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The Budget – it’s getting personal!
When the popular press has scare headlines about the ‘squeezed middle class’ they are not usually referring to people like me. Their idea of ‘middle class’ means someone in a desirable residence in a leafy suburb, with two new cars in the drive and kids away from home in a posh boarding school!
I therefore had something of a shock to discover that the Granny Tax in the Chancellor’s Budget which penalises grey-haired ‘Middle England
That, of course, is not the only blow that the policies of the present government have dealt us oldies. Many of us have our life’s savings entrusted to the Bank or Building Society that, many years ago, had provided the mortgage with which we purchased our homes. Thanks to artificially low interest rates, the interest on those savings (especially when income tax has been deducted!) is less than the rate of inflation. In effect, our savings are diminishing in value. Then too, public services on which many old people rely such as meals on wheels, social support services and so on are either cut or prohibitively expensive. Charities, that once provided services to the old, have had their grants reduced or withdrawn altogether.
Perhaps it is worth mentioning too that the ‘big increase’ that pensioners will receive next month that the Chancellor suggests will more than compensate for the ‘granny tax’ is simply the automatic rise resulting from high inflation last October. It compensates (six months late) for the rise in the cost of living at that time.
I don’t want to exaggerate the effect that the ‘granny tax’ will have on me personally. I shall weather that particular storm without too much trouble. A loss of £80 a year isn’t going to break either my bank account or my heart! My income is likely to remain sufficient for my needs (the scope for extravagant living is a bit limited when one gets to ninety!) and I have sufficient savings to cope with any probable calamity. If I thought that the money saved by freezing my age-related benefit would go towards helping those in much greater need and narrowing the income gap between the rich and the poor, I would part with that £80 – or more - gladly.
What I do bitterly resent is the fact that savings made by the government from this ‘granny tax’ and from other ‘economies’ affecting the old, the sick and the disabled, are helping to make possible the reduction of the highest rate of income tax levied on those with a taxable income in excess of £150,000 a year, from £50% to 45%! The utter rubbish spoken in justification of this indefensible tax reduction, benefiting only the seriously rich, is almost beyond belief!
‘The 50% tax deters entrepreneurs from establishing new small businesses in the UK
‘The new 45% rate of tax will bring in more money than the 50% rate because people resent having to pay half their income in taxes. They won’t feel the same resentment about paying 45%.
First – and this is a point that needs to be made abundantly clear – even if the highest rate of tax were 60% or 70%, no-one would be expected to pay anything like half their income in taxes. The highest rate of tax is levied only on taxable income in excess of £150,000 a year! In any case, does the Government really imagine that those who have successfully avoided paying tax at the 50% rate are going to repent and pay up promptly when the rate is lowered to 45%? That really is Cloud Cuckoo Land
So many people currently find ways of avoiding paying that 50% tax rate that it costs more to collect than it’s worth.
That’s like saying ‘It is so difficult and so expensive to prosecute fraudsters that we’d better stop trying to do so’. If people manage to avoid paying some or all of the tax due, the government should plug those loopholes that make this possible! Oh dear – I have just learned that our Prime Minister’s father-in-law is the proud owner of a Scottish island worth £2 million, registered in the West Indies for tax purposes. I do see the family difficulties!
The Government claims that the Budget is ‘fair’ and taxes the wealthy while improving the lot of the working poor. It taxes the wealthy? Well, there is increased stamp duty when a palatial home changes hands. How often to you suppose a Highclere Castle (better known nowadays as Downton Abbey), a £2 million pound Scottish island, or similar property, changes ownership? The only other promised measure that could possibly cause the seriously wealthy even the least inconvenience is the attempt to close one or two of the tax avoidance loopholes. That is something that should have been done years ago!
It is easy to forget that we have a coalition government of Conservatives and Lib. Dems. The name of the latter party derives from the coming together of the Liberals and the Social Democrats. Perhaps they should now be renamed Lib.Dem.Con. No, the Con wouldn’t be short for Conservatives but for Conned – because ‘conned’ is what the thousands (including myself!) who voted for them in the last General Election have been.
‘Privatise! Privatise! – everything beneath the skies!
That wasn’t one of the slogans of the Conservative Party, and it certainly wasn’t of the Liberal Democrats during the last General Election. It could well have been though, because the one consistent thread of policy that has been followed by the coalition government has been to penalise the public sector of the economy and to privatise as many of its functions as is humanly possible – some might claim further than is humanly possible!
Privatisation of large areas of the NHS and of the public sector has already been perpetrated by previous Conservative and New Labour governments. Many local services previously carried out by democratically elected authorities – water supply, sewerage and sewage treatment, maintenance of publicly owned buildings, refuse collection and street cleaning, maintenance of parks and gardens – are now undertaken by private contractors. Contract cleaners are responsible for cleaning of hospital wards and corridors, instead of directly employed cleaners under the eagle eyes of ward sisters and Hospital Matrons. It is no coincidence that it is only since this happened that patients admitted to hospital to be cured of illness find themselves at risk of contracting new infections there!
Members of the Labour Party who voted for the removal of Clause 4 from the party’s constitution may have imagined that they were merely asserting that not every service and every industry needed to be nationalised. They weren’t. They were opening the door for every industry and service to be privatised! New Labour was every bit as bad as its opponents in that respect.
Large sections of the NHS are to be ‘opened up to competition’. Ways of privatising the Royal Mail are being explored. Many Police functions are to be taken over by private firms and now there is talk of highway maintenance being farmed out to private enterprise.
I wonder they haven’t gone even further. I am surprised they haven’t thought of inviting the gangs of juveniles who have been causing so much concern, to submit tenders for front line police duties? ‘Set a thief to catch a thief’. I understand that when the Kray brothers ruled London ’s East End there were, at least, no other criminal gangs operating in their area! It surely shouldn’t need much re-training to transform a member of a ‘protection racket’ to a useful member of a ‘protection service’! Yes, I know that that’s a daft idea – but not much dafter than some of the privatisations that are already in action or in the pipeline. There is one thing that is certain when any service is privatised. As well as paying the wages and buying or hiring all the equipment required, the contractor has to make a profit sufficient to keep his shareholders happy. That – not the quality of service to the public – will be his first concern.
The Equality Trust
It was probably as long as twenty years ago that, at about this time of the year, I wrote in Tendring Topics (in print) that my idea of a good national Budget was one that narrowed the gap between the very poor and the very rich. It followed that it had been a long time since I had seen a good budget and I could see little possibility of one in the near future. Gloomy as I was at that time, I hadn’t seriously imagined that after a decade of New Labour rule the gap would be wider than ever before – and that a leading member of the government would announce that he ‘had no problem with billionaires!’
It seemed obvious to me that a more equal society was also a better one but I would have had difficulty finding firm evidence to justify that conviction. It was not until The Spirit Level* was published in 2009 that authors Richard Wilkinson and Kate Pickett demonstrated beyond doubt that more equal societies were happier societies than unequal ones in every respect, and that the benefits of greater equality were enjoyed by those on higher as well as those on lower incomes. Years of research into already published statistics of 23 developed countries made it clear that life expectancy was longer, that teenage births, obesity, mental illness, homicides, imprisonment rates, infant mortality rates and general mistrust were all lower, educational standards were higher and there was greater social mobility, in more equal societies than in ones with a wide gap between the poor and the wealthy.
I was not alone in being persuaded. In a speech at the end of 2009, David Cameron who was yet to become our Prime Minister, said that The Spirit Level showed that, ‘among the richest countries, it’s the more unequal ones that do worse according to almost every quality of life indicator……per capita GDP is much less significant for a country’s life expectancy, crime levels, literacy and health, than the size of the gap between the richest and the poorest in the population…..We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it’. In September 2010, Ed Miliband said ‘the countries that are healthier, happier, more secure are the more equal countries. The gap between rich and poor doesn’t just harm the poor, it harms us all’. Vince Cable and Lynne Featherstone (my elder son’s MP), leading Lib.Dems. in the coalition Government, have both pledged themselves to reducing inequalities.
It seems extraordinary that there should be such unanimity among our political leaders about our country’s ills and their cause - and so little inclination among any of them to work towards a remedy. Greed and the desire for power (what an earlier generation might have called the worship of Mammon!) have so far proved more powerful than good intentions. Easter is almost upon us. One of the lessons of Easter is surely that ultimately good will triumph over evil. We can all make our tiny contribution toward that end!
Politicians need a great ground-swell of public opinion to spur them on their way. We can add to that groundswell! The Equality Trust is a voluntary organisation set up to further the peaceful evolution of our country to greater equality and thus to benefit us all. If you’d like to know more or (even better!) make your own small contribution towards the development of a fairer and more equal society, contact the Equality Trust web site at www.equalitytrust.org.uk .
And – a final thought!
I’ll probably have further comment about Political Party funding next week. For now I’ll just say that the risk of super-wealthy individuals exercising undue influence on political leaders would be markedly reduced if the aims of the Equality Trust were achieved and there were no desperately poor or super-wealthy individuals!
*Now published in paperback by Penguin at £10.99, with additional material answering critics of the first edition.
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