At last – the waiting is over. I always think that not knowing is much worse than knowing. And now we know!
Yes – there are things in the Budget that will affect everyone to some extent – but at least it is everyone.
First in line for the pain are the bankers (with a new levy) and then there are those high earners who try to sneak extra for themselves by taking some of their earnings as shares or something that attracts Capital Gains tax at 18% rather than the 40% rate of income tax for higher earners. Capital Gains tax will rise to 28% which hopefully will stop such shenanigans.
The up side of the budget was the long awaited linking of pensions to earnings, the injection of £2billion to the child part of tax credits and the raising of the tax threshold taking 880,000 out of tax and putting about £200 back in low and middle income earners pockets. That is the first step on raising that tax threshold to £10,000. All these are very good for Haringey – as will be the freezing of Council Tax for two years! And no extra duty on wine, beer and fuel!
But – the hard stuff was the freeze on public sector pay for two years (but the lowest paid – up to £21,000 per annum would not be frozen and would get a flat rate pay rise of £250 for each of those years) and the rise to 20% onVAT. Food and childrens’ clothes and all those items that are currently VAT exempt will remain exempt.
Welfare reform is now on the cards. The system will be reformed to help people into work rather than remain dependant on welfare.
Lots of detail still to come – but in broad terms – that’s the way we are going to fill the gaping hole in our finances and pay down the deficit.
We’ve been living beyond our means personally and the banks have been gambling and lost our money nationally. There was always going to be a day of reckoning – and I guess this is it.
Labour, in the form of their acting Leader, Harriet Harman, responded to the budget – but it was quite a worn out, nothing much to say and no new ideas sort of tired response.
For me – the protection of the most vulnerable was the most important part of this austerity budget. And at least the broadest shoulders are going to bear most of the financial burden.