The Budget.

Today the UK Chancellor of the Exchequer has delivered his annual budget in which he outlines how much money the country's got, how it's going to spend that money and how it intends to raise more money. As it is widely accepted that in 42 days Britain will be holding a General Election that will return a new government which will implement it's own budget this years speech was nowhere near as significant as normal. The Chancellor's hands were further tied by the fact at the coming election his Labour party is going to try and differentiate itself for the other political parties by promising to ignore the national deficit and continue with public spending. Therefore he could hardly announce cuts in spending or tax rises and the Queen most certainly wasn't going to allow him to spend any more money.

It would though look just a little unprofessional if the Chancellors budget speech consisted of him standing up and say; "We're pretty much going to leave everything the way it is" before sitting down again. So he decided to heavily pad the speech by spending the first twenty minutes droning on about how his party had responded to the global financial crisis and why he thought it was all an amazing and excellent idea. This has very little to do with Britain's current economic situation and probably should have been saved for a party political rally rather then the budget speech. The Chancellor did however, eventually get on to the important stuff;

Growth Forecasts. In 2010 the Chancellor predicts that the UK economy will grow between 1 and 1.25% which although is being claimed as being in line with forecasts is actually a slight downgrading. The growth forecast for 2011 has been downgraded more significantly to between 3 and 3.5%. Although I think these figures are still slightly optimistic they are, especially at the lower end of the estimate, within the margin of error and are therefore quite credible.


Unemployment. The Chancellor was proud to announce that in spite of the recession unemployment has not risen as severely as expected and in fact has fallen by 47,000. This is nothing more then a fiddle because while the number of people claiming Job Seekers Allowance and therefore registered as unemployed has fallen the number of people classed as "economically inactive" has risen. This group includes people who are on sickness benefits, are funding their job search through savings or redundancy payouts and young people who have been tricked into worthless university courses and are therefore reliant on Student Loans Company who do not have a reputation for prompt payment.


Public Sector Borrowing. Public sector borrowing and therefore the national debt is predicted to have fallen by £11bn to £167bn. Although still very high this is good news for the economy. Aside from a very large estimate in the Pre-Budget Report this has been achieved in a number of ways. The majority of the reduction comes from the one off supertax on bankers bonuses that has netted the Treasury an extra £2bn in revenue. Borrowing has also been helped by the scamming of the unemployment figures that has reduced the amount of money that is being paid out to benefit claimants. Also there have been reports that the department that pays benefits has been ever so slightly underpaying people and paying them late while the department that collects tax has been ever so slightly overcharging people and forcing them to pay early. A large part of this reduction in borrowing though is due to the fact that the governments expensive public health campaign to get people to quit smoking and drink less has failed spectacularly. Sales of tobacco and alcohol products have been up significantly and because they are taxed at around 300-400% this has netted the Treasury a couple of billion pounds in extra revenue.

Taxation and Spending. In terms of the real nuts and bolts of the budget the will effect the average man in the street the Chancellor has actually done very little. There is an attempt to nibble away at the edges of public spending with an extra £6bn in "efficiency savings." As always you need to go right into the minute detail of the budget to discover what these are but I think they are genuine efficiency savings by further reducing the budgets of quangos, moving government offices in areas of cheaper rent and stopping them buying new office equipment. There also small attempts to boost revenue by increasing the tax on alcohol and tobacco in line with the escalator. The tax on cider will be raised by a huge 10% in order to bring it in line with other alcohol products. This is quite a sneaky way to raise extra revenue because very strong, very cheap and largely synthetic ciders are normally drunk by the sort of problem drinkers you would probably call tramps. Therefore this tax hike can be disguised as an attempt to clean up society while sucking a lot of extra money out of people who are basically addicts. The Chancellor has also decided to phase in the 3 pence rise in fuel duty over three stages between April 2010 and January 2011 rather then just doing it in one go in April. This has been done in response to the rise in oil prices and worries that it could damage the economic recovery.

The Election Give Aways. It is traditional for the last budget before a General Election to be packed with freebies, give aways and bribes to encourage people to vote the government back into power. Although the Chancellor enjoyed more freedom the recently in the content the budget the state of the public finances meant that these too were thin on the ground. There were some though. The most high profile of these is the decision to scrap stamp duty for first time house buyers in the event that they can get a mortgage. The higher rate of winter fuel payments to the elderly will continue for another year provided the pensioners remember to vote Labour. There is also a scheme to make bank accounts available to people who have, up to now, been unable to have them. This last scheme does rather sum up the budget because while it hints at a semi-interesting talking point for socialists over the subject of social exclusion within a capitalist society it will only really affect about 1 million over three years. Therefore you really need to be more deeply interested in Communist politics then is probably healthy in order to care about it.

Considered that the time I spent watching the Budget and writing this has meant that I've be unable to write that letter to the medical people I'm inclined to sum this budget up as a bit of a waste of time and effort.