Tuesday, June 22, 2010
Has there been a bigger U-turn than that performed by the LibDems on VAT?
I have to say that my private thinking was that the ConDems wouldn't dare hike VAT precisely because of the above shot from the General Election. Which either goes to show what a lousy political pundit I am, or the extent to which many of us continue to underestimate the LibDems sheer, brazen cheek.
In truth, the LibDems know that VAT, like all sales taxes, is regressive, and hits the poorest hardest. Introducing it in a single slug after Christmas will not only depress sales, but also push up inflation. Elsewhere...
*Child benefit, the universal benefit payout received by all families, will be frozen for three years.
*Tax credits, brought in by the previous government to help working families and people on low incomes, will be cut for households with a combined income of more than £40,000.
*Other changes to family-centred benefits will see the health and pregnancy grant abolished in 2011.
*The Sure Start maternity grant will be restricted to only the first-born child.
As always, my old mate Hopi Sen has done some spot-on reasearch amongst the budget pages - he's found that "the Office for Budgetary Responsibility projects lower growth, higher unemployment and higher inflation as a result of this budget. Yummy. It even states that it expects the output gap to be greater at the end of this It’s pretty rare for a government to come out and say that this is what it’s budget will do."
The real pain is yet to come, however, with the 25% reductions in departmental budgets. Believe me, if the reductions are anything like that in local government, services will be worse than decimated. And here's why:-
Education accounts for 40-45% of local spending. Yet the ConDems have said that education spending will be protected in the Comprehensive Spending Review. So that will leave councils trying to find a net 40-50% savings in the remaining (non-education) budget. And remember, some services rightly have to be protected by law (Social Services and the like). There is the real prospect that local services we have come to value, which are an intrinsic part of our everyday life, will disappear rapidly. Trust me - this isn't scaremongering.
We've always known that Tories have dreamt of hacking away at the State until there was little left. What no-one could have predicted was that it would be the LibDems - the cuddly, inoffensive slightly barking LibDems - who would be complicit in the deal.
Liberal Democrats - be warned. Labour will be coming after you to account for the havoc your Coalition is about to wreak on services that protect the weak and vulnerable. For the decision to allow public services to take the brunt of the pain rather than troubl;e the rich and ask them to shoulder their share of the burden. Whether you're a LibDem MP, a councillor or just a local candidate - expect to see the picture above on election literature time and time again. I hope you have some half-decent answers for the communities your Government is about to attack.