Wednesday, 23 June 2010

Opinion: Yesterday’s Budget, a clear and sensible way forward?

I will start off by saying something we all know.

Labour left this country with a budget deficit of nearly 171 billion pounds. Every £4 the Labour government spent, £1 of it was borrowed. It could not carry on.

Now onto today's coalition budget.

Lets get the bad out of the way first -

VAT is rising to 20%. None of us wanted this. We campaigned against it, as did the Tories. But now we have access to the figures, rather than Labour's selective amounts it seemed the coalition thought that it had to go up. I will not immediately defend this decision, but I will not whine about it either. I wish the economy wasn't in the state it is. Then we would never have done it! But it is worth remembering a couple of points. It has only been risen to the same levels that most other European countries have to pay, and it is not a tax on everything- most foods for example, are exempt.

The other tax decisions I agree with whole heartedly.

Increasing the tax allowance by £1,000, part of the Lib Dem plan to deliver a personal allowance of £10,000. This will result in 880,000 low income earners out of tax altogether, including lots of part time students- who work whilst at uni or college. It is in stark contrast to the Labour legacy, scapping the 10p tax rate, doubling the tax the poorest had to pay overnight- in order to fund tiny cuts for businesses. I know which decision I feel is more progressive and fair.

How are we paying for this tax break for low earners? By implementing another Lib Dem manifesto pledge- cracking down on tax avoidance. By raising Capital Gains Tax to 28% (I believe higher than Labour have ever had it) we stop people declaring income as something it is not, and getting away with not paying their fair share.

With public sector pay we have decided to freeze it for two years for anybody earning above £21,000. As somebody who cares about others, I would rather see a pay freeze on my wage, then the potential of future job cuts (and in turn a higher benefit bill). Anybody earning under £21,000 will get a bonus of £500 over those two years. This again proves our commitment to protecting the poorest paid in all the decisions we have taken.

Onto benefits. We have a welfare budget that is bigger than any other area of government spending. We spend more on benefits than on health or education. In my opinion people that earn over £40000 should never have got these benefits in the first place. I will give an example. It is simply wrong that young students earning £7000 a year under Labour, working part time whilst accruing mounting tuition debt had to give 20% of their money in tax, so wealthier parents can get tax credits. So I am happy that we have finally started taking steps to sort out the benefit system. Don't get me wrong, I support a welfare state, but for people that need it. By cutting these benefits for the better off, we can again protect the poorest from Labour's mismanagement.

We have also pledged a £2 billion a year increase in the "child" element of the child tax credit, which means that despite the tough decisions forced on the government, we should hopefully go someway to stamping out child poverty, once and for all (something that has rised under Labour).

By agreeing to increase the pension age by one year, something Labour have sad they would do anyway- we have been able to restore the pensions earning link, an issue that the previous government refused to tackle. This will help millions of pensioners in this country.

And finally petrol, cigarettes and alcohol duty is not going up! For the first time in how long?

Labour have acted in my eyes like a bunch of school kids today. People want politicians to try and sort out our countries problems, not moan from the sidelines. Remember the advice at the treasury left by a Labour minister? "There is no money left". Honest (for a change), but they are being less than helpful.

What would Labour have cut? It promised to halve the deficit in 4 years? What would they have changed? I am waiting to hear that, but don't hold much hope of it ever happening. In my eyes Labour need to start apologising to people, for leaving this country in such a state.

Paddy Ashdown summed up my feelings in a paper this morning-

"It is, to me, the height of unacceptable, negative and irresponsible politics to refuse to carry the burden when you are in power, and then to criticise those who do when you leave- those who have to take the burden on board and who have to clean up the mess you leave behind."

A Tory budget would have been nowhere near as fair. A Labour budget would (they want us to believe) have gotten our country further into this mess, or they would of had to have grown up and made these difficult choices themselves! Overall I think the budget today has started to tackle the deficit, whilst at the same time striving to protect the poorest in our society, and overall I think we should be proud of it.

This opinion was written by Nathan Khan, General Executive Member for Liberal Youth 2009-2010, Candidate for General Executive Member 2010-2011 and Councillor on Hedge End Town Council.

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