What Liberal Democrat Bloggers are saying about the Budget – Part 2

The Liberal Democrat blogosphere is continuing to talk about the Budget, so here are some of the latest offerings.

Sandy Walkington thinks that the Budget is a dish best observed cold.

I tend to aim off from all instant, hyperbolic reactions to the Budget.  When I worked as a press officer in the oil industry, Budget Day was a time for synthetic outrage at the latest iniquity heaped on the long suffering motorist or on the plucky explorers of the North Sea.  And then the sun continued to rise and set.

In the current global economic circumstances which only compound the reckless public expenditure annual deficit left by the Labour administration, the Chancellor cannot create a rose garden.  It’s going to go on hurting as we work to get things back into balance.  That’s why it is so important that the burden is fairly shared.  I confess to being very uneasy at the reduction of the 50p top tax rate at this moment, and will look for objective evidence that the total tax collected from the top one percent of earners will indeed have gone up (and by a substantial sum) as a result of the overall tax measures.

Liberal England finds the Budget to be surprisingly radical:

 I am told that cutting the 50p rate was the Conservatives’ chief demand from the budget – which perhaps tells you all you need know about the Conservatives. In return for allowing them this, the Liberal Democrats can point to a bundle of measures against tax avoidance that, it is claimed, will bring in five times more than the tax cut has saved.

George Osborne would probably have brought in some of those measures in any case, but what is more significant is that the tax has been reduced only to 45p. There is 5p still to come, and there is hope that in return for granting that the Lib Dems will be able to secure a mansion tax or at least some moves in that direction.

Neue Politik talks about the real life effect of the Liberal Democrats’  tax threshold rise:

I was sitting at work a few months ago and one of the part-timers at the company I work for was talking about how strange it was that she was no longer paying income tax. She said it was absolutely fantastic to get that little bit extra a month in her pay packet. I was quick to point out that this was due to a Lib Dem policy that the Government was pursuing (never miss an opportunity to evangelise…) But when I explained that the threshold would increase again this year, several other colleagues realised they too would soon be out of income tax altogether. They were, needless to say, extremely pleased.

Mark Thompson says that the Conservatives have lost the next election:

Maybe he thought hitting pensioners in the budget would help with his “all in this together” narrative. Maybe he thought the fact that the state pension is now rising in line with earnings for the first time in decades would mitigate the political fall-out. If so he has misjudged how political announcements are assimilated. The good stuff is quietly banked by the winners but the bad stuff will be shouted about very loudly by the opposition and pensioner groups. That is what will be remembered about this budget by the very people Osborne needs to vote Conservative if they are to get a majority in 2015.

The Party’s own expert bureaucrat has some facts about the cynically named “Granny Tax”:

On pensioners, the gradual loss of the additional personal allowance will not affect all pensioners, particularly female ones, who are more likely to be poor and not pay income tax anyway. It also won’t affect pensioners with income higher than £30,190 either, as they would have lost any additional sum in its entirety anyway (the allowance is lost at a rate of £1 for every £2 of income above £25,400 at present). And for those in between, the additional state pension will more than cover the effective real loss of allowances.

Thinking Liberal thinks the Budget shows the Coalition at its best:

One of the interesting features of the budget has been the disappearance of budget “purdah” – the absolute secrecy surrounding budget proposals.  Mr Clegg made the early running in the media game with his bid for an acceleration of increases to personal allowances.  But Mr Osborne clearly understood this to be an opportunity rather than a threat – in this case to reverse the top rate of income tax of 50%, which until a month or so ago looked to be entirely off the agenda.  A few years ago the Lib Dems had a big conference battle over this top rate (before Labour introduced it, as it happens) and rejected the 50% – so there was evidently some Lib Dem ambiguity over the tax, which Mr Osborne was able to exploit.  And indeed world thinking has long since turned against such high marginal rates, even for the very rich.

And, finally, a cautious welcome from the Social Liberal Forum:

Social liberals should apply same test to this budget as to all government economic policy – moving beyond a narrow debate on marginal tax, does it move us closer to a fairer, more sustainable economy with full employment and a better spread of risk and reward? The implementation of many Liberal Democrat measures means that some progress is being made towards this goal, but future policy needs to be more radical, positive and constructive if Lib Dems are to be seen delivering our values in Coalition.

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

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10 Comments

  • Paul Murray 22nd Mar '12 - 8:48pm

    I thought that this was a good budget that clearly and convincingly showed Liberal Democrat influence. What was most pleasing was that Nick Clegg’s work on the “tycoon tax” appears to have been worthwhile.

    Before the budget I had felt certain that “tycoon tax” was going to be a meaningless platitude as the Conservatives helped their rich friends in The City. So I was delighted to be proven wrong.

    It was good to hear that that pension contributions will be capped at 25% of income, ensuring a minimum tax rate of 25% on income. I was also extremely pleased to hear Osborne’s aggressive tone in relation to attempts to find ways round the new 15% off-shore company stamp duty.

    I felt that a thread of progressive, positive Lib Dem influence ran through this budget. Well done, Nick and the team.

  • Malcolm Todd 22nd Mar '12 - 9:07pm

    “Nick Clegg’s work on the ‘tycoon tax'”

    Are we really falling for that? The whole notion appeared about two weeks ago out of a blue sky; god knows what difference it will really make, but I certainly don’t remember it appearing in any LD policy pronouncements. Does anyone think it wasn’t a stitch-up to try to make it look like Osborne had to pay a price for cutting the top rate?

  • Malcolm Todd 22nd Mar '12 - 9:58pm

    @Simon — you don’t see the relevance of whether it’s a Lib Dem policy to whether it can really be counted as a Lib Dem win?

  • I am a pensioner. I have a good pension. I have this because I was lucky enough to enjoy a decent career which I chose amongst a number of alternatives and remained in full employment all my life. I enjoyed free higher education paid for by my employer. I paid 5% deposit on a house and duly moved into a bigger one. I am happy paying income tax because of what I have left and remember where I came from. I suggest there are may pensioners who have enjoyed the advantages I have enjoyed. Less fortunate penioners will have a pension increase greater than the potential loss of increased allowance. many don’t pay income tax anyway.
    Maybe it is time to think of the less fortunate and that consissts of the younger generation But there is no headline in that.

  • Nick (not Clegg) 23rd Mar '12 - 8:47am

    @ BrianD

    Please bear in mind that the main losers from the phasing out of the higher rate of tax relief for over 65s will not be those with relatively good pensions. According to economist Ros Altmann, director-general of the Saga Group, the main losers will be pensioners with incomes between £10,500 and £24,000.

  • Nick (not Clegg) what are @main losers’? Are they pensioners who will actually suffer an income reduction or those who will not recieve the anticipated higher rate of tax relief?

  • Nick (not Clegg) 23rd Mar '12 - 10:32am

    @ BrianD

    As Stephen Lloyd puts it, in a separate post, they will not be “worse off in cash terms”. They will ,of course, be worse off in real terms since the tax relief will not increase with inflation, as it has until now.

  • Nick (not Clegg) But pensions will go up by one of either CPI, avge wages increase or 2.5% whichever is the greater. Now please show me the sums where 0.2x inflation on nett taxable income (i.e the effect of increased allowance in cash terms) which is the loss resulting from no increase in tax allowance , is greater than an inflation allowance or other possible greater increases on the whole income.
    I can’t believe that Labour, given its record on pensions when times were flush has the cheek to even mention Pensions!!

  • Nick (not Clegg) 23rd Mar '12 - 4:05pm

    Brian D – I have no brief for Labour, so I will not comment on your final sentence.

    I’m afraid that the sum which you ask me to do is rather beside the point. The point is that the change which the Chancellor introduced on Tuesday is projected to raise £3.3 billion in revenue over the next five years. That is money out of the pockets of pensioners on relatively small incomes (the elderly members of the “squeezed middle”)into the exchequer. You can, if you like, argue, as some have done in other threads on this site, that that is perfectly fair because “we are all in this together” and it is right that pensioners should bear their share of the burden.

    I would suggest to you that arguing that case on this site is one thing; arguing it on the doorsteps having given the press and your opponents two days’ head start might prove a rather different experience. The problem for LibDem activists is that the government and the spin doctors in both coalition parties made a monumental error in not foreseeing the reaction that this announcement would provoke. It was almost bound to do so for two reasons:
    1. That, as practically every other headline measure in the budget had been leaked and spun before the Chancellor stood up to speak, this was the only piece of “news” left for the media to latch onto
    2. That , in any revision of the tax system , it is always the losers who make the most noise (I’m wondering why, so far, we have heard so little from those who have just been lifted into the 40p tax bracket; perhaps they haven’t noticed yet; or perhaps they vote Tory anyway and realise that there is little point in asking Labour to help them out on this one!), and pensioners ‘ representatives have become pretty effective campaigners in recent years.

    There is a very good account of how this error came about in Roland Worth’s column ” How Osborne’s team failed to foresee the granny tax furore” on page 9 of today’s “Times”. And a leading article, broadly in favour of the change, in the same paper describes it s introduction as “A near-textbook case of political mismanagement”

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