Emergency Budget
An emergency budget was promised and it has been delivered. ‘Emergency’ might seem melodramatic but what else is it when we have an annual deficit of some £165 billion. The interest repayments on our national debt represent one of the largest single items of government expenditure. We could not go on like that.
Inaction would threaten the country’s ‘AAA’ sovereign debt rating. It is easy to say, “So what!”, but a reduction in the rating increases our cost of borrowing and debt interest repayments would rise above their already chronic level. We would become an economic basket case with no obvious route out of a cycle of economic decline.
The emergency budget is tough but fair. I do not like some of the measures but I accept the need for them. We all have our part to play in restoring the country to economic health. Who would willingly increase VAT from 17.5% to 20% in the New Year? This adds just over 2% (from 1.20 divided by 1.175) to the price of taxable goods but brings in much-needed revenue to help Britainlive within its means once again. Only by achieving this status can we see a return to prosperity and a sustainable growth in public spending.
The government has tried to spread the burden taking account of the ability to contribute. Capital Gains Tax increases to a rate of 28% for higher rate taxpayers. There will be a levy on bank balance sheets and there is surely justice in that proposal. Tax credits are to be cut for households earning more than £40,000 a year.
Raising personal allowances should take an estimated 880,000 people out of paying tax. There is also a pledge to link pensions to the higher of earnings, prices or a 2.5% increase. This would meet an aim that has long been discussed within the political parties although it would come with increase in the state retirement age to 66.
The most challenging aspect of the budget will be the delivery of real-terms savings of 25% over four years for all government departments except health and foreign aid. That cannot be easy to achieve and will require some touch decisions to be made.
We in local government will be asked to play our part. In doing so, it will be our aim to protect front-line services and preserve our ability to invest in the long-term future o fCrawley. Over the last four years, we have demonstrated our ability to do just that which positions us better than some areas without the hands-on experience of delivering value for money and improving services at the same time.
Councillor Bob Lanzer, Leader of Crawley Borough Council
22nd June 2010