Ronald Rankin writes with the following critical review of George Osborne’s budget. Note that these are Ron’s views, and don’t necessarily represent those of Positive Money as an organisation, but there are some pertinent points below:
Some people who are members of the Conservative Party received a personal letter from George Osborne, explaining some of his own key points from his budget on 23rd March 2011.
I remember the Budgets of the 1950s and 1960s when Chancellors of the Exchequer would move very little way from the old two pence on a pint of beer and a penny on a pack of cigarettes. Gordon Brown was the first Chancellor early on to attempt social engineering with his Budget. Osborne’s Budget is a ragbag of small changes and indecisiveness brought about mainly by having little room to manoeuvre between cuts in public spending and services and opening the money floodgates to a tsunami of further debt.
Point (1) He talks about “a cut in fuel duty by 1 pence per litre”. He could not even get the English language right! Anyway, one penny off a litre of fuel @ 130p would enable a petrol driven car which does 30mpg to go approximately 80 metres further. A delay to April’s proposed inflation rise in fuel duty is presented as saving the consumer a further 5p a litre. So logically, if a proposal for a future increase in the price of petrol to £1,000 a litre were cancelled or just delayed, we should therefore have a feel-good factor in the present for this. The Government of course does not wish to lose revenue, so is proposing to increase taxes on the oil companies. Baby could get thrown out with the bath oil!
Point (2) “£250 million to help 10,000 first time buyers get on the housing ladder.” How is £25,000 to be ‘given’ to each of the 10,000 buyers? The Government has to borrow this money at interest from the Banks. In order to buy each house at an average value of £250,000, the buyer of each house has to borrow £225,000 as a mortgage over a great many interest charged years. Banks again are in another win/win situation. The other faux pas is in the words “housing ladder”. People are, even now, being encouraged to look on a house as a speculative asset and not as a place to enjoy living in. Plus ça change, plus c’est la même chose.
Point (3) Extra money for Councils to supposedly freeze Council Tax for yet another year. Keep the mushrooms in the dark as to the real cost of extra borrowing to pay for that. Already, almost every Council in Britain is up to its eyes in past and continuous debt anyway.
Point (4) Two peculiar proposals in connection with charitable donations. Gift aid to be claimed on street tin collections instead of just being limited to claimed back tax from known donors. Also, if you leave 10% or more of your heritable estate to charity then the Government will take just 10% off your inheritance tax bill. If you wish to see in detail how this is just a version of the three card trick, see Tom Levitt’s VoluntarySectorNetwork blog in the Guardian of 25th March 2011.
Point (5) “We need to create growth and jobs in the future”. We need this NOW, and anyway you can only promote jobs in the private sector, not create them, and the biggest and oft-repeated mantra of all politicians is the cry for ‘growth’ in the economy – which is as elusive to pin down as the Holy Grail.
Point (6) “New Enterprise Zones and new broadband to promote growth across the country”. Well a fat lot was achieved by all the enterprise bodies set up in the past, including Scottish Enterprise. Presumably his broadband means carrying out the Gordon Brown promise to roll out 20Mbs to every part of the country. He should perhaps be aware that the imminent future will see mobile technology consigning landlines to the dustbin of history.
Point (7) “£100 million for new science facilities” (as opposed to 3,000 times that). “£3 Billion for a Green Investment Bank which WILL generate an additional £15 Billion in private sector investment”. I think you could get ‘more bang for our bucks’ from the former rather than the latter!
Point (8) “50,000 additional apprenticeships and 100,000 work placements for young people”. I recall the days gone by where real apprenticeships supplied by companies could take 5 years to learn your trade properly. Not all that long ago, the Government paid employers to take on youngsters for 6 months, and at the end of the ‘free lunch’ period the youngsters’ services were terminated.