Tuesday, 22 June 2010

DC plays hide and seek...

So today was the first coalition budget, the first thing I noticed when tuning in was just how well the Tories had positioned themselves... David Cameron's arm could just about be seen behind George Osborne on the TV pictures, however he is unmistakeably flanked by two key Liberal Democrats (Nick Clegg on the left of the picture and Danny Alexander on the right).  How intentional this was one obviously can't be sure, however it did a great job from the Tory perspective of deflecting blame onto the Lib Dems.

I thought Danny did well when speaking to the BBC shortly after, however the constant defending of Tory coalition policies annoys me almost as much as commentators asking why the Lib Dems are supporting policies that were not in their manifesto.  The BBC's Nick Robinson is so bias it is unbelievable.  He was pressing Danny as to why he was backing the raise in VAT when this was something the Lib Dems argued against in the run up to the election.  Of course there are policies that the Liberals do not like as they are in a TORY lead coalition.  As a result it is primarily Tory policies that are pushed through.  The job of the coalition partner is to support this in order to ensure that their priorities are followed.

For those who did not notice the personal allowance of income tax was increased (a Lib Dem manifesto pledge), there was no increase in inheritance tax allowance (a Tory pledge that the Lib Dems argued against), a "tripple lock on pensions" (a Lib Dem pledge) and there was a raise in the higher rate of capital gains tax.  The latter being basically a watered down Lib Dem pledge - or a compromise if you will, as what happens in a coallition.

Here is my problem with the current Liberal set up however.  When asked why 28% was chosen rather than the 40% that the Lib Dems pledged Danny responded with some Tory based arguments, rather than stating that in a coalition there is give and take as all parties must be satisfied.  A coalition should be made of compromises, hopefully Simon Hughes will do his best to emphasise this and win back support from some disgruntled voters.

Nick Clegg has totally missed the point as well.  In a message to members he states:

"In the past, efforts to tackle a big deficit have always hit the poorest the most. The coalition has ensured that – for the first time – this will not happen. The richest will pay the most, while pensioners and children will be protected."

That, unfortunately is not the case.  Whilst the richest may be paying for most of it, this is not the key point, the point is who is most effected by the policies.  It is those with the most modest incomes who rely on the services offered by the Government departments that will be scrapped.  The very poorest will see absolutely no benefit from the raise in the personal allowance, as they weren't paying tax anyway!  The VAT rise, the richest will end up paying more VAT, however this will not influence their purchases.  Most people on low incomes have particularly tight budgets.  A change in the VAT rates make their normal items more expensive (including utilities!) as a result they may well be forced to alter their lifestyles in a detrimental way.

VAT is a regressive tax, Nick Clegg knows it, even David Cameron knows it.  Whilst they are supporting this tax increase rather than other tax rises they cannot call this a progressive budget.  VAT is a crazy tax to increase, it increases prices (as almost all price rises will be passed on to the consumer) and as a result depresses demand leading to lower (negative) growth in an economy.  This is not the right tax for this time.

All of that being said, I still feel that the massive cuts are necessary and that today's budget is a lot better than we would have had if Mr Cameron had walked into number 10 on Friday 7 May as the Prime Minister with a majority in Parliament.  This was always going to be a Tory budget, at least the one we had had some Liberal influence.

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