Tuesday, June 29, 2010

Some snippets from the Budget Debate

I don't want you to think that I've spent the last week glued to the Budget debate in the House of Commons, but I thought I'd share with you another couple of moments from the proceedings from the bits I have seen and some other speeches I've read about in Hansard.

Firstly, I have to say that it gave me the proper creeps when Iain Duncan Smith referred to Simon Hughes as "my honourable friend" yesterday afternoon. We may be in coalition with the Tories but that does not mean I have to like them. IDS is, I'm sure, a very nice man, but he has a very narrow view of life which I feel compromises his judgement on social justice issues. Mind you, even he was yesterday agreeing to requests for things like racial impact assessments from the opposition on the effects of the cuts in Housing Benefit. Look at this exchange between him and Simon Hughes:

Simon:
Will he ensure that over the next few weeks, when we consult on the future of the welfare state, all the relevant charities, agencies and local councils, which are very knowledgeable about such things, are fully involved so that the outcome is informed by the facts and not by prejudice?


Mr Duncan Smith:
I give my hon. Friend absolute confirmation that we shall consult widely. As he knows, we are planning to reform the benefit system so that it no longer acts as a major disincentive for people to go back to work.


That sounds way more accommodating than the Labour Government with their "you'll take what you're given" approach we've become accustomed to after 13 years.

Some of IDS's ideas are awful and I've already written about my concerns about them. It's a subject I expect to have to return to many times in coming months.

I wasn't particularly impressed by Labour MP Mary Creagh's intervention on the limiting of the Sure Start Maternity grant even though I actually agree with her and think there needs to be greater flexibility. She said:

I can tell him that if someone has a child who is two, they cannot expect a baby to travel in the same pushchair. I can tell him that if someone has a child of six of seven, they have already given away the pushchair by the time the next baby comes along, because that is how families organise themselves


I bought very little new for Anna, who is my first and only born although to be fair we could have afforded it. I just didn't see the point of having new when there were perfectly usable things available to me. I saved my money for when she started to need things like shoes every 3 months. I borrowed my friend's pram and then used the pushchair that I had bought for my niece 7 years earlier. It was with us until the Winter of 2002 when some not very nice people decided to steal all the wine that was in our garage and took the pushchair presumably to wheel it away in. If circumstances had been different, I'd have happily used it for another baby. Her cot was second hand (which I'm glad about because she hardly ever went in it), although the mattress was new. As to the issue of a 2 year old not being able to travel in the same pushchair, that's very true, but I'd say in my experience most people don't buy double buggies because they are such a nightmare to manoeuvre - they get a little board which straps to the buggy for the toddler to stand on or the toddler walks, or the baby gets carried in a sling and the toddler goes in the pushchair. My way of doing things doesn't and won't suit everybody which is why I think there has to be more flexibility to suit people's circumstances rather than a straight abolition.

In terms of Liberal Democrat interventions in the debate, I have to turn to two of my favourite MPs - Malcolm Bruce and Vince Cable.

Malcolm was robust in his support of the Budget. He looked back to a time when he was our Treasury spokesman:

I had the honour of being my party's Treasury spokesman between 1995 and 2000. During the 1997 election, the Liberal Democrat manifesto included an aspiration to raise the threshold at which people started to pay income tax to £10,000. That was only an aspiration because, try as we might, we were unable to find the resources at that time to pay for it. However, when the Labour Government were elected in 1997, the first thing that they did was to introduce the most generous capital gains tax relief that the richest people in this country had ever enjoyed-Mrs Thatcher never contemplated it!


One of my greatest issues with the Budget is the introduction of a medical assessment for DLA. Malcolm, who knows more about it than I do as he has a daughter who gets it has a different perspective that's worth us listening to:

I declare an interest, as I have a grown-up deaf daughter who receives disability living allowance, so I certainly welcome the simplification of the process for applying for that abstruse allowance. It is not means-tested-people do not have to prove that they need the money; in fact, that is not a valid reason at all for qualifying for it-as individuals have just to prove how disabled they are to enable someone to make a judgment. That is difficult, and it goes against the grain for disabled people, who want to show how able they are, in spite of their disability. A simple medical test, if it is applied objectively and fairly, would work, and I hope that someone like my daughter, who can prove that she is profoundly deaf, would automatically qualify, as would others with a similar category of disability.


I think that the words which are critical to that are the ones I've put in bold. I do hope that the DWP will not use the flawed system of medical assessment that Labour introduced for Employment and Support Allowance as a model as it appears to be skewed towards marking people as fit for work and has deemed, for example, that Cancer sufferers undergoing treatment should also be working at the same time.

Malcolm also outlined how much better this budget is as a Coalition measure rather than one introduced by one party alone:

There is much in the Budget of which to be proud, and I make it clear to right hon. and hon. Friends in the Conservative party that it is not a Conservative Budget or a Liberal Democrat Budget, but a coalition Budget. I would argue that it draws on the best on both parties. Those parties command the support of the majority of the British people, and the Budget's approach will deliver benefits to the majority of the British people. I said in the election campaign, when I became aware of the seriousness of the financial situation facing the country, that the position would be much better after the election if cuts that had to be made were implemented by more than one party, as they would be forced to engage with each other and find a balance that would be more acceptable than measures adopted by one party running for a sectional interest that did not have the same strength of appeal. I honestly believe that the coalition has found a dynamic that has delivered something that is greater than the sum of its parts: a Budget that is genuinely progressive.


And finally, here is the Almighty Vince. I would be much happier if he were Chancellor than Osborne, but he's not so I have to live with it. Read his whole speech because it's worth it. He talked about the time 30 years ago when he was an adviser to the Government when the IMF came to call:

Since the questions are coming from Labour Members, let me now give the other reason why I feel strongly about the need to act decisively in the way in which the Chancellor acted yesterday. Thirty years ago, as an adviser, I occupied the office that I now occupy as a Minister. It was the end of a Labour Government who had chosen to ignore the build-up to a major financial crisis. As some people will remember, the painful measures-the taxes, welfare cuts and spending cuts-were not taken by choice. They were imposed from outside by the International Monetary Fund. Because I was there at the tail-end of that Government, I saw the consequences, not the least of which were the massive divisions that opened up. People in the Government such as Denis Healey, Roy Jenkins and my boss, John Smith, believed that the Government had to be responsible, but there were a lot of others-I sense a growing echo of this feeling on the Opposition Back Benches today-who said, "We don't need to do anything, we can fight the gnomes of Zurich and drive them underground, we can ignore the rest of the world and we do not need to act." It was a disastrous alternative strategy, and the Labour party is in great danger of returning to that territory.

That is why I have come to the same position as the Chancellor of the Exchequer. We come from different political traditions; I do not try to hide that. As it happens, my role models as Chancellor of the Exchequer include Sir Stafford Cripps and Roy Jenkins, because they understood the need for sound public finance and they combined tough action on budgets with fairness.


And this is what he had to say on VAT - and the regressiveness of the Council Tax under Labour:

The Government did look at the possibility of raising capital gains tax further. They did serious analysis and the conclusion was that it would not raise any more revenue. That was the problem. It certainly would not have raised anything remotely like £10 billion. That is why we cannot evade this issue.

Let me turn to the central concern about value added tax, which is expressed on both sides of the House: the worry about regressiveness. I checked back on what independent analysts were saying about value added tax and its income distribution effects. It is worth looking at the work of the Institute for Fiscal Studies, which has conducted a distributional analysis based on expenditure. It came to the conclusion-this is its word, not mine-that value added tax was fairly "progressive" because of the exemptions that are given for zero rating, as food, children's clothing and other essentials are key items in the expenditure patterns of poorer people. [Interruption.] The top 10% of the population pay three times as much in value added tax as the bottom 10%. [Interruption.]

Opposition Members are expressing righteous indignation about what they regard as regressive measures. Let me tell them which is the most regressive tax: it is council tax. Do they remember what happened to council tax under the Labour Government? On average, it went up 70%. Taking into account rebates, for the poorest 10% of the population it rose by 93%. It is the most regressive tax of all, yet they lecture us in this sanctimonious way about regressive taxation. They have no basis for doing that.


I can see the logic in what he's saying, but I still don't like it when so many of the uber-wealthy are being comparatively lightly taxed.

I think that in general the speeches I saw from the Government side were much more rational than the bile that came from the opposition benches. The Budget is now passed and there is more pain in the specifics of the spending cuts still to come, but I wanted to preserve what were for me the most important arguments made in the debate. I'm not convinced by all the answers given, but let's give it a chance. This Government also seems to be prepared to listen to rational, evidence based argument so we'll see if measures can be adjusted in the future.

2 comments:

dougf said...

"Firstly, I have to say that it gave me the proper creeps when Iain Duncan Smith referred to Simon Hughes as "my honourable friend" yesterday afternoon."

The rest of your piece was so adult that this portion seems so discordant in comparison. The 'friend' salutation was merely standard form in the Commons. He could have said 'honourable ally'. Would that have helped any ?

The LibDems are in a FIVE YEAR Coalition Government. They are in POWER for the first time in almost 70 years. At this point having gone into the Coalition, it seems somewhat un-serious to be upset by a salutation. Tribalism is your enemy as much as it is Labour's and the Tory's.
It's unbecoming if nothing else.

Caron said...

Doug, I think I'm doing really well as a leftie tax and spend Liberal to have embraced the coalition. It does feel strange to be working that closely with the Tories which is what my comment was meant to convey. You'll note that the comment which came next was "IDS is a very nice man" but it's his vision of welfare which Lib Dem MPs are obliged to vote for which I have real problems with.

The term "honourable friend" in Parliament is usually reserved for someone of the same party. We certainly didn't refer to Tories as "friends" when we were both in opposition. I'll get used to it and I'm not suggesting that they shouldn't use it but it does seem very,very strange.

There are elements of Tory and Liberal Democrat philosophy as well as policy which will always be at odds.

I want the Coalition to last the five years, not least because I want to get to the point where we actually make a difference and get this country back onto a secure footing. That's the only reason I can cope with the painful measures in the Budget.

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