Thursday, July 09, 2015

The Budget.

Never thought I would ever hear a Conservative Chancellor announce a compulsory National Living Wage. Was sitting near Ian Duncan Smith, who celebrated like he'd won the lottery. Probably because a philosophical shift in strategy to tackle poverty through work rather rather than welfare matters more to him. It's been his dream for years. Labour MPs were stunned into silence. I was sitting on the step in front of an annoyingly shouty one, who had her voice cut from beneath her feet. They were all so stunned that George Osborne repeated the paragraph. He thought they had not quite grasped the enormity of what had just happened. It was one of the great moments of my Parliamentary life.
Lots of stuff in today's budget. But this philosophical shift was the biggie. We knew that the Chancellor was going to take £12bn out of the social security budget. He told us that during the election campaign. We didn't know the precise detail, but everyone expected a cut in working tax credits which have ballooned to an eye-watering £30bn. Won't pretend I wasn't worried about this. I represent a low wage area. I had hoped for an increase in the Minimum Wage. Well, out of his top hat, the Chancellor pulled the big fat rabbit of a compulsory National Living Wage. Lots more detail to understand and looking forward to reading the analysis, but the tone of this Parliament was set in one sentence.
This is one hell of a shift in policy. I still remember the Conservative Party opposing the introduction of the Minimum Wage. Seen as a threat to jobs. And of course today's announcement is. I've already had emails from local employers concerned about competition in the export market. But we are told the number of jobs which may be lost is around 60,000 - set alongside the anticipated extra million jobs predicted to be created over the next five years. 
Lots of other big stuff as well. Totemic was the commitment to 2% of GDP to be spent on defence. That's Conservative. Corporation Tax down to 18%. That's Conservative. Freeze on fuel duty. That's welcome in rural Montgomeryshire. End of non dom status scrapped for permanent residents. That's fair. Inheritance Tax changes. That's welcome but small beer, and why on earth is it limited to the house and not to 'the estate'. Plenty more not so welcome too. That's unavoidable in the circumstances. 
There will be losers in today's budget - inevitable when reducing the annual deficit from £80bn to balance. Most people in Britain will accept that today was necessary. It was what the Conservatives promised the people before they voted on May 7th. We do not want to end up like Greece, and after today, we very definitely will not.

1 comment:

IanJ said...

Like you have to wait for the full details to emerge and the in depth analysis/diatribes in the press, but looks good and many of the bigger changes are being phased in over several years and with plenty of notice.

Disappointing that some of the allowance changes don't appear to be being legislated with the claimed linkage to "lock in" the change i.e. the allowance rise to mean people on 30 hours don't pay income tax, or even the National Living Wage where the figures don't seem to relate to the existing calculations of a Living Wage