From the TUC

The Budget: was it progressive?

22 Apr 2009, by Guest in Economics, Environment, Labour market, Pensions & Investment, Politics, Public services, Society & Welfare

So did Darling deliver a Budget for progressives to applaud or not?  Here’s five quick judgements with marks out of ten for progressiveness (if that’s a word).

1. Green fiscal stimulus: The Budget put some serious money behind measures to shift the UK to a low carbon economy and stimulate green growth and jobs.  It isn’t the massive Green New Deal many on the left wanted but it is a real shift in Government thinking towards a much more interventionist approach.  I wrote earlier this week about how Mandelson’s “active industrial” policy took a big step forward on Monday but needed more detail and money; the Budget began delivering on those things in a big way. The doubling of capital allowances for business is also an indication of a changing emphasis towards manufacturing and more capital intensive sectors  – it contrasts nicely with the 2007 Budget when Gordon Brown actually reduced capital allowances. Some reasonable moves and money for housing as well. (progressiveness mark: 7/10)

2. Reducing unemployment: The guarantee of training or work for young people who are unemployed for more than a year is extremely welcome and has a lot of cash behind it.  It would have been great if it could have come in earlier than January 2010 but there are bound to be logistical issues to address.  It leaves questions about whether similar help should be extended to those over 25 and those unemployed for less than a year but this is not a cheap scheme and if you had to target a priority group, the young unemployed would  probably be it. (mark: 8/10)

3. Fairness and Equality: On the fairness and equality front, this was a Budget that sent out the right messages but was rather limited on help for the poorest.  The higher rate of income tax and reduction in pensions tax relief for those earning over £150,000 and the withdrawal of the personal allowance for those earning over £100,000 means the taboo on raising taxes for the wealthiest is well and truly buried (the funeral began with the Pre-budget Report, of course).  The higher income tax rate, in particular, also raises a fair bit of cash – almost an extra £2 billion per year from 2011.  There are also plans to close a series of tax avoidance loopholes but no real step change in HMRC attitudes to avoidance in terms of moving to a principles based approach.

At the other end of the income scale, there have been a few moves (some more money for the Social Fund and Child Trust Funds for disabled children, an assurance that pensions and benefits will not be cut in line with RPI deflation, for example) but the small amounts dedicated to the child tax credit were a real disappointment and a sign that the child poverty target for 2010 will almost certainly be missed.  In fact, there was little here for the “ordinary person in the street” (this was not an electioneering Budget) except for the fact that their taxes were not raised which in the current climate is probably to be welcomed.  (mark: 5/10)

4. Help for the unemployed: The big gap in the Budget was on major emergency measures for the unemployed.  No short-time working subsidy, no rise in Jobseekers Allowance and only a limited rise in statutory redundancy pay.  Placed in the too expensive column is my guess and probably fell foul of the decision to go for the big, targeted measure for the young.  A shame really because the Government is still focused on getting people off the dole rather than preventing them going onto the dole in the first place. However, extra resources are being made available for the over-stretched Job Centre Plus network which will prove vital over the coming months as unemployment continues its inexorable rise. (mark 4/10)

5. Public spending: One area where many will be worried is the announcement of “efficiency savings” of an extra £9 billion on top of the already planned £35 billion announced in the Comprehensive Spending Review and Pre-budget Report.  This will undoubtedly lead to public sector job losses and, despite the claims being made by the Government, a decline in service standards.  It is important, however, that there were no signals given about attempts to hold down public sector pay or downgrade public sector pensions. Any moves on this would be economic insanity reducing the confidence and spending power of five million consumers. This all contrasts very strongly with the Tories and CBI who are rapidly becoming little more than the political wing of The Daily Mail on the issue of the public finances.  They are seeking to actually shrink spending whereas the Chancellor is severely slowing the rate of growth. Darling also announced that he is delaying plans to balance the books by two years to 2018 which will ease the cuts but which has sent the CBI into a fury. (mark 5/10)

So in this very scientific test that gives an overall mark of 29/50 or if you prefer an average mark of 5.8/10.  Not top of the class but pretty credible under very difficult economic, fiscal and political circumstances.  It wasn’t the game-changing and radical budget many of us think these unique and troubling circumstances demand but it is fair to say it went a bit more than half way towards being one.

The trick now will be to build on this for a barnstorming Pre-Budget Report in the Autumn which, along with the Queen’s Speech, will be the last set-piece parliamentary event before the election. (UPDATE 23/4/09: my mistake – there could, of course, be another Budget just before the election). Now, if George Osborne had been giving that Budget speech … no, it doesn’t bear thinking about.

6 Responses to The Budget: was it progressive?

  1. A Very Public Sociologist
    Apr 23rd 2009, 8:58 am

    Re: public spending, one thing you forgot to mention was the £60bn sell off of government assets. If this isn’t a code word for more outsourcing and privatisation, I don’t know what is.

  2. UK Poverty Post
    Apr 23rd 2009, 9:39 am

    Budget 2009 – A missed opportunity…

    Moussa Haddad Well, this wasn’t quite Lloyd George in 1909. People’s Budgets don’t, it seems, come round every hundred years after all. No increase in benefits; no increase in tax thresholds; and the much trumpeted ‘targeted help’ adds up to……

  3. A Budget Pick’n’Mix « Frank Owen’s Paintbrush
    Apr 23rd 2009, 6:05 pm

    […] The TUC blog includes some articles which argue it did ok as a progressive Budget. […]

  4. Robert
    Apr 23rd 2009, 8:43 pm

    The Unions are hardly going to attack labour are they, not when they then cough up millions to keep it in power.

  5. Adam Lent

    Apr 23rd 2009, 9:00 pm

    The unions are very often highly critical of Labour and the TUC doesn’t give a penny to the Labour Party anyway.

  6. Robert
    Apr 27th 2009, 4:57 pm

    I’ve been in a trade Union for 40 odd years, I know how Labour and the TUC work.

    Yes I know what the TUC did for the lads working at Remploy, and I notice the TUC agreed with Labour about the welfare reforms, it was only once we told the TUC something was wrong and it’s not working the TUC felt it had to react, five years to late.

    The trouble with blogs like this it’s about telling people New Labour is right for us, when most of us know it’s not