Budget 2013 – reaction

The Budget contains some welcome measures, especially on childcare costs and raising the personal tax allowance to £10,000 next year. The latter is a Liberal Democrat commitment being delivered in government, and will go some way to ease the spiraling cost of living faced by millions of households, but it’s nowhere near bold enough to tackle the deep economic problems the UK faces.

This should have been a budget for growth – where was the action required to get the banks lending, builders building and investment flowing? The small increase in capital spending (to begin not now but in 2015) is on nothing like the required scale, as it is funded by cuts elsewhere in the budget – not borrowing at low rates as we’ve advocated, nor new monetary instruments, which could have provided a significantly bigger investment boost. Of particular concern is the new limit on ‘annually managed expenditure,’ which signifies further painful reductions in the welfare budget are to come in the spending review this June – the consequence of a misguided attempt to remain fiscally neutral.

The Office of Budget Responsibility confirms that substantial growth will not return to the UK economy for some time yet, prolonging the squeeze on living standards until well after 2018. Without a significant change in public policy to restore investment and confidence, even this seems unlikely. Instead of an attempt to boost sub-prime mortgage spending through yet more loans and guarantees, we should have had a huge programme of house-building, as Vince Cable recently advocated.

The Social Liberal Forum is keen for Liberal Democrats in government to continue to press for a macro-economic policy suited to boosting the economy – there is widespread appetite within the party for a significant change of approach. Only by tackling the vast underlying challenges we face – that this budget skirted around – will we ensure prosperity returns to those who’ve been hit hardest by this ongoing crisis.

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One comment on “Budget 2013 – reaction
  1. Les Jones says:

    It saddens me to see Vince Cable attempting to defend the indefensible 2013 Tory budget, a budget so contrary to the

    principles and beliefs of so many in our Party that it is fair comment to say that supporting such policies is ripping the

    very heart out of many left leaning radical Liberal Democrats.
    It is of course quite right to point out the hypocrasy of Labour politicians who now decry policies that will clearly

    exacerbate the housing problems of the UK, when they themselves did everything in their power to push the same policies. But

    of course two wrongs don’t make a right, you cannot defend Tory housing policy by putting forward the argument that Labour

    were just as bad.
    Osborne has concocted a housing policy designed to keep house prices artificially high, certainly NOT to address the

    fundamental problem of a lack of housing in the UK. And one of the consequences of this policy is to throw out any chance

    that the UK has of realigning its economy towards a more sensible model. As Fathom Consulting points out “Had we been asked

    to design a policy that would guarantee maximum damage to the UK’s long term growth prospects and its fragile credit rating,

    this would be it”.
    We need to be opposing the policies of this Government based on sound policies of house building, infrastructure building

    and, very important, solving the problem of UK banks being so mired in property debt that they cannot lend for growth. This

    latter could be the basis of real radical policies, cooperative or social banks that will operate for the benefit of the

    people and not for the benefit of millionaire bankers, speculators and the like.

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