Budget: Coalition fails its first test – and, pul-lease, spare us the codswallop about ‘hard choices’
This post supersedes all previous posts and tweets on this subject, which I hereby retract.
The Institute of Fiscal Studies verdict is very clear. The Budget will “hit the poorest the hardest“. Nick Clegg cannot wriggle out of this one. Just look at this graph here - it is mind-blowingly unequivocal.
The two counter-arguments to this, which Nick Clegg put up this morning, are:
1. If you take into account measures already announced by Labour with the latest budget, then the overall impact is that it hits the poorest the least.
In other words, Labour weren’t that bad after all. Their announced measures were progressive. The budget does hit the poorest the most and is regressive. But if you take Labour’s progressiveness and the coalition’s regressiveness, it adds up to progressiveness. Codswallop. The budget hits the poorest the most – there is no getting away from that. The design was wrong and Clegg seems to have been duped (the dupes in the government seem to be on the front bench – not the back bench as in the case of the opposition, as Cameron referred to them yesterday) by the treasury tables. And it doesn’t take a genius to work out where the flaw is. VAT. If only the government had had the courage to implement an increase in income tax targeted at middle and high earners, we would now be looking at a progressive budget which hits the poor least – the litmus test for the coalition government, as far as I am concerned and one which the government has failed. And please, can we have no more claptrap from Clegg etc about “hard choices have to be made”? It’s quite simple. Your self-given task was to design a progressive budget which hits the poorest the least. Instead you produced a regressive budget which hits the poorest the most. You have failed and it has nothing whatsoever to do with ‘hard choices having to be made’ – you made the wrong choices – pure and simple.
2. If you take into account measures the government has not already announced, the budget is progressive, hitting the poorest the least.
I can’t believe Nick Clegg had the audacity to say this on Today this morning. This is entering the realms of fairy land. Total cloud cuckoo stuff. Ridiculous. In any case, it implies/assumes/confirms that the poorest are hit the hardest first but then might get a bit of relief in a few years time. At best it’s an admission by Clegg that he has failed to protect the poorest. At worst, it makes a complete farce of the government’s position.
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16 Responses to “Budget: Coalition fails its first test – and, pul-lease, spare us the codswallop about ‘hard choices’”
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Burbler-in-chief
Good post Paul. My gut reactions to the budget were ‘This is awful’, ‘I think I’ve shoved my last Libdem leaflet through a Newbury letterbox’ and ‘Where’s that online Labour Party membership page?’. Then I thought forget gut reactions – we all know that the devil is very much in the detail and it’s difficult to tell much from the budget speech itself.
The IFS has confirmed my gut reactions were correct – what on earth were Clegg, Alexander and Cable thinking when they agreed to this budget?
Shall we blame naivety, incompetance, or a fatal combination of the two?
I forsee that a split in the parliamentary party cannot be far away. If not, the (slow) death of the party cannot be dis-counted.
Define `poorest` – perhaps it depends whether you think income inequality and percentages are an end to themselves or whether you think like most working people that can’t claim anything that there’s INEQUALITY between the working poor and those that can claim.
I think there’s a definite fork happening between two sides of the Lib Dems to do with what happens in five years time – once the deficit is reduced and unemployment is trending downwards and the economy is growing stronger do you use the fruits of that to provide more lollipops for everybody or do you use it to raise tax thresholds with an economic climate trending towards ensuring that those that can work have decent jobs and pensions while those that cannot have an good standard of living.
Unfortunately, too many Lib Dems fall into the trap of fetishising income inequality without looking at its many facets including how people can help themselves as part of the deal.
Health inequality – quit smoking, drink less and learn to cook – ok not the most sexy of slogans yet surely there’s something in that
Income inequality – get a job, learn a skill, devolve power so that regions can start to stand on their own two feet
Educational inequality – phase out child benefit and phase in a hypothecated lowering of class sizes
Have you not thought that the IFS might be using the wrong assumptions to model its formula on?
Thank you, so I’m not the only Liberal Democrat supporter who feels completely let down.
Personally, I’m terminally ill and feel pretty vulnerable as it is – this budget has just added to my feelings of vulnerability.
You’ve accused me of being a Labour troll in the past but I’m not, I just don’t know who to support anymore.
So voting to bring down the Coalition now are we ? It’s only been two days since you found the budget sort of OK, and now you are RETRACTING all your previous postings ? ‘Feel’ that it is just so unfair? Only after a few weeks of intensive immersion in LibDemdom and already I ‘feel’ completely ‘feeled out’. It’s something like being wrapped up in a children’s crusade must have been.
Just FYI and all –
There is absolutely nothing wrong or immoral in saying that a situation is ‘progressive’ because of the mere act of retaining some things that had been proposed previously by the OLD Government. ALL things proposed by the OLD Government are automatically null unless specifically re-authorized by the NEW Government. So the choice of what to retain IS a choice and DOES count towards an evaluation of the ’tilt’ of the new legislation. It has nothing to do with Labour being ‘good’ or ‘bad’. It has to do with the perceived merits of alternative courses of action. It matters not who first proposed the actions. So it is perfectly legitimate for Mr. Clegg to claim that “if you take into account measures already announced by Labour with the latest budget, then the overall impact is that it hits the poorest the least.”
I of course hope that the LibDems don’t implode over the difficult decisions that the economic crisis(which is not over by the way —- it was NEVER over, so at least you don’t have to worry about that double-dip) will make increasingly necessary, but it’s too late to turn back the clock now. Even if the Party decides to take its few toys and go home in a sulk, Cameron now has the template, for his centrist re-alignment. A template he can plug in after he easily wins the election that would be forced by a collapse of the Coalition. A template for a Tory Government with a LibDem face. But with the added advantage of not having to worry about the LibDems themselves. I’m pretty confident that he could snag more than a few Libdems to join him should it come to that.
History is now ‘on the march’. There will be either a Coalition or a Majority Conservative Government in office for the next 4 years. The outcome in 2014 is by no means assured, but the steps to be taken to that point are increasingly clearly marked. Maybe Osborne is wrong but he’s still going to the end of the line. And so is everyone else. I’m not sure about the ‘private sector’s’ ability to generate lots of jobs in the future, but I am sure that the UK can’t afford its current Welfare State any longer. So changes are coming and can’t be stopped, and if you are this upset by the VAT thingy(really small potatoes in the BIG PICTURE), wait until you see what those 25-30% reductions in State Operations really mean. They are coming too.
Would income tax had raised enough money? I’d rather a bigger increase in the income tax threshold, mind. The ‘good’ thing about VAT is that it is almost unavoidable, where as income tax is. Also, do you really think Labour wouldn’t have raised VAT?
In other words, the manifestos were works of fiction; this is the reality. Who’s to say Labour’s IFS charts would have looked any different?
Bob – many thanks for your comment and very best wishes to you. Paul PS. Sorry to have accused you of being a Labour troll.
Goodp oint on Labour.
“Maybe Osborne is wrong but he’s still going to the end of the line. ” Could be unwise to bet on that. And I think the 25-30% cuts will be tempered.
[...] Paul Walter is not impressed with the budget either… [...]
Tax/benefit “Fairness” should be based on disposable income not total income. The richer elements of society benefited most from the financial bubble leading to the crunch they should pay the most to address the problem created. Fairness? sell your yacht don’t ask the poorest mothers to sell their children’s future.
You are right – the graph you link to (showing VAT) will hit the poorest hardest. It is Tory measure, and if it had been a 100% Lib Dem Budget, I have no doubt that we would have kept VAT low whilt not lowering corporation tax as much…
However, you do not link to the rest of the graphs showing the overall impact of the Budget on incomes which whilst both mildly regressive at the lowest end and very progressive in taxing the richest lots, by 2014-15 it becomes wholly progressive, helping the poorest by far.
I am a Lib Dem. I am a centre-left Lib Dem. I do not like the VAT increase. But you should not be so selective with your figures.
Sorry. I didn’t even look at the other graphs to be honest. So it was lack of research rather than selectivity. Selection by incompetance and carelessness, if you like. Thank you for that point.
[...] Why are you trying to pretend that your budget doesn’t hurt the poorest most when it manifestly does?Bad Answer: WAAAAAAAAAAH THAT’S NOT TRUE AND ANYWAY IT’S ALL LABOUR’S FAULT!Good [...]
[...] Paul Walter is not impressed with the budget either… [...]