Wednesday, March 23, 2011

What Liberal Democrat influence will we see in the Budget?

Way back in June, the night before the Budget, Nick Clegg sent out one of those anodyne e-mails setting out the context of the mess we were in.  That signalled to Liberal Democrat members that there were be changes we weren't going to like - as there were, to Housing Benefit (some of which, like the cut after a year's claiming have been stopped because of Lib Dem action within Government) and DLA, for example.

Well, we haven't had an e-mail this time and I hope that's because with last year's Budget and Spending Review, we've had the bulk of the bad news.

Let's not forget, though, that when the Coalition Government took office, they did so amidst the backdrop of Portugal, Greece and Ireland being in a real financial mess and having to take action to avoid us being in the same position. Labour's financial mismanagement, which had led to us spending £3bn a week more than we brought in. Anyone who's paid interest on a credit card will know how much that eats into your budget. It couldn't go on.

So June's budget was about getting the public finances under control. This one will be about encouraging economic growth. Let's face it, it would be really mean of a Government to cut back on public spending without helping the private sector to grow, to employ more people. There are limits, though, as far as I'm concerned. While both Tories and Liberal Democrats want to reduce useless bureaucracy and regulation, there are disagreements about what counts as useless. Liberal Democrats will not want to see employment rights eroded, for example. I've already expressed my concern about the proposed doubling of time an employee has to work before seeking recourse to an employment tribunal, for example, and about any diminution of parental leave. Having said that, I have it on very good authority that no parental leave rights will be taken away, but small businesses won't initially have to comply with any future changes.

The BBC is already reporting that the tax threshold in this budget will be raised by a further £6000 from April 2012. That means that the Government will, within the first 2 years, have achieved £1600 out of the planned £3525 needed to raise the tax threshold to £10,000. I hope that the next Liberal Democrat manifesto will raise that still further, but what's been done so far is one of the biggest Lib Dem achievements in this coalition.

It'll be interesting to see what Osborne does with fuel duty - the steep rises in the price of petrol and diesel are affecting everything, every household, every business and sending inflation up to levels we haven't seen for a long time. I would have thought that as a minimum April's duty rise, which had been put in place by Labour, will be scrapped and work on securing the derogation from fuel duty will continue. You can't just walk into an office and come out with a derogation, by the way - it can take some time to negotiate, so don't listen to anything Labour says about this being able to be done overnight. And we also have to remember that when they were in Government they did nothing to help rural residents who have to have a car because there is no public transport.

I would say that as an absolute priority, the Government has to do something about youth unemployment, providing more money for training, college places and apprenticeships. I would have thought that our ministers would have been working to achieve this - as Jeremy Purvis has already achieved in the budget negotiations up here.

Affordable housing is also a huge priority with many lower earners simply having no prospect of getting on the property ladder. The BBC reports £250 million will be put into a scheme to help first time buyers which will also boost the ailing construction industry, creating jobs. Similarly, jobs in green technology will be created by the Green Investment Bank - and I hope we'll get more flesh on those bones today.

What the Budget probably won't do is change the Winter Fuel Allowance. This is a real bugbear of mine because we will get it this year and we don't need it. It's galling when families with disabled children won't get it. It annoys me that David Cameron has got to keep his pledge on this.

I shall be tweeting my way through the Budget at 12.30 and will write up the detail later. I don't quite have the foreboding about today as I did in June. I think that's because we've seen so much evidence of Liberal Democrat policy in action since then:

900,000 out of tax altogether;
the pupil premium to ensure that poorer kids don't suffer in the education system;
the triple lock on pensions to end the sort of miserly 75p pension increases under Labour;
an admittedly imperfect, but still fairer system of tuition fees, which means lowest paid will pay less than under Labour;
increase in Child Tax Credit for the poorest;
compensation for Equitable Life policyholders;
public sector pay increase for lowest earners.

Those are just a few things off the top of my head. We learn more about how Liberal Democrats behave in Government by how our Council administrations are coping with cut budgets. As Nick Clegg pointed out in his Sheffield speech, Liberal Democrat Sheffield is only cutting 200 jobs compared to 9 or 10 times that amount in Labour run Liverpool and Manchester who had similar budget settlements. Faced with constraints, Liberal Democrats will instinctively protect those frontline services such as libraries and children's services.

Anyway, enough from me at the moment - Zumba class beckons and I need it to wake me up.

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