Reaction to the Budget from progressives.
Today’s Budget has been broadly welcomed by progressives, as variously “a Budget for the future”, “a difficult hand played well” and “the Belize gambit”, with the announcement of a Green Investment Bank dubbed “fantastic” and something which could herald a “low carbon revolution”.
Leading economist and Labour PPC for Leeds West, Rachel Reeves, said the Chancellor had “made the right judgement between frontline services and halving the deficit”, spelling out the consequences of the Tory plans to cut their way out of the deficit:
“More unemployment, more home repossessions, more business failures and more pain for families up and down the country … Indeed, if you don’t invest in future growth then you risk making the recession and debt worse.”
Explaining how David Cameron’s plans to inheritance tax plans would adversely impact the rest of society, she added:
“The Tories want to scrap Sure Start as a universal service and restrict tax credits (that have helped 440,000 extra families through the recession, by an average of £38 a week). That would mean an awful lot of people worse off in order to fund a tax break of £200,000 to the richest 3,000 estates in the country, one of the most regressive policy proposals ever dreamt up, and far removed from the freezing of inheritance tax for four years and the crackdown on tax evasion – including by non-doms in Belize – announced by Darling today.
“The next election offers a clear choice. A choice about what sort of country you want Britain to be, what sort of future you want to see. A choice about investing in our future prosperity or an age of austerity for the hard-working majority. Darling set out Labour’s vision. It’s a vision to fight for and a fight we cannot afford to lose.”
General Secretary of the Fabian Society Sunder Katwala, meanwhile, told Left Foot Forward the Budget was “mostly about continuity” in the Chancellor’s strategy for a post-recession recovery. He said:
“Alastair Darling could show that his deficit and debt forecasts had been too pessimistic, with sources including money saved from lower unemployment than projected and increased revenue from the bank bonus tax (which suggests it changed behaviour somewhat less than anticipated). That allowed him to project a pathway to halving the deficit in four years, with public debt as a proportion of GDP peaking at 75%. For all of the alarmism, there are much higher precedents, historically in Britain and internationally now.
“Government departments have this afternoon out some specific spending reductions, such as a not insignificant £4.3 billion at the Department of Health. The Conservative instinct is to argue that cuts will need to be both quicker and deeper. But I wonder how confident they are about fighting on that ground, with the public at least as worried about the impact of cuts to public services as about deficit reduction. The promise (or threat) of an emergency George Osborne budget could become a significant liability in the election campaign.”
Compass also welcomed many of the key measures, including the removal of tax allowances for those earning over £100,000, the freezing of inheritance tax, the clampdown on tax avoidance – which Left Foot Forward looked at earlier – the extension of pensioners’ winter fuel allowance, the Green Investment Bank, the rise in child tax credits from 2012 and the rasing of the stamp duty threshold. Compass chair Neal Lawson said:
“Alistair Darling did the right thing by increasing public spending and this should help maintain economic demand. This Budget lays the foundations for a radical manifesto.“
Also writing on Progress, David Coats, the Work Foundation’s associate director of policy, praised Alistair Darling’s “cool, understated style”, criticising David Cameron’s response for displaying a “huge but misplaced confidence in the efficacy of immediate reductions in public spending”, since “private investment is weak, consumer spending is sluggish and the risk of a double dip recession all too real”.
He concludes by describing it as a “real Labour budget”, containing “more help for the young unemployed (the extension of the job guarantee), support for first time buyers (the stamp duty changes) support for social care and a determination to foster robust economic growth”.
Writing for this blog, Nicola Smith of the TUC also focuses on labour market measures and writes that:
“Today’s announcement that the Future Jobs Fund and the Young Person’s Guarantee will be extended until 2012 is great news. These programmes are already reducing young people’s risks of long-term unemployment – and all of its associated costs – meaning that despite the largest drop in GDP since the 1920s youth unemployment levels, against both the claimant and ILO measures, have already started to fall.”
The reaction from green business leaders was also positive, though some feel the £2bn of equity in the new low carbon bank “does not go far enough”. As highlighted in Joss Garman’s summary of the reaction from environmentalists, Paul King, chief executive of the UK Green Building Council, said:
“The Green Investment Bank could lead to a low carbon revolution. However energy efficiency must not be a poor relation to high-profile issues like offshore wind and high-speed rail. Refurbishment of our homes and buildings offers the greatest cost-effective carbon savings, as well as alleviating fuel poverty and creating jobs.”
Environmental campaigners were even more positive, Executive director of Friends of the Earth Andy Atkins called it “a massive stride in the right direction”. While his counterpart at Greenpeace UK, John Sauven, said:
“This bank can provide the jolt that brings Britain’s economy back to life, but only if it’s here to stay. It will need a similar injection of public funding every year if we’re to see the scale of private investment required to transform our energy system. Clean energy is set to be the growth industry of the 21st century, and this bank can help ensure that Britain receives the benefits in terms of jobs, investment and energy security.”
And tax expert Richard Murphy, writing about the crackdown on offshore tax havens on The Guardian’s Comment is Free, said that, although Mr Darling’s “Belize gambit” won a “rousing cheer” from the Labour benches, “we should read the small print”. He wrote:
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“What’s the reality after the moment of intense satisfaction for Labour MPs in the parliament chamber? I hate to disappoint, but disappoint I must. What the UK is signing is a Tax Information Exchange Agreement (Tiea) with Belize. That sounds good. The reality is far from living up to the title. Tieas (as they are called, to rhyme with “tear”) were first created in 2002, at the low point of the attack on tax havens, when George Bush was riding to their defence.
“All that the OECD – then charged with the task by the G7 – could do at that time was to create the lowest common denominator possible form of agreement it could establish with tax havens – or secrecy jurisdictions, as experts now prefer to call them – to maintain some momentum in the faltering crackdown on offshore abuse. The difficulty was that when, in 2009, the G20 demanded more action on the issue, the OECD had not moved its thinking on. So, all they had to roll out were Tieas.
“And they don’t work. That’s because no information is automatically supplied under a Tiea. The UK will have to apply for information. It won’t be able to ask for anything from the past – which means that nothing about Lord Ashcroft’s affairs while a non-dom will be open to enquiry – assuming he becomes domiciled in the UK after the election…
“Which makes it an opportunity lost after the pleasure of a brief cheer in the Commons. So there could be Tieas before bedtime, when the reality sinks in.”