Monday, June 21, 2010

The Budget - the correct decisions

Sound money, getting the deficit under control and the structural deficit eliminated, a rise in capital gains tax, an increase in the personal allowance of £1000, capital spending protected, measures to help businesses start up and employ people in the regions, restoration of the pensions rise to earnings, clamping down on runaway housing benefit costs (the current system simply pushes up rents and puts more money into landlords' pockets), the bank levy, the rise in the children element of tax credits for low income families, the reduction in benefits to wealthy families that don't need them, help for councils to freeze council tax. These are all the right decisions.

There was a cheer from me when it was announced the upgrade of the Tyne and Wear Metro will go ahead. Let's hope all those Labour members who were shooting off statements attacking the Lib Dems for "cancelling" the plans will be applauding as well.

The costs? Clearly the rise in VAT is one of them. Remember however that most basics, such as most foods and children' clothes are exempt or like domestic electricity, charged at only 5%. These exempt items form a higher element of the basket of goods bought by people on lower incomes. And the wealthier pay considerably more VAT than those on low incomes.

Pay freeze in the public sector: yes, that is an unfortunate price but given the choice between more public sector job losses and better pay in the public sector, which would you go for? And don't forget, those on incomes of less than £21,000 will get a pay rise. But don't forget, many people in the private sector have taken pay cuts to protect their own jobs. Many have cut their hours. The private sector has already taken the pain. The public sector cannot be treated differently.

The budget needs to be considered in it entirety. It is aimed at putting the economy and the finances of the nation back into order and ensure the pain is shared across all sections of the community whilst avoiding putting too heavy a burden on people on low incomes. I believe that whilst the Budget is not perfect, the right decisions have been taken.
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