Finding Holes in the Budget

I wrote this column before the Chancellor’s speech but, thanks to pre-budget leaks, the content is hardly a state secret. He has more money to play with than anticipated and is likely to target areas where opinion polls show Labour taking a lead.

He’ll relax staff/child ratios for nurseries. It’s been done in Scotland with no ill-effect and should work here, but it’s unlikely to reduce costs. He plans to increase Universal Credit childcare allowances which will help those trying to re-enter the job market, but only if he allows upfront rather than retrospective payments which have caused many working mums to lose places and then their job.

What about working couples who don’t qualify for Universal Credit? There’s precious little for them. A freeze on fuel duty and energy prices is the least he can do and measures to encourage people over age 50 to remain in work are useful but will mostly benefit those with large pension pots. It will help doctor retention but do little for those over 50s with smaller incomes.

Jeremy Hunt has history. He presided over problems affecting the NHS and then, as Chair of the Health Select Committee, argued for remedial action. His budget ignores the impact of years of wage restraint. Even the Institute for Fiscal Studies, hardly a left-leaning body, casts doubt on his arguments regarding public sector pay.

There’s more scope than this budget recognises. Improvements in public finances make it easier to deliver a fair public pay settlement. If the Chancellor, unlike his predecessor, is worried about the bills, he could always opt for fairer taxation. Tax on ordinary families is rising but taxation in the UK is still below the OECD average and unfairly distributed. The LSE/Warwick University study says that equalising Capital Gains Tax and Income Tax would raise £15.6 billion. Abolishing non-dom status, already Labour policy, would raise £3.6 billion and extending National Insurance to investment income (e.g., rental income) would raise £9.6 billion.

This is the budget of a tired man who lacks the vision and imagination to address the problems caused by 13 years of Tory failure.

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