Senior Lib Dems react to Budget

This post will be updated during the day as more people respond.

First of all, what did the leadership candidates make of the budget?

Norman Lamb:

Update: 5:35: He has released a fuller statement:

In government under the Coalition, the Liberal Democrats took difficult decisions to tackle our deficit and get our public finances in order. Our financial discipline over five years means that under Coalition spending plans, national debt is set to start falling next year as a proportion of our economy.

But today the Chancellor has set out a wave of new cuts that are ideologically driven, and unnecessary. The idea that you would slash £12bn from support for the poorest working families and in the same breath cut inheritance tax bills for millionaires is beyond belief, and morally reprehensible. This will impact on some of the most disadvantaged people in our society, affecting millions of children and reinforcing disadvantage.

And we have seen vividly how David Cameron’s Conservative government has failed to grasp the existential threat we face as a society from global climate change. Plans to scrap the tariff exemptions that support our investment in tackling climate change and securing the future of our planet are depressingly short-sighted. If the Conservatives are worried about mass migration and instability in the Middle East and North Africa, they need to get serious about action against climate change.”

Finally, this Budget failed to mention mental health once. In government the Liberal Democrats made equality for mental health one of our top priorities, working to rectify the historic discrimination and under-funding suffered by mental health services in the NHS. The Conservatives have discarded equality for mental health along with tackling climate change, supporting working families, and helping children from disadvantaged backgrounds go to university in an ideological mission to cut the size of the state.

Tim Farron:

And Tim has written a longer piece for the Huffington Post which you can read here. Here’s an extract:

At a time when we need to encourage young people from all backgrounds to gain the skills they’ll need to get the well-paying jobs of the future, they’re scrapping the maintenance grants that give so many young people the life-changing chance of a university education. When I worked in Higher Education, I saw up close what a difference the government makes by extending this support to disadvantaged students at such a crucial stage in their lives. When the Liberal Democrats were in Government, we made good progress increasing the numbers of young people from poor areas going to university – partly because we prevented the Tories from doing exactly this. Now, left to their own devices, they risk setting that good work back.

And, at a time when public sector workers have taken enough pain already, Osborne’s piling on more. The Coalition asked a great deal of public sector workers, and their sacrifices and hard work are what allowed us to bring down the deficit and get the economy back on track while maintaining the public services on which we all rely. But the Liberal Democrats have always been clear: once the economy has returned to strength, it’s time to reward them with decent pay rises. Instead, even as he boasts about our growth rate, George Osborne is hitting them with pay rises of 1% – well below inflation – for another four years. In real terms, it’ll mean a 7% for the five million workers in our schools, hospitals, local authorities and other public services.

All of this while spending £1billion cutting inheritance tax only for the wealthiest 8% of estates.

That, as clear as could be, is the Conservative approach. Hitting the working poor, the disadvantaged young, and the hard-working public sector. Helping the very wealthiest.

Eluned Parrott AM

 

Jeremy Purvis

In an interview with BBC Scotland Jeremy Purvis said that we had blocked many of the Conservative measures on ESA, student grant, tax credits and the like.

He said that the Tories were forced to stick with our idea of raising the tax threshold.

Lib Dems would have wanted to see more infrastructure growth and pay rises for public sector workers.

He also highlighted concern over future of green investment bank.

He also pointed out that every budget when Danny Alexander was at the Treasury, Scotland got a good deal out of it through Barnett consequentials – netting billions over the five years. This budget gives nothing to Scotland at all.

Alistair Carmichael – the Nasty Party is back

If anyone had doubts, the budget today shows that the nasty party is well and truly back. The first Conservative budget in 19 years is blue and tooth and claw.

Liberal Democrats in government forced the Conservatives to ensure that we balanced the books fairly, protecting spending in key areas while getting the economy back on track. Now we are seeing the true face of the Tory party and it is not a pretty sight.

These welfare reforms are an assault on the young and the poor, with the benefits freeze, ESA cuts, child tax credit cuts, and withdrawal of housing benefit from 18 – 21 year olds all set to hit Scotland hard.

Tory reforms on ESA mean that new claimants with conditions like depression, schizophrenia and bi polar disorder will face a future with £30 a week less than people do at the moment, a third of their weekly support. That is the reality of the Conservative plans.

The living wage that the government has announced is lower than the living wage in Scotland at present and we should not forget that many of those who will qualify for a pay raise may also be losing their tax credits. George Osborne is giving with one hand and taking away with the other.

There are things in this budget that should be welcomed. The increase to the income tax threshold was a policy that Lib Dems forced the Tories to introduce in government. The fact that fuel duty freeze will be extended is good news for motorists. But we should make no mistake, what we have seen today is a Tory budget that will make life tougher for thousands of public sector workers, families and young people across the UK.

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

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40 Comments

  • Eddie Sammon 8th Jul '15 - 3:52pm

    Decent responses. A measured response is definitely necessary. Not enough for those struggling in poverty in the UK and public sector pay should be rising with inflation. Not fair to ask people to train for years and then keep cutting their pay once they are qualified.

    How to fund it? Return to the 50p rate. Corporation tax cut to 18% probably unnecessary, but then again I would have kept the dividend tax credit.

    Biggest concern is probably housing benefit for the young. This needs to be available for those in need.

  • Peter Watson 8th Jul '15 - 4:25pm

    Norman Lamb: “Scrapping of maintenance grants will have big negative impact on students from poorest backgrounds. V bad news!”
    Huh?
    I’m confused by Norman’s position here. Isn’t he one of the Lib Dem politicians that have claimed that large student loans for tuition fees are have increased the number of students from poorer backgrounds, explained that it’s a graduate tax in all but name, persuaded his fellow MPs into voting for it, etc. etc? How is Osborne’s announcement anything other than a logical extension of the approach enthusiastically endorsed by Lib Dems in government?

  • @Peter Watson Lamb is wrong on that.

  • Yet again…Norman voting for something and then saying…oh I don’t like it now….

  • Is anyone else bemused by the sudden Lib Dem concern for students being weighed down with debt in working life?

  • jedibeeftrix 8th Jul '15 - 6:11pm

    And not a single ‘senior’ lib-dem has a word to say on the implications for defence and foreign policy…

  • Jackson – debt?

    That’s been a consistent Lib Dem position for about 15 years that I can remember. This must be some new definition of ‘sudden’ I’m unfamiliar with.

  • Why do you have to go to University?. Many of us have degrees, Masters even PHDs and never went, we worked full time, with families and studied evenings and weekends. That way you get the best of both worlds, work and education, just means self discipline for 3 – 4 years. The costs by comparison are minimal and often supported by employers.
    Betterthan spending Sundays afternoons in the pub as one usually saw when living in University towns.

  • Usual knee jerk reactions with rhetoric to accompany.
    A bit late for the sudden concern about students.,
    Farron should take a trip to Africa and learn what poverty really means.

  • Eddie Sammon 8th Jul '15 - 8:00pm

    Kevin, or how about you look underneath a bridge at night in central London, or in other cities, and see what you find. Maybe a bunch of people huddling together trying to stay warm for the night.

    We should run a national campaign on homelessness.

    Having said that. As I have been banging on about today: there’s are some things for Lib Dems to like, so the responses should reflect that.

  • Daniel Henry 8th Jul '15 - 10:07pm

    @ Peter Watson
    You seem to be mixing up issues between the maintenance grants for students from low paid background with the student loans for maintenance loans (that all students get) and for tuition fees.

    Under the coalition, student loans increased for tuition fees, but that only has to be paid back once the graduate is in a good job, and then it’s only a small part of a good wage.

    These maintenance grants were for students from poor backgrounds who would not have enough to survive on during their studies if only given the standard maintenance. Part of the deal in increasing the tuition fees was to ensure that there were more of these grants so money would be less of a barrier to students from poor backgrounds. And sure enough, more were able to attend Uni than before.

    But now the Tories are scrapping it.

    So Norman’s position IS consistent.

  • Daniel Henry 8th Jul '15 - 10:12pm

    @ Peter Watson – APOLOGIES FOR THE ABOVE POST

    I hadn’t realised that the grants were being replaced with equivalent student loans, so it’ll merely add to the total “debt” that they’ll only pay off as part of that graduate tax system.

    Apologies again for misunderstanding your post.
    (And you’re right that the criticism of it kind of contradicts our defenses of the loan repayment system)

  • If it had been a coalition budget, what would have been different? No Inheritance tax rise, probably fewer welfare cuts, beyond that I’m struggling. The theme of taking money away from younger generations for measures aimed at pensioners is nothing new and one of the things I was most uneasy with in coalition (e.g. Screwing students to pay for the pensions triple-lock)

    Not sure any of the comments from the great and good quite hit the mark (honourable exception to Eluned Parrott) in that many of the themes are a continuation, and we will just sound like typical politicians to be ignored when we condemn measures we are associated with. A long 5 years ahead of us.

  • Sammy O'Neill 9th Jul '15 - 2:02am

    Disappointing responses by the party bigdogs. Instead of discussing alternative policies the lib dems would like to see and reforms that could be better, everyone seems to have gone down the old (but perhaps easier) avenue of soundbites about how evil the tories are and how -insert whatever policy/change is applicable- is going to ruin lives. Labour’s response to the budget has been god awful. What a wonderful opportunity we’ve wasted to fill that void.

    @Eddie

    On the 50p rate, HMRC did a study some years back concluding that increasing the rate had actually led to a drop in tax revenue because it incentivised avoidance and discouraged people from earning beyond the threshold. Due to that and the perceived negative impact it had on the economy, they recommended it be scrapped or at least dropped. That is what the last government did and I think realistically unless we can say anything has changed that it would suddenly become revenue positive, we should leave it how it is.

  • A Social Liberal 9th Jul '15 - 2:53am

    Sammy O Neill

    I asked several people at the time (albeit not on this site – I had resigned from the party at this time). How could anyone make the claim you do on the 50p rate when it had only been running for a motter of weeks. I would chuffed if you could inform me when so many others could not.

  • Philip Rolle 9th Jul '15 - 9:13am

    One can’t help but think that George has noted the Lib Dems’ dividend tax proposal and judged that it gives him cover for dividend tax reform.

    Shareholder directors in family companies will be spitting. They will be hit hard. Paradoxically, top rate payers with modest share portfolios will pay less tax!

    I wonder if there will be rules to prevent planning around the £5,000 dividend exemption – for example by getting dividends out to spouses, grandparents and children were they each to have £5,000 exempt?

  • To echo a Social Liberal re: the 50p tax rate.

    High earners took bonuses early (at 40%) in 2009-10 or late (at 45%) in 2011-12 to avoid the 50% rate and give the result that the parliamentary party all too happily signed up for that 45% was somewhat higher that 50%.

    All the Laffer curve theories, brain drain, perceived ‘closed for business’ and capital flight fears were never tested (some of us think this is because this is all bunkum)!

  • Neil Sandison 9th Jul '15 - 9:33am

    Like most budgets it is early days yet to understand the full implications of it, and we still have the Autumn statement to come .Will there be a pasty tax or caravan tax moment which can unravel a budget who knows .We should wait and see .What is clear is that there are big losers across a range of low income groups from the young to low income households and public sector workers .If anything Osborne did not go far enough in raising tax threasholds to offset tax credit withdrawals.The welfare safety net is severely damaged .
    Some of your correspondents are right we shouldn’t blindly following the whinging labour party route but use our skills to put together an alternative Liberal Democrat response .

  • Richard Underhill 9th Jul '15 - 9:38am

    The Chancellor cheerfully says that the UK is meeting the 2% NATO target on defence spending which David Cameron had pressed others for at Cardiff.

    Apply details:
    War Pensions are included, correct of course to pay them and to exercise discretion in favour of claimants, but they are a welfare payment;
    Trident is hugely expensive, so that even former Tory, former Defence Secretary Michael Portillo ranted against it recently.

  • I do wonder if it is time to stop saying ” now the country will see how truly awful a majority Tory give without the Lib Dems will be” because a good many people are saying now ” oh they’re not that awful, yes they are awful but not as much as the Lib Dems said they would be” .

  • @A Social Liberal & D

    It doesn’t matter what you set that tax rate to, hardly anyone pays it. Long before that you or your company (or your accountant) will realise that the best way to approach this problem is to make you a director/shareholder of a limited company, pay you the tax allowance in wages and the rest of the money in dividends. You only pay tax on dividends if you’re a higher or additional rate taxpayer, even then it’s far lower. If you’ve got a partner, things are going to be even better.

  • I’m surprised by Norman’s comments on the £8bn NHS pledge. He said everyone knows it’s not enough… well why did we spend the whole election saying we would commit £8bn to health? I’m confused.

  • Theakes: yes, I started work at 17, and now have an Open University Science Degree. ( Social Justice level 3 came into this) give it a try.
    Eddie: yes, but there is a different level of poverty and resilience in Africa. (I have worked there too).

  • nvelope2003 9th Jul '15 - 12:26pm

    Eddie Sammon; It is sad that people are living rough under bridges etc but they are only a small minority in a population which has a standard of living which many people in places like Africa, Philippines, South America etc can only dream about. That is why so many of them are so desperate to get here though if they were all allowed to come in living standards in Europe would fall as the wealth had to be shared by many more people.

  • Sammy O'Neill 9th Jul '15 - 2:29pm

    @ASocialLiberal

    It did not run for “several weeks”, that is just completely wrong. I refer you to the HMRC report below. Note in particular the conclusion that it has a negative effect on GDP, most probably led to an actual DROP in tax revenues, raised nothing like what it was claimed it would, that the rate was damaging to competitiveness and made the UK a less attractive place to work and invest.

    http://webarchive.nationalarchives.gov.uk/20140109143644/http:/www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf

  • Sammy O'Neill 9th Jul '15 - 2:30pm

    @D

    I would encourage you to read the Mirrlees review, which sets out (amongst many other things) in wonderful detail why a tax rate of 50% would be inherently harmful to the UK both in terms of revenues and the economy generally.

  • A Social Liberal 9th Jul '15 - 2:51pm

    Sammy

    “In fact, Labour didn’t put the top rate of tax up until shortly before they lost the general election.”

    From the BBC

    http://www.bbc.co.uk/news/uk-25894312

  • Sammy O'Neill 9th Jul '15 - 3:23pm

    @ASocialLiberal

    The coalition didn’t instantly reduce the 50% rate 3 weeks later. Please read the report (or at least the conclusions) I linked you, it will aid understanding.

  • Eddie Sammon 9th Jul '15 - 4:41pm

    Hi Sammy. When it comes to the 50p rate I actually support a 48% rate because of the 2% NI and I am also open minded towards increasing the starting threshold to £200,000.

    I am clear though that we need to tackle people like billionaires just getting richer and richer. We can’t just say it is fine no matter how rich they get.

    I have other ideas for tax reform, such as a net-asset tax. Someone who earns £200,000 one year should be taxed less than a billionaire who earns another £200,000. But this could be costly to implement and collect.

    Joan, nvelope, I just think people sleeping in the freezing cold is very had. I know there are no easy solutions, but as soon as I hear about bad weather on the TV it is one of the first things I think about.

  • @Sammy O’Neil

    I’m D – chrome autofill omitted by surname above – strange for google not to share personal information – 😉

    The Exec Summary of the report you link to talks about £16-£18b of forestalling and also the possibility of people delaying tax . Therefore my conclusion is that we haven’t really tried the 50% rate!

    That said there is a lot of good critical thinking/theorising regarding optimum tax take. The Mirlees report said 40% as a maximum but “there is no escaping the uncertainty around the estimate of a 40 per cent revenue-maximizing income tax rate “. Some might counter that Scandinavian (with 55% ish top rates) don’t do too badly!

    I am generally ambivalent about the top rate – that said I thought the symbolism/politics of it was one of our many errors in coalition. Given a couple of years at 50% we would have known conclusively and could have made an informed decision and avoided lap-dog comparisons (although I suspect the die was already cast with the electorate)!

  • Peter Watson 9th Jul '15 - 5:20pm

    @D McKay “Given a couple of years at 50% we would have known conclusively”
    I recall that when the change was made it looked like the timing was necessary to show an increase in tax revenue before the 2015 election as some people deferred taking salaries/dividends/bonuses under the 50% regime, while any reduction to a more normal level would be after the election.

  • Jen – yes debt!!

    Where have you been for the period of coalition? The LDs were responsible for a massive hike in students debts. Hardly consistent with their message for the past 15 years. In fact the last time I remember LDs speaking out against it was just before the 2010GE when they wanted votes off students and young people but we all know how successful that was for the LDs.

  • This budget, whatever else it does, finally disproves the Lib Dem claim that the Tories on tyheir own would be able to move hard to the Right.

    Before the election, the Tories promised only £12bn welfare cuts. Now they have softened the pain somewhat, by a £4bn rise in the incomes of those on the raised minimum wage. Their bark was worse than their bite.

    Before the election, the Tories said they would get rid of the deficit in three years. Now they have slipped that to four years and softened their austerity policy.

    Why have they done these things? Could it be that, now they are governing alone, they are more fearful that public opinion might turn against them, and feel the need to moderate their policies?

    It seems that Norman Tebbit was right – the Clegg coalition helped the Tories move faster and further to the Right. Now that they do not have Clegg to help provide “centrist” cover for right-wing policies, the Tories have had to somewhat moderate their policies.

  • This actually a vicious budget for most working families, David Allen – all those under about £30000 pa, who will lose £1000+ in tax credits. Try the BBC budget calculator if you don’t believe me.

  • Richard Underhill 10th Jul '15 - 7:35pm

    During the general election I emailed the local Tory, ex-MP standing again, to ask whether he had George Osborne’s assent to all the spending promises. There was no reply then, nor since.

  • GP Purnell, I entirely agree with you. My point was only that the plans which the Tories put forward in the election campaign were even tougher. They have slightly softened their approach since the election. In my view, they have done that because they are now governing alone, and they therefore have to be a little more cautious than they were when they had the Lib Dems supporting them.

  • Richard Underhill 12th Jul '15 - 11:01am

    Nick Clegg will be interviewed on the BBC TV Sunday Politics on 12/7/2015.
    The programme starts at 11.00.
    Labour’s interim leader Harriet Harman will also be on.
    She could be asked about what her education spokesman said on the Andrew Marr Show.
    He is not running for leader this time.

  • Richard Underhill 12th Jul '15 - 11:08am

    Playing Australia at cricket is like playing Brazil at football. We do not always win.
    In the most recent series of matches in Australia we lost five nil.
    The current team has a mix of youth and experience.
    They played Australia in Cardiff, winning the first five-day match with one day to spare.

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