by Stephen Tall on November 24, 2008
LDV’s own Alix Mortimer has already live-blogged Labour’s pre-budget report, the Government’s response to recent economic turmoil, which (to my eyes) looks like being more dramatic than expected, and less effective than needed. Alix was quick to pick up the (deferred) impact of the national insurance hike:
This 0.5% on National Insurance. I smell another 10p fiasco. NI already hits lower earners disproportionately hard, with a current rate of 11% on your earnings between about £6,000 and about £40,000, and then 1% above that. What is this “offsetting” which will miraculously absolve those earning below £20,000 from being hit? Very over-complicated.
Here’s what Lib Dem deputy leader and shadow chancellor Vince Cable is saying:
The Government acknowledges that the UK tax system is inherently unfair, but then announces that it will hit those struggling to make ends meet with yet higher tax bills by increasing National Insurance. Everyone earning over £19,000 will be hit. The new 45p Income Tax rate is nothing more than a fig leaf to cover a £5bn tax hike which will hit millions of low earners and businesses.
“The Government has missed a golden opportunity to make the tax system permanently fairer which it could have done by cutting income taxes for those on low and middle incomes, paid for by getting rid of tax loopholes for the wealthy. Instead of increasing investment in sustainable capital projects which benefit the country tomorrow as well as today, the Government has opted for a temporary cut in VAT which will benefit big spenders the most and not give the economy the boost it needs.
“At a time of economic emergency, Gordon Brown has once again failed those who need help the most.”
Here’s Lib Dem Shadow Work and Pensions Secretary, Jenny Willott:
The Chancellor’s pledges to pensioners is a repeat. It was originally promised that pension credit would rise to £130 as long ago as 2007. Pensioners have known about this rise for two years and are now being told to wait another five months. The announcement on the increase of the basic state pensions was deceptive to say the least. The Government promised to increase it by inflation four years ago.
“Alistair Darling’s ‘grand gesture’ is insulting to pensioners. It offers nothing extra today, just what they were already expecting. Pensioners have been hit the hardest by the spiralling cost of food and fuel – they must feel very let down today.”
And here’s Liberal Democrat Shadow Scotland Secretary, Alistair Carmichael:
This was an occasion when we needed bold announcements that would inspire confidence that the Government would help people to get through difficult times, but we saw nothing of the kind. Instead, we got a classic New Labour mix of small measures, giving with one hand while taking away with the other. Rather than a clear picture painted in primary colours, we have been given 50 shades of grey. This PBR will not inspire the consumer confidence that is needed to get our economy functioning properly.
“Alistair Darling’s fiddling with VAT will do little to encourage Scottish consumers, while his increase in National Insurance payments will hit the low and middle earners he should be trying to help. There is now an even greater need for the Scottish Parliament to back Liberal Democrat tax cuts of 2p in the pound. The Chancellor is clearly not prepared to do anything to help the families who are struggling in the economic downturn. Scottish politicians of all parties must now back the measures which will see money put back in the pockets of those who need it the most.”
And – finally – Steve Webb, Lib Dem MP for Northavon, has already blogged his not-so-impressed impressions:
It takes a special sort of genius to mess up both the politics and the economics of a Budget statement, but I reckon the Chancellor managed both today in his ‘pre-Budget report’. … What should have been done was a massive programme of investment in the things we need for the present and the future. The Chancellor says he will insulate an extra 60,000 homes, but there are over 3 million in fuel poverty. A huge programme of home energy efficiency would create jobs, save fuel bills for hard-pressed pensioners and other householders, and benefit the planet. Likewise we could have insulated our schools and hospitals to decent standards, creating jobs, freeing up money for education and health and benefiting the planet. … Today was a once-in-a-lifetime chance to do something for the long term. Instead all we got was a temporary tax cut that probably won’t deliver.
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