There are elements of this budget we as social liberals, and of course Liberal Democrats, can be proud of, though the removal of the 50p rate of income tax is something we would clearly never endorse; those with the broadest shoulders should bear the heaviest burden.
But the single state pension, at £140, is an excellent example of successful Lib Dem influence, as is the establishment of the green investment bank – neither would have happened in an exclusively Tory government.
Raising the income tax threshold to £9,200 is manifestly a welcome implementation of the long-standing Liberal Democrat commitment to fair taxes, as is the hike in property taxes and the “tycoon tax” measures to tackle avoidance. This demonstrates we’ve won the argument on shifting taxes onto wealth.
The political challenge now facing the Party is to show that these loophole closures and the stamp duty changes on properties worth more than £2million will mean the rich pay more despite the 50p rate being cut to 45p. Letting off the wealthiest at a time when many people are suffering is not something the Coalition will be easily forgiven for, and rightly so.
Clearly, as this was a Coalition budget, we could never have obtained all the changes we wanted (such as mansion tax, effective measures to stimulate investment and job creation), and we should not gloss over the Tory-led top income bracket tax changes, the corporation tax cut from 25% to 23%, and a further £10billion of cuts to welfare.
Liberal Democrats now have to ensure that impact of these measures does not outweigh the clear wins for the Party, economically and politically, and there are particular regional concerns as well as the impact on some pensioners and those unfortunate enough to find themselves outside the mainstream which this budget is aimed at. Half a million pensioners potentially being worse off is something no one can be proud of. We as social liberals should also be aware of the risk that this budget, hot on the heels of the Welfare Reform Bill and the NHS Bill, takes us a step nearer to a kind of society which favours the fortunate and punishes those less so.
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.