Tag: Budget

THE RIGHT TO BUY…A LAMBORGHINI.

BUDGET OVERVIEW

 

George Osborne’s reform of annuities is being compared to Margarent Thatcher giving council tenants the right to buy their homes. That’s probably overdoing it but it plays to the same Tory belief that people should be trusted with economic decisions. Few will actually buy sports cars but many will thank the Chancellor for the freedom to decide.

 

 

Improving economic figures, radical pension savings reform, backing for major Northern projects and a few good jokes made this the most confident Budget performance by George Osborne since he became Chancellor four years ago.

 

It shamelessly played to the older voter who might be flirting with UKIP and didn’t have enough to deal with youth unemployment. Yet the overall impression was left that the Coalition’s policies for the economy are beginning to work, albeit three years late.

 

Labour will hope that their question, “Do you feel better off than 4 years ago?” will continue to be answered in the negative, but they face a danger in doing that. They could end up appealing to a narrow section of the electorate whilst more people get jobs and older voters thank the Chancellor for doing something about the pitiful returns they have been getting on their savings.

 

Osborne threw down the challenge to Labour when he referred to the need for further cuts in public spending to achieve a surplus in 2018. He said the question for the British people was who had the credibility to do it?

 

I will never forgive the government for scrapping regional policy but while we are under this heavily centralised system, it is better that Whitehall backs Northern projects than ignores us altogether. So praise is due for the £42m Alan Turing Institute to help businesses use Big Data to help their manufacturing. I particularly liked the way the Chancellor, in announcing the project, referred to the disgraceful treatment Turing received in the 1950s because he was gay. The £270m guarantee for the Mersey Gateway Bridge should finally see this scheme get under way, the new centre for high level training in the commercial exploitation of graphene is welcome. Our regional theatre touring companies are to get a tax break. The future of Colin Parry’s Survivors For Peace programme in Warrington is to be secured when Lottery funding expires

 

The Budget documents also show that the government has asked HS2 Ltd to flesh out their proposals to accelerate the project with a view to opening the line to Crewe by 2027.

 

THE ECONOMY.

 

As George Osborne announced a series of economic indicators all pointing in the right direction, I had to check the one where he claimed unemployment in the North West is lower than in London. Surprisingly it’s true, 8.1% in London, 7.9% here. Yorkshire is 8.4%.

 

It was important that the Chancellor announced new moves against tax evasion. If we are cracking down on benefit, we must be even tougher on the fat cats who evade their responsibilities.

 

The biggest surprise in the Chancellor’s red box was the help for savers. Low interest rates may be good for the economy in difficult times but they have left savers angry. The reform of ISAs, freedom from the necessity for the elderly to get low yielding annuities and the new pensioners bond will please a section of the population with a high voting record.

 

The cut in beer and bingo tax and the freeze on petrol duty added to the feel good factor.

 

The Liberal Democrats also contributed to this Budget. The help with child care and the raising of the tax limit to £10,500 in 2015 are there policies. George Osborne praised his “excellent” Chief Secretary Danny Alexander. Will that be all the gratitude the Lib Dems get as they languish at 7% in the polls?

 

There were disappointments. The government’s green credentials are compromised by freezing the carbon floor price, there was no reform of business rates and very little on youth unemployment.

 

Anxieties remain about whether the recovery can be sustained especially if commodity rices rise in response to a worsening crisis in the Ukraine.

 

A lot will depend on how business responds to measures like the hike in investment allowances, but at the moment Osborne looks a happier man than Ed Miliband who managed a smile once during the Budget statement. It was when Osborne announced government backing for celebrations to mark the 800th anniversary of Magna Carta.

 

King John was a central figure in that, recalled the Chancellor. A weak leader who betrayed his brother and then was bullied by unruly bar

 

 

 

 

STAND ASIDE MARY PORTAS. WHAT SHOPKEEPERS REALLY NEED.

 

 

 

 

BUDGET PREVIEW: BUSINESS RATES

 

Not only is the North having to give much needed train carriages to the South but small shopkeepers in Leeds and Liverpool are subsidising retailers in London’s Bond Street.

 

The Chancellor should use next week’s Budget to announce wholesale reform of business rates. They are based on the rental value of properties. Since the last revaluation, rents in London’s West End have gone up 72%. In Greater Manchester they have gone down 47% but rateable values have stayed the same. Not only has this led to the decimation of businesses in many of our out of town shopping streets but it means that London’s businesses are paying far less than they should be.

 

To add insult to injury the government has postponed the review due next year until 2017. Ministers claim 800,000 of 1.1 million businesses will benefit. Well not many of those will be in the North. Greater Manchester Chamber of Commerce says their members are paying business rates set at the height of the market in 2008.

 

There are other factors driving demands for reform. Retailers are under pressure from internet firms who pay no business rates for their “shop fronts”. Furthermore a committee of MPs is questioning if the £2.3m allocated to the Mary Portas schemes has been spent. Sorry Mary but your high profile trips to our deserted High Streets aren’t the answer to this problem.

 

The House of Commons Business Select Committee wants the Chancellor to examine whether retailers taxes should be based on sales rather than rateable value.

 

BUDGET PREVIEW: OTHER MEASURES.

 

Next Wednesday won’t be an easy day for Ed Balls. On past Budget days he’s been able to taunt the Chancellor with gestures indicating the economy flat lining or falling living standards. This time most of the economic indicators are in George Osborne’s favour. This Budget is his last real chance to set the economic framework against which the General Election will be fought.

 

The British Chambers of Commerce say the size of the British economy will be back to 2008 levels by the summer and they even foresee interest rates of 0.75% by the end of next year. After five long years of 0.5% flat lining that would be a symbolic sign of real recovery.

 

So what will the Chancellor do with this improved economic outlook? An easing of the remorseless cuts in public spending looks unlikely. The recession’s legacy of a high deficit remains and the international picture offers many uncertainties.

 

He should take more steps to deal with youth unemployment, although in truth many measures have been tried.

 

There’s a bit of a campaign running to merge National Insurance and Income Tax on the basis that they amount to the same thing. But with 16% of people paying 40% Income Tax and National Insurance at around 12%, it would become obvious that a lot of people are paying more than half their income to the state.

 

And finally don’t forget that the £10.000 annual tax free allowance before paying income tax kicks in next month. The Lib Dems insist this was their policy forced on a reluctant Chancellor. Politically it will help to bind the Coalition together for the final 12 months of this parliament where the Finance Bill implementing this Budget will be part of a pretty thin Queen’s Speech.

 

 

 

 

 

 

GEORGE AND THE BATTLING GRANNIES

You’ve got to hand it to the toff from Tatton, he doesn’t lack political courage.

At one stroke George Osborne has knocked the walking stick out of the hands of pensioners and rewarded his millionaire friends with a massive tax cut.

And yet for all the controversy the income tax cut and the age related tax allowance freeze will create, the Chancellor gave a confident performance. The signal was given out that the government’s determination to bring down the deficit was on course and the Coalition was holding together.

The ludicrously leaked budget was all about Tories and Lib Dems showing how much influence they had on the decision making process. Both parties got prizes. The Tories cut the 50p rate, the Lib Dems are now close to their pledge that people earning less than £10,000 should not pay income tax.

Osborne must now pray for growth and that the newly enriched millionaires will not only “stay and pay” but will invest to help the recovery. We must remember the government has only just begun the cuts agenda. There is the prospect of a further £10bn cut in welfare benefits.

The Chancellor ran up the white flag on the 50p rate effectively saying that private sector accountants had outwitted Treasury officials who draft our tax laws. We’ll see how effective the government’s pledge is to clamp down on aggressive tax avoidance.

He must also hope there will not be a big backlash over the “granny tax”. There is an argument that the golden generation born into the welfare state after the war, enjoying full employment and retiring on good company pensions should share the burden with the young suffering from tuition fees, unemployment and the prospect of retiring at 70 on average salary pensions.

The problem for politicians is that the old vote and the young don’t. The scrapping of the age related allowance is going to hit soon-to-retire couples really hard.

Labour still isn’t trusted on the economy but Ed Miliband did well in the House of Commons when he invited Tory MPs to acknowledge they would personally benefit from the income tax cut.

 

BUDGET IN THE NORTH WEST

The Chancellor’s announcement of investment in the Preston-Blackpool, Manchester-Bradford and Manchester-Sheffield rail lines is welcome. The links between Manchester and South Yorkshire are particularly bad. The full commitment to the vital Northern Hub at Piccadilly Station is still awaited though.

Manchester has done well, getting £150m over five years from the Treasury in return for promised economic growth through tax increment financing. The city is also to be part of the government’s superfast broadband project.

Surprisingly Liverpool wasn’t  included, another blow after the city’s failure in its bid for the Green Investment Bank.

 

VIV BINGHAM OBE

The funeral was held yesterday of one of the finest Liberals the North West has produced.

Although he never made it to parliament, Viv Bingham served the party at every level from fighting hopeless seats to becoming Party President.

A principled man, he was sometimes a thorn in the side of his party leaders particularly on the issue of nuclear weapons. He was a confirmed unilateralist.

But overwhelmingly people responded to his friendship and warm hearted personality.

Over thirty years he fought a range of seats from Heywood and Royton and Hazel Grove to West Derbyshire and Stalybridge and Hyde.

The highlight of his career was his year as President of the Liberal Party 1981-82.

Viv brought all his diplomatic skills to bear in his party’s sometimes difficult relations with the newly formed Social Democratic Party.

The many tributes in recent days are eloquent testament to the passing of a true Liberal.