#junebudget My knee-jerk reaction to the budget
I’m still absorbing the headlines of the budget, and haven’t had time to really think some of it through. My initial gut reaction is this that I’m very pleased I didn’t vote Lib Dem (which right up until the last minute I was very close to doing), because I would feel very cheated now.
There’s a lot of stuff in that budget – and whichever party had been in power it would have to have been a tough one. We’re in a mess, and there are tough decisions to be made. I think most people were prepared for sacrifices having to be made.
And some of the announcements were good news. The increase in the income tax threshold to £7,475, for example. Not as good as the Lib Dems had promised (£10,000) but certainly a step in the right direction. It seems bizarre that we should be trying to reduce dependency on welfare, but as soon as people start to try and work their way out of the benefit trap they are penalised for it.
Child benefit is frozen for three years. Which in real terms (taking inflation and the hike in VAT) is a substantial loss, particularly for poorer families who depend on it. So why not means test it? Many families don’t need it, and losing it would be hardly noticeable. Then those that do depend on it could have had more. Same cost, fairer distribution.
A very quick way to save millions would have been to sack ATOS. This is the private company paid millions to carry out medical tests on benefit claimants for Disability Living Allowance and Employment and Support Allowance (formerly invalidity benefit). This company employs assessors to interview people with a wide range of complex and often long-standing conditions and make a decision in about 15 minutes as to whether they are fit for work, or to what extent their disability requires support. And, unsurprisingly, they usually get it wrong (70% of appeals win their cases). So – here’s a thought – why not ask the medical professionals (GPs or specialists) who are already being paid to monitor and look after these claimants what their opinion is? Surely they know their patients better than some random assessor asking questions for 15 minutes? End the contract with ATOS and use existing, much more reliable, resources. Saves the country millions, and means more people receive the level of support they genuinely require. The first time – without going through all those expensive appeal processes.
When I first heard about the capping of Housing Benefit (or Local Housing Allowance as it’s now called) it sounded fair enough. It may not affect many people who live in my part of the country. But it will cripple many families who live in London. The charity Shelter says, “it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.” The only kernel of good news is that there is a recognition that disabled people who have live-in carers need to accommodate them too. This is definitely a positive move.
I know I will make myself unpopular with many people (including my eldest daughter who is a teacher) when I say that I can see the point of the public sector pay freeze (other than for the very low paid). I do believe that teachers, nurses and other frontline service deliverers don’t get paid anything like enough to reflect the importance of the work they do. But the reality is that many, many private sector workers have had pay freezes, or even pay cuts, in the past few years. It’s horrible; no-one likes it, but we are in an economic mess and we all have to make sacrifices.
However, slashing public sector budgets by 25% across many departments, including education, is ridiculous. There is, undoubtedly, waste in some areas of the public sector (refer to my comments regarding ATOS above), but this level of cuts can have no choice but to impact on vital front line services (you know – the ones both the Conservatives and the Lib Dems promised wouldn’t be hit?). A substantially high percentage of every public sector department’s budget is its wages bill, so savings of this magnitude can only be achieved by making a significant number of people redundant. Raising the number of unemployed people. Apart from the social and emotional cost of that, it increases the cost of benefits needing to be paid out, and reduces taxes being paid.
How will education meet its 25% cut? Fewer teachers? That can only happen by increasing the number of pupils in classes. Less spend on school buildings? Have you seen the state of some of our schools? Less money for teaching resources? My eldest daughter (the teacher mentioned earlier) already spends a significant part of her own salary on resources for the children in her class. Her pay is going to be frozen, and she is going to have more children in her class. Maths has never been my strong point, but this seems unfair to me.
Anyway, this was an initial knee-jerk reaction. Maybe when I’ve had more time to look at the detail it won’t seem quite so bad.
And in their defence, whilst the Conservatives were cheering and waving at the end of the budget speech, most of the Lib Dems were looking decidedly sheepish.
What did you think of the budget?
About JaneHattonJane Hatton helps people with disabilities find a job through an Even Break. If you are an employer who is looking to recruit a talented individual from a Jane, then take a look at how you can here
View all posts by JaneHatton →
9 Responses to #junebudget My knee-jerk reaction to the budget
All that jazz – All in A Day
Review of: Cousin Alice Jazz Music by Cousin Alice: Elaine Sturgess Reviewed by: Elaine Sturgess Rating: 5 On January 21, 2012 Last modified: January 30, 2012 Summary: What makes Alice so distinctive is her wonderfully smokey voice, a quality that furniture designer William Yeoward found so arresting at a concert she was performing for the [...]
Well, the effects of the 20% VAT rate will increase costs, so if there's a significant spend planned it will save some £s to have the work done before 4th Jan 2011
Otherwise as you say Jane, whoever was going to do this budget had to make significant changes and it's a suck it and see. Some cuts were needed and it's going to be very hard on education and health sectors to begin to balance their books.
What worries me is that the effect is worse on the poorest – and they all have no choice but to spend their money which keeps it moving in the economy.
I'm a bit of a Keynseian at heart, and am not at all convinced that cutting is the way to get out of an economic hole like this – what we need is for the economy to grow.
Keynes said it didn't even matter what the money was spent on – that it was still worthwhile if you paid people to dig a big hole and then to fill it back up again. We don't need to go that far though – there are actually things we need to do.
Well we have an overdose of Keynesian politics over here, Ann, and let me tell you there are as many people cheesed off with the spend spend spend approach of Obama and the Democrats as there are happy with it.
We're still in a horrid economic slump over here and adding to the National Debt is not a prudent strategy. I'm pretty sure Keynes economics is akin to Voodoo economics
. You can't spend your way out of debt, that's an absurd idea in modern times.
Of course, we have Bliar and Bush to thank for a lot of the current woes with the billions they spent on the pointless Iraq war, but neither are here anymore so we all have to economise and tighten our belts. The UK strategy, will painful, will likely have more impact on the economy than the spendthrift Democrats will on the US.
Twitter: maverickny
You can't cut your way to prosperity, either. We clearly need both – investment and savings. The ridiculously tiny amount that is spent on scientific research is a case in point.
I fully understand the need to tighten our belts, but my concern is that the people already at the bottom of the pile are feeling the pain the most. And some of it is false economy. Some of the measures will lead to a mass rise in unemployment and homelessness – requiring more to be spent on benefits, not less.
The talk of saving £11 billion from welfare and benefits is targetting the most vulnerable people in society. The “benefit cheats” cost us far less money than the tax loopholes of the highest earners. And genuine claimants are underpaid benefits by far more than the cheats gain.
Twitter: evenbreak
A very good point about ATOS. I have a good friend who is permanently disabled, his wife is his carer and they live just above the breadline on disability allowances. He really doesn't need the additional mental worry of having to go through yet another assessment to see if he's as ill as he says he is – just ask his consultant at the hospital.
I have thought on this the last few days, since the budget. One of the comments I have seen flying around is 'we're back to the Thatcher years'. For me the Thatcher years have a different connotation than what they do to the staunch Labour supporters.
The lean start enhanced creativity in businesses. My dad, a lifelong employee from a family of lifelong employees started his own business. He was/is an amazing success, this came from the Thatcher years. It was an environment that was superb for businesses.
The general reaction to the budget from the business folk is one of joy, yes the vat goes up but hey – we have notice, manufacturers can get their pricing models adjusted to take this into account and yes, it will cost but not as much as we thought.
Fuel, for us specifically fuel will continue to be taxed to annihilation, and the railfreight arena will continue to be invested in, but the road infrastructure won't be. Even large companies such as PepsiCo need the roads as Railfreight runs in a smaller schedule. We need to give the transport guy a chance to settle in, he is different from Lord Adonis, but they all seem hell bent on electric powered vehicles… you think your energy bills are high now, wait until the electric vehicles become mainstream. The fuel prices are what inflates the prices of goods in the shop, they cost more to get there, so they will cost more to sell. The VAT rise will be barely felt in my opinion.
What I am trying to say is, this is a good environment to grow our businesses, to become creative, to do different things, even if your family just don't 'do' that sort of thing.
If it works, the impact on the vulnerable will be short lived rather than becoming a way of life. If it doesn't then the risk has damaged a whole section of society that cannot afford to take it
that WILL impact on us all.
looking at the budget, the way they are encouraging small businesses and startups, I think the government are expecting the private sector to take on those people who leave or are forced to leave the civil service. Sadly it does not normally work out that way….
I absolutely agree, Maggie. My mother in law had MS and she used to get terribly stressed every time she was assessed for her care needs, and that would so often make her illness worse. Then I also have friends with ME, who may well be able jump through hoops on one day, at one assessment – but then are adversely affected for weeks afterwards.
It's all very well to talk about getting disabled people back to work, but it covers such a wide range of things and often it is not well understood. When my mother in law struggled in her wwheelchair people would say, ah but you see people playing basketball in wheelchairs, as if everyone is disabled in the same way. Some kinds of illness just don't sow on the outside, and some of the people employed to make the assessments really don't understand that at all.