HAND MADE PRODUCTS FOR YOUR HOME

Facebook black small Twitter black small

find us on

BLOCtrans

Our budget response

BY BLOC 23/07/2015

Earlier this month the Chancellor, George Osborne, presided over his 6th budget; this time called an ‘emergency budget’, the emergency being that the Conservatives didn’t think they’d get a majority & needed to quickly amend the previous coalition budget to ensure it cut deeper into the hearts of Britain’s poorest, with not one Liberal Democrat to hold them back. We have already given our response to the ‘living wage’ on our Facebook page so we’ve spent the past couple of weeks picking apart the budget to give you some of the lesser known & unreported facts

1363981503018,0

Firstly, we’ll start with two ‘facts’ Osborne himself used to back up his budget and used in his delivery speech:

 

“Four fifths of all journeys in this country are by road, yet we rank behind Puerto Rico and Namibia in the quality of our network.”

Partly true according to the World Economic Forum’s latest Global Competitiveness Report. It gives the UK road network a score of 5.2 out of 7; 30th in the world and just behind Puerto Rico and Namibia. What he didn’t mention though is that this is solely based on asking ‘business leaders’ from around the world on their thoughts on their road networks at home – these are therefore based on nothing other than opinion and personal experience. This is where the word ‘quality’ is questionable & Osborne’s ‘fact’ falls down – our argument is that business leaders from all across the world have differing views on what constitutes a ‘quality’ road

 

“This country faces a very simple choice. We’ve got 1% of the world’s population, 4% of its GDP, but we undertake 7% of its welfare spending.”

Full Fact approached the government to find where the 7% figure is from & discovered it was taken from a report by the World Bank. The figure is accurate but dates back to 2009 & only included data from 96 of 192 UN countries – not including countries such as Canada & Mexico who have comparable welfare systems, meaning the 7% figure would dramatically drop. Regardless of where this is from though, it is completely irrelevant as there are many countries across the world without a welfare system in place– it should be a celebration that we have one & are able to look after all members of our society rather than seen as a failure of our state

 

Now, let's take a closer look at what the budget actually entails:

 

Corporation Tax

While the poorest members of society are continuously being hit hard by the government, corporations are unsurprisingly enjoying having the Tories at the heart of government. In this budget it was announced corporation tax will be cut to 18% by 2020. Osborne pointed out this was only a 2% reduction but what is a lesser known fact is that it had already been cut from 28% to 20% in his previous 5 years as Chancellor. By the end of this government Osborne will have cut taxes for corporations by 10% in 10 years – who else can say their tax is falling by 1% each year?

 

Britain for sale

In this budget there are £30 billion worth of public assets up for sale, more than has ever been up for sale in a single budget in the entire UK’s history – even under Thatcher. Shares in Lloyds, RBS, Eurostar, Royal Mail, Green Investment Bank and Kings Cross Property Development are all up for sale

 

Insurance Premium Tax

Insurance premium tax is set to rise from 6% to 9.5% in November hitting tens of millions of people with motor, home & personal insurance. Experts predict it will add an average of £35 to the average household yearly bill or £40 if you’re a young driver. Our argument is that this could lead to many people taking the risk of not having insurance, particularly young drivers who are continually being priced out of driving. This is yet another way of hitting ordinary people, and particularly younger people, with unnecessary tax rises – how can this be justified when corporation tax is falling?

 

Restriction of tax relief for buy-to-let landlords

The ability to offset mortgage interest will be capped at the basic rate of income tax with the annual ‘wear & tear’ allowance scrapped and replaced with a new system only allowing them to deduct costs they actually incur. Industry experts have said that these additional costs to landlords will be passed on to renters – the same renters who are already being squeezed for every penny. It is a good thing to be targeting the private rental market but it needs to be done in a proper way that helps renters. The government know that this proposal looks good to those on the outside looking in but in reality the cost will be to renters rather than landlords; the market desperately needs regulations and rent caps

 

Tax credits & ‘living wage’

We have commentated a number of times on our Facebook page over the past couple of weeks about tax credits, welfare and the ‘living wage’. To reiterate our point though; a single parent working 16 hours a week with two children will gain just over £400 from George Osborne’s national living wage per year. But they will lose £860 a year from changes to tax credits in 2016-17

 

Climate change

Despite making many claims they want to be the greenest government ever, climate change took a beating in this years budget due to a huge change in the climate change levy. As things stand companies who use renewable energy are exempt from paying extra charges but under new rules set by Osborne they will no longer be exempted from paying a levy as this strategy has been axed from the climate change levy

 

Banks win, again

After intense lobbying from the banking industry in the previous government, including HSBC threatening to close its London headquarters in London & relocate abroad, the bank levy will be ended. The levy was designed to help address the ‘to-big-to-fail’ problem & raise much needed cash from the very banks that crashed the economy in the first place. As part of the levy HSBC paid £700 million last year and the bigger the bank, the more they pay, as they are seen to be a bigger risk of a bailout. Many economists have actually said, barring the obvious job losses, the move of HSBC’s headquarters wouldn’t have actually been such a bad thing anyway as any future bail out wouldn’t end up costing the UK tax payer; showing the banks are holding the government to ransom over empty threats. The end of the levy simply allows banks to continue to play their dangerous games completely risk free & leaves them, yet again, not paying their way in British society

 

Tax cuts not what they seem

Osborne fluttered his eyelashes as he declared there were £24.6 billion of tax cuts in his budget. We’ve looked into these though & the majority are likely to never see these as they include corporation tax & inheritance tax – in 2016/17, when the new inheritance tax comes into place, an estimated 80,000 estates will avoid paying it; barely anyone will profit from it. Adding up the tax rises though is shocking - £47.2 billion in total; most of which most of us will see. These rises include the aforementioned insurance premium tax, vehicle excise duty & pension tax relief – all things most ordinary people will be affected by at some point

 

Tuition fees

The tuition fee cap was quietly removed in this budget. The £9000 a year set by the coalition government has been removed, allowing universities to charge more. Maintenance grants are also set to be replaced with loans – some experts predict that this could leave those from poorer backgrounds with £53,000 worth of debt upon graduating. A shocking number, we’re sure you agree, but what is going to be more shocking is the number of poorer children who miss out on going to university. The numbers impossible to predict right now but a government who says they promote ‘prosperity’ and ‘ambition’ are pricing some people out of reaching their true potential

 

BBC

A hot topic on both the left and the right but our argument is that the BBC is being held to ransom by the government. It’s no secret that they feel the BBC don’t report the Tory’s favourably enough & the decision to make the BBC fund the license fee for over 75’s – costing them £750 million is a clear message; ‘get on our side or life will be difficult’. The Office for Budget Responsibility has predicted that real terms spending will fall 19.9% between this year & 2020

 

Britain’s Roads – Back where we started with Britain’s Roads - Despite declaring this was the budget that provides ‘sustained investment our roads so badly need’, this won’t happen for years as spending the proceeds from the ‘New Road Fund’ won’t begin until 2020. Hidden in the small print of the budget papers is the fact that by far the biggest single cut Osborne has made to departmental budgets has fallen on the Department for Transport. Transport’s capital spending has been slashed from an expected £9.7bn to £6.1bn in 2015/16. That’s a huge cut of £3.6bn or 37% on the plans set out in his last budget