2012 Coalition Budget: SLF Response

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.

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9 comments on “2012 Coalition Budget: SLF Response
  1. John Doran says:

    All this week’s events have done, is move me closer to the exit door. Utterly ashamed.

  2. There are a number of questions we should ask ourselves. Firstly will this improve the lot of those on the lowest incomes? The raising of the tax thresholds partially addresses this, but notably not in the case of those who already do not pay tax, many of whom have had their benefits cut. These are of course the poorest people in our society. Also this policy has to be funding by even more public spending cuts, which in turn depresses growth and will hit the poor.
    So if helping the poor is our main concern, this policy is not well focussed in doing that. So not as good as it could be.
    Another question is how Green is this budget? Osborne gives the impression that he couldn’t care less on this and on those grounds he really should not be chancellor.
    Another question is on growth strategy. Cutting back regulations on employment protection and environmental protection are fundamentally not what we are about. I am not sure he mentioned this in his budget, but it ought to disqualify him from the job.
    There are many other points to make, but that will do for now.

  3. N Dixon says:

    Once again pensioners have been seen to be an easy target. This recent budget does not help those who have worked and tried to save for their old age, why bother?
    It would seem that the government is more interested in spending our money on other countries or to those who have never contributed in any way, with families who do not even reside in the UK, that looking after its own elderly.
    All political paries should remember, that it is those in their senior years who normally vote, not the young. I have no doubt that pensioners dismay will be reflected in the next local elections, and again at a later date when the country goes to the polls in 2015.
    We may be old, but we can still make our voice heard and will do so.

    • Monica says:

      Now, whilst I agree that Labour will porlabby lose next time, given that I don’t see anything significant in the Tory programme which will turn things around, I think the latter post is evidence-free.Politics can change very quickly. You get a Tory government, some sort of economic collapse/crisis, a change of labour leadership, a distinctly different policy, and bingo! Labour are back in power.I recall times when both the Labour and Tory parties have been written off. Spim.

  4. owen hockey says:

    any one who supports a tory goverment that includes libdems should be ashamed,i have seen and heard your m.p.s wriggle and squirm but they have not said sorry for the damage they have helped to make on our n.h.s.not theres or the tories,this n.h.s.does need reforms but not tory ones,listen to those who work there not m.ps,rember it was us in the t.u. no one else who fought for years to get the health service in the first place,against tory & liberal oppostion,just look at the mess in care for the elderly all privately run for profit of course not for the old folk,read the blog of(a benifet scrounger)then hide in disgust as to what you party supports

  5. Richard Coe says:

    For a lot of people just above the threshold the changes to VAT and the withdrawal of tax credits, coupled with high inflation means they are worse off.

    Anyone working in the public sector is suffering under the “banker tax” which has been applied to them alone via their pensions contributions.

    The result is that due to other tax changes introduced by the coalition, most people in the mmiddle and bottom are in fact worse off. In my own case the BBC estimate I will gain £124 from the budget, however as a teacher the NUT estimate that the public employees “banker tax” will cost me £846 a year. I am aware that I earn above the median, but I think we still count as being in the middle.

    This would be fair if there was any evidence that the pension scheme was underfunded, but there is not, indeed quite the contrary an FOI response indicates that the main reason for the increased contributions to the public sector schemes is being made so that the government can steal our pension funds. (Teachers pension contributions are currently worth billions more than the government has paid out)

  6. Mike Cobley says:

    It seems that many in the party believe that the LDs should be praised for the measures that we put forward but not held accountable for the damage wrought by Tory-derived policies. Unfortunately, there are not two governments in this country, a nice, progressive Libdem one, and a nasty, grasping Tory one. There is just the one government in charge and all those who work in it and support it with Commons votes must carry the blame for whatever is done in its name.

    Which includes the loss of 100s of thousands of public sector jobs, a catastrophic self-mutilation which has brought about the thoroughly predictable plummet in demand and the flatlining economy in which we currently trudge along. No-one can possibly be so obtuse as not to understand the consequences of mass unemployment, yet the leadership of this party displays not a shred, not so much as a flicker of genuine remorse or regret.

    Which is why this party member feels no pride at all in the budget or any other coalition policy.

  7. Yellow Bill says:

    This budget was, despite the best spin of the government (including Lib Dem ministers), a rich mans charter. Unless he or she is buying a house, those have most will have significantly more in their pocket. Conversely, the most needy who have to suffer the extortion of high private rents (London, York and other expensive places to live) will have the amount of money coming in cut.

    This is not cleansing as some are saying, but gerrymandering on a scale that far exceeds the worst excesses of the Westminster council of the eighties.

    Shame on you.

  8. owen hockey says:

    Clegg and his party got in bed with a corrupt con.party,there party is paying the price for there greed for power,Osborne and his ilk only think of the rich not the country like he says,LibDem mps have gone along with the biggest set of self centered tory mps we have had the misfortune to rule us like Maggie before there is only there way ever one else is wrong(poll tax ring any bells?)you have helped them destroy our NHS for that you will never be forgiven,shame on any LibDem for support of the robber barons in disgust O Hockey

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