cuts.
    The only BBC programme I watch is Eastenders so I have sold my TV and digital box.
    What pushed me further towards my decision was Jonathan Ross being paid by my licence fee, Ann wotsername with the squaky voice still doing the Weakest Link and choosing a man who looks like a toddler to play DR WHO.

  • @John N Clarke

    Also remember to remove any TV card from your PC, as that will also qualify you to pay the license fee, whether you use it or not.

  • John N Clarke 1st Jul '10 - 6:01pm

    Thanks for your advice – much appreciated.

  • How are we all feeling now after Lansley has shafted the NHS?
    I’m afraid, very afraid.

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