Friday, March 23, 2007
The Budget
So “Gordo the Psycho” has delivered what is believed to be his final Budget speech. The Labour spin doctors would have us all believe it to be a cause for celebration that 2p has been taken off the basic rate of income tax. Let’s look at this in a little detail.
Firstly all of the tax breaks have been pushed forward to a year or more in the future, good for the headlines today but the tax rises are more or less immediate while the tax “reductions” will not come into force until April 2008. Why? Because if the forecast predictions of economic growth fizzle out and the amount of tax raised falls the promises can be quietly forgotten about in 12 months time, and taxes even raised. The newspapers will report on the budget speech now, and will do so again in a year’s time, but will they be remembering the promises made and broken in 12 months time? I doubt it and the cynical new Labour spin doctors know this.
Year on year Gordo has promised that public sector borrowing would be repaid “next year”. Year on year the predictions of how fast the economy is growing and the estimates on how much tax will be raised on consumer spending are greater than what is actually achieved. We are being told that Gordon the Iron Chancellor is the best this country has ever had and the economy is safe under Labour yet this year in the UK:
· Economic growth last year was 22nd out of the 27 members of the EU[1].
· Inflation is the highest for 16 years, almost double the level in 1997, and above the EU average[2].
· The UK’s structural budget deficit (2.6 per cent) is the largest of all the major EU countries, including Italy (2.5 per cent)[3].
· Real take home pay is falling – average earnings (excluding bonuses) rose by 3.7 per cent in 2006, compared to RPI inflation of 4.4 per cent[4].
· Business investment as a percentage of GDP in 2006 was the lowest on record[5].
· The savings ratio fell in 2006 to 5 per cent, less than half it was in 1997[6].
· The trade deficit is set to rise to the highest level ever, of £60bn per year in 1997[7]
· One million more people are not in education, work or training than in 1997.
· Latest ONS figures show that UK productivity is falling further behind the US, France and the G7 average.
The 2p reduction in the basic rate of tax is being paid for by getting rid of the 10p rate for the first £2900 over your individual tax allowance. In other words anyone earning around £18,000 will be worse off by 10p in the pound. The lower earners in society, the ones that “socialism” was supposed to protect against the ravages of the capitalists are the ones being betrayed by their “own people”. Buried in the small print are new stealth taxes which will hit low earners by doubling his 10p tax band. The three income tax changes on working families are not a tax cut, but raise £340m extra revenue. In the small print of the Budget is an admission that the tax burden will continue to rise (p278).
The so-called “giveaway” of £770m that this 2p cut is supposed to represent is, of course, being made up elsewhere. £1.1bn of personal tax rises are planned. National Insurance Contributions are being extended to 11% to earnings up to £43,000 a year from £38,000. The inheritance tax is still well below the value of an average 3 bedroom house, so if you die and leave the family home to your children they will be faced with a huge bill to pay before they can inherit. Inheritance Tax was originally designed to tax large amounts of inherited wealth, never to penalise hard working parents trying to give their children something for the future. When a 1 bedroom flat sells for £290,000 in London you get taxed much on inheriting little.
Business has been hit too with the reduction in Corporation Tax being funded by increases in Small Companies Corporation Tax. The net result is that those companies in a precarious position will fail more easily than before. This is a particular issue for Milton Keynes because of the number of small businesses based here. It also flies in the face of the Conservative pledge to encourage small and fledgling businesses in Milton Keynes. Big business is being subsidised by small business in the same way as the reduction in income tax is being funded by the lowest earners. This is tax policy gone mad!
Also hit is the NHS. Health spending was conspicuous by its absence in this budget, which makes it hard for the NHS to plan ahead. We Conservatives have called for the NHS budget to be set up to 3 years in advance to help health services plan. Brown mentioned the NHS just once in his speech: to re-announce what he first said three years ago. The only new news for the NHS is a stealth tax on “managed service companies”. The NHS is the biggest employer of managed service companies. The new stealth tax will hit NHS staff hardest. It’s the managed service companies who supply ancillary staff who will have to increase their costs to the NHS. The net result will be more staff cuts across the NHS at the front line of patient care.
Don’t forget the proposals from Labour for the revamped Council finances and the new Home Improvements tax where tax inspectors will be able to charge higher council taxes to people living in nice streets (obviously it is then better to put your foot through your neighbours door and never paint your house) as well as give inspectors the right to access your property and if you refuse they will hand you a £500 fine.
This budget begs many questions. Locally and nationally the Conservatives will be asking:
If the Chancellor wants to build a Britain of “high aspiration and achievement”, then why has he increased the income tax burden for those earning less than £18,000?
What impact on encouraging enterprise does the Chancellor believe the increase in the Small Companies Corporation Tax Rate will have?
Most tax cuts have been delayed until 2008. If there is a deterioration in the fiscal position, will his successor be forced to reverse these before they take effect?
In the Budget the Chancellor said that he expected the savings rate to rise. How does he square this assumption with the below RPI inflation increase in the overall ISA allowance?
What impact does the Chancellor think that his freezing of standard property stamp duty thresholds will have on first-time buyers?
The Chancellor has missed his borrowing projections yet again. Why is it that he has been so inaccurate in his projections of borrowing?
The NHS is in crisis and yet the Chancellor hardly mentioned it in his speech. Why is this?
Will the Chancellor confirm that, in real terms, education spending is growing at a lesser rate than the economy?
In this Budget, the Chancellor plans to share the proceeds of growth. With this revelation, will he explain why he has criticised the Conservatives for this policy over the past year?
[1] Eurostat, most recent available data for 2006 Q3
[2] OECD statistics 9 January 2007
[3] European Commission Autumn Economic Forecasts, 2006
[4] ONS Labour Market Statistics
[5] Red Book p257
[6] Red Book p255
[7] Red Book p260
Firstly all of the tax breaks have been pushed forward to a year or more in the future, good for the headlines today but the tax rises are more or less immediate while the tax “reductions” will not come into force until April 2008. Why? Because if the forecast predictions of economic growth fizzle out and the amount of tax raised falls the promises can be quietly forgotten about in 12 months time, and taxes even raised. The newspapers will report on the budget speech now, and will do so again in a year’s time, but will they be remembering the promises made and broken in 12 months time? I doubt it and the cynical new Labour spin doctors know this.
Year on year Gordo has promised that public sector borrowing would be repaid “next year”. Year on year the predictions of how fast the economy is growing and the estimates on how much tax will be raised on consumer spending are greater than what is actually achieved. We are being told that Gordon the Iron Chancellor is the best this country has ever had and the economy is safe under Labour yet this year in the UK:
· Economic growth last year was 22nd out of the 27 members of the EU[1].
· Inflation is the highest for 16 years, almost double the level in 1997, and above the EU average[2].
· The UK’s structural budget deficit (2.6 per cent) is the largest of all the major EU countries, including Italy (2.5 per cent)[3].
· Real take home pay is falling – average earnings (excluding bonuses) rose by 3.7 per cent in 2006, compared to RPI inflation of 4.4 per cent[4].
· Business investment as a percentage of GDP in 2006 was the lowest on record[5].
· The savings ratio fell in 2006 to 5 per cent, less than half it was in 1997[6].
· The trade deficit is set to rise to the highest level ever, of £60bn per year in 1997[7]
· One million more people are not in education, work or training than in 1997.
· Latest ONS figures show that UK productivity is falling further behind the US, France and the G7 average.
The 2p reduction in the basic rate of tax is being paid for by getting rid of the 10p rate for the first £2900 over your individual tax allowance. In other words anyone earning around £18,000 will be worse off by 10p in the pound. The lower earners in society, the ones that “socialism” was supposed to protect against the ravages of the capitalists are the ones being betrayed by their “own people”. Buried in the small print are new stealth taxes which will hit low earners by doubling his 10p tax band. The three income tax changes on working families are not a tax cut, but raise £340m extra revenue. In the small print of the Budget is an admission that the tax burden will continue to rise (p278).
The so-called “giveaway” of £770m that this 2p cut is supposed to represent is, of course, being made up elsewhere. £1.1bn of personal tax rises are planned. National Insurance Contributions are being extended to 11% to earnings up to £43,000 a year from £38,000. The inheritance tax is still well below the value of an average 3 bedroom house, so if you die and leave the family home to your children they will be faced with a huge bill to pay before they can inherit. Inheritance Tax was originally designed to tax large amounts of inherited wealth, never to penalise hard working parents trying to give their children something for the future. When a 1 bedroom flat sells for £290,000 in London you get taxed much on inheriting little.
Business has been hit too with the reduction in Corporation Tax being funded by increases in Small Companies Corporation Tax. The net result is that those companies in a precarious position will fail more easily than before. This is a particular issue for Milton Keynes because of the number of small businesses based here. It also flies in the face of the Conservative pledge to encourage small and fledgling businesses in Milton Keynes. Big business is being subsidised by small business in the same way as the reduction in income tax is being funded by the lowest earners. This is tax policy gone mad!
Also hit is the NHS. Health spending was conspicuous by its absence in this budget, which makes it hard for the NHS to plan ahead. We Conservatives have called for the NHS budget to be set up to 3 years in advance to help health services plan. Brown mentioned the NHS just once in his speech: to re-announce what he first said three years ago. The only new news for the NHS is a stealth tax on “managed service companies”. The NHS is the biggest employer of managed service companies. The new stealth tax will hit NHS staff hardest. It’s the managed service companies who supply ancillary staff who will have to increase their costs to the NHS. The net result will be more staff cuts across the NHS at the front line of patient care.
Don’t forget the proposals from Labour for the revamped Council finances and the new Home Improvements tax where tax inspectors will be able to charge higher council taxes to people living in nice streets (obviously it is then better to put your foot through your neighbours door and never paint your house) as well as give inspectors the right to access your property and if you refuse they will hand you a £500 fine.
This budget begs many questions. Locally and nationally the Conservatives will be asking:
If the Chancellor wants to build a Britain of “high aspiration and achievement”, then why has he increased the income tax burden for those earning less than £18,000?
What impact on encouraging enterprise does the Chancellor believe the increase in the Small Companies Corporation Tax Rate will have?
Most tax cuts have been delayed until 2008. If there is a deterioration in the fiscal position, will his successor be forced to reverse these before they take effect?
In the Budget the Chancellor said that he expected the savings rate to rise. How does he square this assumption with the below RPI inflation increase in the overall ISA allowance?
What impact does the Chancellor think that his freezing of standard property stamp duty thresholds will have on first-time buyers?
The Chancellor has missed his borrowing projections yet again. Why is it that he has been so inaccurate in his projections of borrowing?
The NHS is in crisis and yet the Chancellor hardly mentioned it in his speech. Why is this?
Will the Chancellor confirm that, in real terms, education spending is growing at a lesser rate than the economy?
In this Budget, the Chancellor plans to share the proceeds of growth. With this revelation, will he explain why he has criticised the Conservatives for this policy over the past year?
[1] Eurostat, most recent available data for 2006 Q3
[2] OECD statistics 9 January 2007
[3] European Commission Autumn Economic Forecasts, 2006
[4] ONS Labour Market Statistics
[5] Red Book p257
[6] Red Book p255
[7] Red Book p260
Thursday, March 15, 2007
Lib Dems don't know where they stand on crime
In their recent leaflet we have seen how the Lib Dems have cynically manipulated the truth to make it appear as if they are doing something positive on reducing crime and being tough on criminals.
But wait a minute, the Lib Dem candidate who wants to stand against our MP Mark Lancaster at the next general Election is describing ASBOs as a "fast track to prison" and commending the Lib Dem Council for being reluctant to apply for them as best practice because "putting more people in prison is not the answer".
Well I'm sorry, but the vast majority of people believe that prison is EXACTLY where criminals ought to be. It's a truth that the Home Secretary has had to face in spite of the reluctance of his predecessors to acknowledge that there was a crisis on their hands. That is why HMP Kennet has opened in Liverpool to provide 350 extra cells, why 2 Custodial Facilities are planned for HMPs Wayland and Rochester to accommodate 600 more, why planning approval is going forward for another 300 cells at HMP Belmarsh, and why 5 extra cell blocks are being built in existing prisons to accommodate 300 more prisoners. Then there are the extra 2000 cells to be built in the public sector before 2010 and 4000 more in the private sector of contracted out prisons.
To sugest that we ought not to robustly tackle anti-social behaviour because it leads to prison is to live in denial of the misery such behaviour causes. The fact that ASBOs are seen as a badge of honour for some is no reason not to use them where appropriate to prevent louts, yobs, and vandals from making the lives of decent people intolerable. They may not be the best legislative means of preventing anti-social behaviour, but until the Torys win power, they are the only means available to the police and the Council and they ought to be used where appropriate. Yes there is a debate to be had on the effectiveness of prisons in reforming people, but to shy away from using ASBOs is to abbrogate responsibility.
This is another case of the Lib dems wanting to be all things to all people, and at the same time as talking tough on how they are going to treat convicted criminals, being a bunch of bleeding heart liberals who are not concerned with using the sanctions available to serve the best interests of the people of MK. Even when they "talk tough" they can't tell the truth! Perhaps the Lib Dems would like to tell us where they actually stand (other than on all sides of the argument)?
But wait a minute, the Lib Dem candidate who wants to stand against our MP Mark Lancaster at the next general Election is describing ASBOs as a "fast track to prison" and commending the Lib Dem Council for being reluctant to apply for them as best practice because "putting more people in prison is not the answer".
Well I'm sorry, but the vast majority of people believe that prison is EXACTLY where criminals ought to be. It's a truth that the Home Secretary has had to face in spite of the reluctance of his predecessors to acknowledge that there was a crisis on their hands. That is why HMP Kennet has opened in Liverpool to provide 350 extra cells, why 2 Custodial Facilities are planned for HMPs Wayland and Rochester to accommodate 600 more, why planning approval is going forward for another 300 cells at HMP Belmarsh, and why 5 extra cell blocks are being built in existing prisons to accommodate 300 more prisoners. Then there are the extra 2000 cells to be built in the public sector before 2010 and 4000 more in the private sector of contracted out prisons.
To sugest that we ought not to robustly tackle anti-social behaviour because it leads to prison is to live in denial of the misery such behaviour causes. The fact that ASBOs are seen as a badge of honour for some is no reason not to use them where appropriate to prevent louts, yobs, and vandals from making the lives of decent people intolerable. They may not be the best legislative means of preventing anti-social behaviour, but until the Torys win power, they are the only means available to the police and the Council and they ought to be used where appropriate. Yes there is a debate to be had on the effectiveness of prisons in reforming people, but to shy away from using ASBOs is to abbrogate responsibility.
This is another case of the Lib dems wanting to be all things to all people, and at the same time as talking tough on how they are going to treat convicted criminals, being a bunch of bleeding heart liberals who are not concerned with using the sanctions available to serve the best interests of the people of MK. Even when they "talk tough" they can't tell the truth! Perhaps the Lib Dems would like to tell us where they actually stand (other than on all sides of the argument)?
Lib Dem Cynical Claim of the Week
In their latest leaflet the Lib Dems propose their 5 point plan for tackling crime.
One of the proposals is to make prisoners work while they are incarcerated.
Looks good doesn't it? Tough on those criminals the Lib dems. Or are they?
Let me show you "Prison Rule 51 Offences Against Prison Discipline" section 21 which makes it an offence punishable by adjudication by a Prison Governor for a prisoner who:
Intentionally fail(s) to work properly or, being required to work, refuse to do so;
Prisoners are already required to engage in "purposeful activity" which means either work or education. Failure to comply with the regime is sanctioned either by being downgraded to a basic regime (which has erstrictions of privilege ) or in the worst cases being placed in segregation (solitary confinement) for up to 7 days. The only general exception are prisoners "on the rule" or who are segregated from the general population of the prison for their own safety (for example if they are a known sex offender, "pad thief" or someone who steals from other prisoners, an informant and so on)
Yet again another cynical lib Dem claim to be doing something they aren't to add to the recent plethora of examples. The lib Dems would try and take credit for the sun coming up in the morning if they thought it would snatch them a vote at election time!
One of the proposals is to make prisoners work while they are incarcerated.
Looks good doesn't it? Tough on those criminals the Lib dems. Or are they?
Let me show you "Prison Rule 51 Offences Against Prison Discipline" section 21 which makes it an offence punishable by adjudication by a Prison Governor for a prisoner who:
Intentionally fail(s) to work properly or, being required to work, refuse to do so;
Prisoners are already required to engage in "purposeful activity" which means either work or education. Failure to comply with the regime is sanctioned either by being downgraded to a basic regime (which has erstrictions of privilege ) or in the worst cases being placed in segregation (solitary confinement) for up to 7 days. The only general exception are prisoners "on the rule" or who are segregated from the general population of the prison for their own safety (for example if they are a known sex offender, "pad thief" or someone who steals from other prisoners, an informant and so on)
Yet again another cynical lib Dem claim to be doing something they aren't to add to the recent plethora of examples. The lib Dems would try and take credit for the sun coming up in the morning if they thought it would snatch them a vote at election time!
