How should Simon Hughes amend the budget?

Deputy Leader of the Liberal Democrats Simon Hughes has announced an intention to amend the budget to promote fairness. He told the Guardian today that:

When it comes to the Budget next week, we will vote for the budget. But if there are measures in the Finance Bill where we could improve fairness and make for a fairer Britain, then we will come forward with amendments to do that, because that’s where we make the difference, as we will in the spending review which will follow in the months ahead.

This is very welcome, but what should this amendment look like? I have already been thinking about an income tax rise to replace the VAT rise, but what else might the Liberal Democrats propose? Answers in the comments below.

It is notable that Simon is leading on this, not just another backbencher – and strikingly, not anyone from the Labour benches. Isn’t it time they started making more constructive noises?

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23 comments on “How should Simon Hughes amend the budget?
  1. Neil White says:

    Wow, where to start?! Eg.:

    * Housing benefit.
    * Youth employment and training.
    * Higher education.
    * DLA.

    The current budget position on these has absolutely NOTHING to do with being “fair”. Honestly, I don’t hold out much hope that there will be any improvement. Things are very, very bleak.

  2. Andrea Gill says:

    Huw Irranca-Davies was quite good at the constructive criticism thing from the Labour back benches yesterday, as was Mark Field from the Conservative back benches today.

  3. Andrea Gill says:

    @Neil White: DLA is not something people “live on”, it is there to help with *additional* costs associated with living with a disability. Sorry but what is wrong with making sure these claims are genuine?

  4. john says:

    This sums up the SLF thinking – I’m not quite sure what sort of economic society SLF are working towards.

    Housing benefit – why? Perhaps they’d like to look someone locked out of the benefit system on 15k asking them to subsidise a better house for someone else who can’t be bothered to work.

    Youth employment and training – good idea – but where’s the money coming from?

    Higher Education – vocational and basic stuff for adults please

    DLA – agree with Andrea

    Most people think that benefits should be reformed and/or are either at the right levels or too high.

    I’d love to know how many SLFers actually live in areas outside London and the SE. It all seems so london-centric. Let’s face it apart from on stuff that enables people it ain’t gonna happen. Even if there was no deficit there’d be reasons to reform the benefit system – unless of course you want a Swedish society – in which case can we have all your higher tax proposals (including for the low paid workers)

  5. James Graham says:


    Those are all important, certainly, but what we need are practical and specific things that might form an amendment to the finance bill.

    Sadly we can’t rewrite the entire budget at this stage, but we can mitigate the worse effects – and we can begin organising for the 2011 and 2012 budgets before the worst effects of this budget begin to kick in. Nick Clegg was hinting this morning that the 2012 budget would have to include a lot of progressive measures in order to ensure that the IFS report on the budget turns out to be wrong.

    So please don’t give up hope – there is still a lot to play for.

  6. Niklas Smith says:

    John and Andrea make good points, except that the real cause of rising spending on housing benefit is the lack of affordable housing. The redesignation of gardens as greenfield sites should be reversed immediately, since there is no logical justification for equating a garden with open countryside or a park, and since we need more building, not less.

    As for my amendments wishlist, here goes:

    1) Implement a fairly high minimum price on UK emissions permits immediately and announce the intention to roll out a carbon tax at that rate. Consumption taxes are necessary, but are best targeted on emissions rather than indescriminately on all consumption. Also announce a carbon tax escalator to lock in above-inflation rises until emissions reduction targets have been met.

    2) Actually impose a lowish annual limit on pension contributions eligable for tax relief (e.g. £30,000) to raise at least £3.5bn from reducing tax relief payments to the enormously well-off. It’s good to see that this proposal has been made by the government, but it is so obviously necessary that it should be imposed immediately rather than put out to consultation. This would help nudge the budget’s impact in a progressive direction.

    3) For the longer term, aim to replace Council Tax and business rates with local Land Value Taxation on all land. This would be progressive because the poor are more likely to be tenants (who would no longer pay local taxation). Local income tax is not economically wise (fattening the tax wedge is not the way to create more jobs) or politically doable (the Conservatives would have a heart attack).

    I don’t think replacing the VAT rise with an income tax rise makes sense. It would undoubtedly be more progressive, but there is limited room to raise the higher rate (already 42% if NI contributions are included), let alone the new top rate (50%), without genuinely discouraging work. Even Sweden’s top rate is 55%! Meanwhile, increasing the basic rate would be directly against years of Lib Dem tax policy and (because of 12% NI) also has little room to go upwards.

    Apart from fairness we must bear in mind the economic impact of tax decisions, because killing the recovery will only lead to higher unemployment and a higher national debt burden. Economists are agreed that the most efficient form of taxation (see is taxation of land or real estate, the next is taxation of consumption (VAT, sales tax or carbon tax) and the worst is taxation on income, especially earned income.

    I agree absolutely that we need to make future budgets better, though how much that can be afforded depends crucially on economic growth and job creation in the next couple of years.

  7. @Andrea, there’s nothing wrong with making sure people need the DLA. But the current criteria are already too restrictive – I know people with very real conditions who’ve spent months or years trying unsuccessfully to persuade the benefits office of their claims…

  8. John says:

    I’ve got other ideas:

    1. phase out child benefit and phase in lower class sizes – nothing promotes inequality more than poor nurturing at school or bad parenting – lower class sizes would enable good teachers to concentrate on the pupils struggling and those with good parents would get extra help on top of what they already get at home. If there are serious concerns then the local council can get involved

    2. radically devolve power away from London – another promoter of inequality is the dysfunctional nature of our geographical economy – move Parliament and all politicians and civil servants that work in it or for it to another Parliament say in midlands or north east. strip Westminster of a lot of its powers and devolve all those to regional and local councils. That way HB would be reduced over all as well as the diversity of chances spread geographically

    3. reform rail ticketing – it’s absurd that on the day fares from Manchester to London should be so high and it’s geographical discrimination – the centralised system lessens life chances for a lot who live outside london and the SE yet demands they pay through the nose to get there!

  9. John says:

    @Andrew hickey – all the more reason to eliminate fraud when the economy picks up

  10. Jon says:

    Replacing the VAT rise with an income rise is difficult for all sorts of reasons (political more than practical) and is a major piece of unpicking the budget.

    But expanding the Capital Gains Tax increase to include standard rate taxpayers as well as higher rate taxpayers would simplify things, raise revenue with few adverse impacts and move the budget closer to implementing the tax changes promised in the Coalition Agreement.

    Also very dubious about the changes to lone parent benefits – reminds me of Labour cutting lone parent benefits soon after they came into office.

    I also have grave reservations about using the CPI index for all benefits (except, curiously, for pensions).

  11. Hywel says:

    Andrew – isn’t that a procedural failure though more than a failure of the criteria (ie whether the system is brutal or soft it should be able to reach a quick decision)

  12. always been for local income tax and generally using income tax if you need to put something up rather than council tax/vat

  13. Andrea Gill says:

    @James Graham – Clegg made a good point, because people seem to forget this is an EMERGENCY budget, with several annual budgets planned before the end of the Parliament, including one would hope a rise in the personal income tax allowance to as close to £10K as is feasible.

  14. Andrea Gill says:

    @Andrew Hinckley – But DLA should not be something people “live on”, it is meant to compensate for costs associated with living with a disability, regardless of income.

  15. Where did I – or anyone – say it should be something people ‘live on’? Please do me the courtesy either of engaging with the actual comment I made, or of spelling my name correctly. I don’t really mind which, but to do neither is just rude…

  16. john says:

    I just find the whole debate a bit sterile. Are we really saying that money is the only factor in decreasing inequality. Where does responsibility come into all this?

    Does SLF think that there are any non-monetary aspects to tackling inequality?

  17. Paula says:

    I would like to see some sort of Fairness monitoring organisation – perhaps running alongside the office of budget responsibility. OK it might be hard to come up with definitions but if decision makers knew that there would be regular publication of reports it might make them a little more determined to actually check whether something is fair rather than just assume it is. It this organisation were independent from Government then at least it’s clear that we are serious about trying to make things fair (despite the various pressures).

    Related to the budget, extra airline taxes were trailed in the coverage the weekend before.. but I don’t appear to have seen anything re this. Surely with our environmental credentials this is something we would want to push – particularly the shift from passenger taxes to flight taxes.

  18. james says:

    In response to James’ question about the Labour leadership candidates – Ed Miliband campaigned for Simon Hughes to speak out & is encouraging his supporters to call on the Lib Dems to stand up for their values, David Miliband has suggested ending the charitable status of fee-paying schools and (one of those non-monetary aspects to reducing inequality) giving representation to ordinary workers on corporate remunertion committees, Ed Balls has strongly opposed the VAT rise and is calling for a graduate tax instead of higher tuition fees, Andy Burnham has reiterated his support for a National Care Service and spoken out on the abolition of the Future Jobs Fund, Diane Abbot has called for fair taxation, cancelling Trident, and setting a timetable for troop withdrawal from Afghanistan.

    Now, it would be easier for Simon to speak his mind if the coalition idea had been rejected.

  19. James Graham says:


    I can’t deny the Labour leadership contenders are attempting to foment splits within the Lib Dems by branding Clegg and co as “sell outs” and “betrayers” – but it is entirely counter-productive. That sort of rhetoric will go down well amongst Labour members I’m sure but it will only make it harder to get Lib Dems to cooperate, not easier. And they know it. Neither has a clear Labour programme for what should be done about the budget yet emerged. Having leadership candidates thinking aloud doesn’t exactly move us forward. If they were serious about mitigating the effects of this budget, they would call a ceasefire, negotiate a specific line to take on the finance bill, and begin campaigning about that. The country can’t wait for your party to get its act together any more than it can afford to wait for mine.

  20. Mark Yeates says:

    Just a couple of points to debate –

    As if the impending cuts are not bad enough for the weak, ill, disabled and aged; a report from the British Medical Journal states that welfare cuts can lead to an increase in poor health and increased alcoholism. The social costs to cuts in certain benefits can lead to people already heightened sense of hopelessness to ever greater feelings of despair. As one sinks lower in health and status as valued by ones peers the attractiveness of alcoholic oblivion seems a medication that will numb your emotions and senses.

    To the already ill and disabled the rigour of another reform to their benefits can be a turning point, even the most intelligent and eloquent of disabled people may just give up in hopeless resignation. I speak from personal experience, filling in these forms are already a nightmare. To those on the lowest rung of the ladder, without the life skills and education I was fortunate to have, I can see the lure of alcohol and drugs dependency. If we add up these social costs the added bill to the NHS will increase.

    Secondly, Martin Keetle in today’s Guardian sums up what some of us in the Lib Dems (if not many).

    “First, that Nick Clegg’s party had little choice but to join a coalition government with the Conservatives. Second, that being in the coalition will eventually destroy his party.

    The formation of the Con-Lib coalition is water under the bridge now, though it is important to go on emphasising that Clegg, like David Cameron, had no realistic alternative. Yet it’s the possibility of future destruction that matters more today, especially as public opinion adjusts to the scale of the cuts in the public realm that George Osborne unveiled on Tuesday.”

    Anything Simon can do to bring or force about as much socially liberal measures that go beyond the rhetoric Nick Clegg, George Osbourne et al have said; that truly the weak, the poor and the disadvantaged are not being made to pay more than those richer and are not going to be made the scapegoats for the current economic crisis. Where to begin in this budget? Well, we could start with ripping it up and starting again.

  21. james says:

    James, you speak as if there really is a need for an emergency budget – there isn’t. It’s caused a slump in business confidence – the real risk is of deflation caused by sudden fiscal retrenchment. This is the shock doctrine in action.

    Both our parties went to the people on the basis of gradual deficit reduction, securing the recovery – not plunging our country into a depression.

  22. Alex says:

    Surely devolution of power should be about allowing local people to decide for themselves what form local taxation takes?

    “Are we really saying that money is the only factor in decreasing inequality. Where does responsibility come into all this?”

    Find me a way to redistribute responsibility and I’m all ears.

  23. In addition to any amendments to the Finance Bill that would reflect our general economic approach, I believe we should focus some attention on the possibility that the new Select Committee system will be able to comment more forcefully on government policies and programmes.

    For example, we could suggest that the Treasury Select Committee should publish an impact report on the budget proposals in time for consideration before future budget proposals are put forward. However, I remain somewhat pessimistic about the prospects for radical programmes emerging from the coalition government. One potential for good could be greater engagement with the voluntary sector and civil society groups.

    A final, mischievous thought – for those who read the New Statesman, Peter Wilby wrote many columns in the last year including regular invitations to Ed Miliband to resign on principle from the Brown government. When will the first such demand be made of one of our Lib Dem ministers?

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