Tuesday, 22 June 2010

No surprises as "tough but fair" budget hammers the poor

Today, Chancellor George Osborne unveilled the "emergency budget" (PDF) that we've all been anticipating for some time. Touted as "tough but fair," most people knew it would be anything but, and we were little surprised.

Before we go on, it should be pointed out that there are positives. Council tax will be frozen for the next two years. The tax free personal allowance has risen by £1,000 to £7,475, saving everyone £200 a year in income tax. The amount of child benefit for low income families will rise by £150, per child, above the rate of inflation next year. That, however, is about the sum of it.

On the negative side, the thing that will get most attention is the rise in VAT from 17.5% to 20%. This may, on its own, be enough to cancel out the benefit of the personal allowance increase.

But, of course, it isn't on its own.

For public sector workers, earning less than £21,000 a year grants you a flat £250 pay rise for the next two years. Hardly enough to balance increases in VAT and (inevitably) rising prices and inflation. For those earning over £21,000 it is an out-and-out pay freeze.

The budget offers £1.8bn of cuts in housing benefit, including a 10% cut for those unfortunate enough to be out of work for over a year. After all, the payments are currently "excessively generous," since ideology dictates that anything less than the threat of starvation is an "incentive" to doss about and cost the rich money.

Child benefit is to be frozen for the next three years. The Sure Start maternity grant will be restricted to the first child.

Lone parents will be forced to seek work the second their child enters the school system. Somehow, this will "help reduce child poverty." This non sequitur leap is, of course, asserted a priori, the need for evidence being an unhelpful barrier to free market dogmatism.

To top it all, increases in benefits will be based upon the Consumer Price Index rather than the Retail Price Index. Apparently the fact that the former is lower makes it "more appropriate." Though how "exclud[ing] the majority of housing costs faced by homeowners" will do anything other than leave people with less money to live on isn't explained.

But "this is a progressive Budget," and "the people at the bottom of the income scale will pay proportionately less than those at the top." So, surely the rich will face something similar?

Well, no.
The "entrepreneurs relief" rate of 10% on the first £2m of capital gains will be extended to the first £5m. The threshold at which employers start paying National Insurance will rise by the rate of inflation plus £21 per week. Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years, until it reaches 24%. The small companies' tax rate will be cut to 20%.

There is a "bank levy," to tackle "unacceptable bonuses," but that's about it. And smaller banks will be exempt.

There is probably more that can be said, but much of it would be retreading familiar territory.

I have dissected the government's policies more fully when discussing the Queen's speech and the coalition agreement. I have explained why the need for "painful cuts" is an entirely ideological one. And I recently made the point that it is those at the top, not the bottom, of our society who are parasites.

What remains is to build upon these arguments and form a credible resistance to the ruling class and their war upon the rest of us.