Clegg: Pick and mix budget fails on all counts

by Stephen Tall on April 22, 2009

Nick Clegg has issued the following response to Alistair Darling’s budget:

Today we got a pick and mix Budget of recycled announcements from a government skilled in raising people’s hopes but incompetent at actually delivering help.

“This Budget is a political supermarket sweep of random promises, without even a hint of a plan or any likelihood the promises will be put into practice. The biggest disappointment in this Budget is its failure to sort out Britain’s unfair tax system. To put money into people’s pockets to help them make it through this recession.

“Britain’s taxes are too heavy on those who can least afford it. And too easy to avoid for those who know how. The 50p rate will further encourage the very wealthy to avoid tax unless we tackle the unfair loopholes they exploit.

“The Liberal Democrats would get practical help to people who are struggling and cut the vast majority of people’s Income Tax bills by £700, paid for by taking aggressive action to clamp down on all the loopholes and exemptions that benefit the richest people and biggest businesses.

“We would take big choices about what government should and shouldn’t do. With a shocking deficit this year of £175bn we need a national debate about what the state can and cannot afford in the future. That is the responsible way – the honest way – to reduce spending in the years ahead and avoid painful higher taxes.

“But Labour is out of ideas and out of steam. Today they have condemned us to years of unemployment and a decade of debt. The country deserves something different.”

A video excerpt of Nick Clegg’s Commons response is below:

You can read the full text over at the party’s website HERE, or after the jump:

Nick Clegg’s response to Alistair Darling’s Budget in full:

Mr Speaker, the economic crisis is unprecedented in many ways – its scale, its speed, its reach. So people are looking for something bold and distinctive from this government.

Think back to the great Budgets of our history. The People’s Budget of 1909, the first pension, the first social insurance. Labour’s post-war Budgets, building a new nation from the rubble of war.

What made these Budgets great was their ambition, and their coherent vision for a different future.

That is what we needed today, in the aftermath of this generation’s disaster. The worst of times demand the best of Budgets.

So what did we get today?

Today we got a mish-mash of recycled announcements from a government skilled in raising false hopes but incompetent in delivering practical help.

The Chancellor had a choice: he could have used this Budget to get practical help to the millions of people struggling in this recession.

He could have given a People’s Budget for the 21st century. Instead we got a politician’s Budget, desperately rushing around picking up half-baked ideas to save the skin of this failing government.

This Budget is a political supermarket sweep, a trolley full of random promises, without even a hint of a plan or any real likelihood the promises ever going to be put into practice.

Mr Speaker, the growth predictions in this Budget also stoke up false hopes.
The economy will grow by 1.25% next year and 3.5% from 2011?
£15bn can be shaved from public spending without cancelling a single Whitehall project?

Given the lamentable failure of this government to get its own predictions right, people will be asking what kind of fantasy world does the Labour Party live in these days? And if he gets the figures wrong again, particularly the growth predictions, there will be even greater pain necessary to get the government accounts in order in future years.

The economic crash is not the result of a few minor mistakes. Patchwork repairs won’t fix it. We need to do things differently.

And – though it barely warrants a mention in this Budget – that will need to start with a different kind of banking system.

Just because this is off the front pages today, that doesn’t mean the problems are solved. Businesses still aren’t getting loans. Banks are still in a mess.

The problems have to be sorted – we need a banking system where no bank is too big to fail, where high street banks take no unnecessary risks with other peoples money, and where risky casino investment banking is cut loose to fail when things go wrong.

But, Mr Speaker, the biggest disappointment in this Budget is its failure to sort out Britain’s unfair tax system.

To put money into people’s pockets to help them make it through this recession.
Britain’s taxes are still too heavy on those who can least afford it.

And too easy to avoid for those who know how.

That’s how this Government, and I think the Conservatives, seem to want it.
We are the only party who will do things differently, and get practical help through lower taxes to people who are really struggling.

This week, we explained how it is possible – even in a recession – to cut most earners’ Income Tax bills by £700 by raising the Income Tax threshold to £10,000 for everyone.

If we take aggressive action to clamp down on all the loopholes and exemptions that benefit the richest people and biggest businesses.

The Government has today finally accepted that one of the most unfair loopholes – the doubling of tax relief on pension contributions from highest earners compared to people on ordinary incomes – should be changed.

But they have only tinkered with the loophole today, removing the benefit from only the tiny minority earning more than £150k. Like his other tokenistic measures applying to highest earners, it will raise very little money – according to his own red book only £200 million – whilst leaving the really big loopholes like the lower 18% tax on capital gains in place, which in effect serves as a massive subsidy for the very rich, when we should be doing everything we can for people who really need help.

Our proposals would ensure that 4 million of the lowest paid no longer have to pay any income tax at all.

Our proposals would put fairness and transparency back into this government’s woefully unfair and complex tax system, and I urge the government, even at this late stage, to take our ideas up.

It isn’t too late to sort out Labour’s failed fiscal stimulus, either. There should have been proposals in this Budget to end the pointless VAT cut and replace it with a stimulus package that actually works.

Billions have already been poured down the drain, but if the Chancellor stopped the VAT cut now he would still have £8.5bn to better spend elsewhere. Just imagine what could be done with that money – creating thousands of real jobs, as well as laying the foundations for a different, greener economy. Insulating 2 million homes and every school and hospital in the country. Building new council houses. Upgrading public transport with new train carriages and re-opening railway lines and stations.

For every minute that goes by, £22,000 is wasted on the VAT cut. And every minute that goes by, someone else in Britain loses their job. It isn’t too late to turn things around. Cancel the VAT cut, put the money into green jobs, and we’ll have a quicker recovery and a stronger country.

Mr Speaker, this mish-mash Budget includes a litany of missed opportunities.
It has failed to do anything to help the poorest pensioners who receive pension credits on the absurd assumption that they’re making a 10% return on their savings. The treasury is robbing pensioners of their rightful entitlements at a time when savers everywhere are being hit hard.

I’ve lost count of the number of government announcements on housing – we have yet another one today – yet fewer new affordable homes are being built than ever, young people still can’t get a foot on the housing ladder, and the government persists with its deeply misguided policy of subsidising people to take on new debt in a falling housing market.

And then there’s the huge dilemma of how balance and discipline can be restored to the government’s finances in future.

Today’s figures of projected national debt will cast a shadow over future generations.
One thing is more important than anything else when it comes to the public finances: growth.

Without growth there’ll be no money anywhere to pay off the nations’ debt.
And that means we must not pull the rug out from under the British economy just as it’s struggling to get up off the floor.

So the Conservatives are just plain wrong to propose slashing Budgets immediately.
That would be an act of economic masochism.

But Labour are wrong, too, to commit right now to big Budget cuts in April of next year – the biggest fiscal contraction in the OECD – when we have no idea what the economy will look like then. No idea whether cuts would kill off growth just as it gets going.

Remember, this time last year the Chancellor said that the economy would be growing by 2.5% today, and yet it’s now predicted to shrink by 3.5% this year.

Six months ago he said the recession would be over on July 1. The Chancellor may fancy himself as the new Mystic Meg, but he should get out of the predictions game.

We don’t know where the economy is going: so we simply must keep our options open until growth is restored when we will need to face difficult choices.
That’s the only honest approach.

The Chancellor should adopt an honest approach on spending, too. He’s trying to pretend that £15bn can be stripped from public spending without anyone noticing. But talk of pain-free efficiency savings are a joke.

We all remember Gershon. All it proved is you can move money from one column to another and call it a saving.

The Liberal Democrats would do things differently. We would take big choices about what government should and shouldn’t do in the medium term, once growth has kicked in again.

Asking difficult questions: Is the 50% target for university students either necessary or affordable? What is our international military role and how much should we spend on it? Are exceedingly generous pension entitlements for well paid public servants fair and affordable?

We need a national debate about what the state can and cannot afford in the future, not with Whitehall salami slicing today.

That is the responsible way – the honest way – to reduce spending in the years ahead and avoid painful higher taxes.

Mr Speaker, this Budget could have been a great Budget. It could have set a new direction, a new course for Britain, out of recession and towards a stronger future.

A new, fair, transparent tax regime. A better banking system. Green jobs, green infrastructure for a sustainable economic future. A new era of openness from government about what the public purse can sustain. A new era of responsible, lean government that improves people’s lives.

Today was an opportunity to deliver practical help. But Labour is out of ideas, and out of steam. Today they have condemned us to years of unemployment and decades of debt. The country deserves something different.