Cross-posted: Some thoughts on Bristol's Budget

My piece for the Bristol Lib Dem website on Tuesday's Budget decision:

Politics can be murky business at times but in Bristol things are remarkably clear following the Budget debate yesterday: your Council Tax will be going up by 1.95% in April.

Something else is clear, too: all the parties had their price in supporting the Mayor's budget. Only one, though, was prepared to defend the ordinary Council Tax payer against an increase in this regressive tax.

Only one party recognised that, while the economy is starting to recover, household budgets remain tight and argued that people should be protected from increased costs, if possible.

Only one party had the vision to find the funding that would have enabled a Council Tax freeze: 50% from Central Government, the rest from council reserves set aside in case of various eventualities but often untouched for years.

Only one party... but the Mayor and Council rejected this approach, and voted through a budget that will see every Council Tax payer pay more.

So what of the other parties? Well, Labour are arguing that the Lib Dems' Freeze The Tax campaign is a cynical ploy. But whilst Labour talk tough and refer to a "cost of living crisis", they have refused to support a practical measure to address this. Now, that is what I call cynical.

They argue that they have managed to obtain a package of reversed cuts unlike any achieved by any opposition party in Bristol Council's history. The reality, though, is that all it took for them to move from a position where "we cannot support the budget" to a position of support was £1.3million of cuts reversed. £1.3million from a budget of £389million.

Ironically, £1.3million is precisely what a Council Tax Freeze would cost. But the source of the funds was different. Had Labour been prepared to negotiate, they could have had their amendment and a Council Tax Freeze. Like I said, cynical.

Meanwhile, the Tories - whose representative on the Mayor's cabinet is Deputy Mayor and has responsibility for Finance matters - were whole-heartedly in favour of the Budget. Indeed, they did not table any amendments to the substantive debate.

Whilst nationally Eric Pickles and other Conservative ministers pushed Councils to freeze the tax, the Bristol Tories chose to support raising them. The self-describing 'Party of Lower Taxes' does not, it appears, believe in them for Bristolians.

The Mayor - in a party of one - is often caricatured as still being a Lib Dem in all but name. After last night, though, I believe that that notion can be put to rest. He was adamant from the start that he would not freeze the tax - and with the help of all parties but his former one, he got his way.

Finally, the Greens - what was their contribution? Well, as with the Tories, they brought forward no amendments. They have variously said that this was because their arguments are national, that without Trident the Council would have more to spend, that a 'Robin Hood Tax' on financial transactions would be a cure-all, that they argued their case in Cabinet and behind the scenes and that 1.95% rise is modest and OK as below inflation... 

Whatever, the over-riding impression is that, at best, they have failed to engage and, at worst, they would have wanted a higher rise such as the 4.95% being levied in Green-controlled Brighton.

So when your Council Tax bill arrives, and you're forking out more each month, remember that there was one party prepared to take a stand for freezing the tax, one party that wasn't bought off, one party that wasn't complicit in raising your taxes and one party that wasn't prepared to stand idly by.

It wasn't a cynical ploy and it really could have been achieved but for the other parties who took positions contrary to their rhetoric, policy or both.

Andrew

A Budget Response

Well it's all over bar the shouting - George Osborne has delivered the coalition government's first budget.

Of course, there will be a lot of shouting. Indeed Harriet Harman in her Commons' response was particular hard on the Liberal Democrat members of the government. All very ""Old Politics" - and to be expected. Ms Harman has the luxury of not having to make any of the hard decisions which the opposition leader always has on these occasions.

It's easy to argue against cuts or tax rises but given the situation we find ourselves in, it's not particularly responsible. If we had continued on with the current arrangements, things would get a lot worse as the economy failed to meet the last government's overly optimistic forecasts for growth.

It is this simple point that Ms Harman doesn't seem to have grasped - Labours' plans to reduce (but not eliminate) the deficit was founded on ridiculous assumptions. Not only was their target less ambitious than it should have been - and what the markets expected - they consistently overstated the economic expectations for the country.

The nature of budgets - even more so when you're a member of a party which is part of the coalition government - is that there are some good measures, some bad measures and, even more so than usual this time, some measures which are both. The nature of the coalition means that some of the things now deemed necessary were the very things were previously argued against by one or other party. Much is made of Lib Dem views on the VAT rise but that overlooks Tory compromises on CGT and Personal Allowances.

So what did I make of it? Well, in the end, I'm not sure it's as harsh a budget as expected. I've picked out some of the headlines, and added a brief comment of my own for each:

VAT: A regressive tax, of which I am not a fan, but a reliable revenue raiser. All Osborne has done has brought forward a rise which would have been inevitable even if Labour had won.

Personal Allowance Rise: A welcome move towards the £10,000 threshold and a move which will help offset other tax rises, particularly for lower earners.

CGT: Higher rate of 28% not the simplified and systematic approach I would favour but a pragmatic approach to balance politic interests and the potential income against people maximising use of loopholes and reliefs.

Child Benefit: Still feel we need to think the unthinkable on this - not sure universal payment still justifiable. Perhaps 3 year freeze pre-empts wider changes once Frank Field has reviewed.

Tax Credits - Reduction in the threshold fat which they get removed much needed. Not sure about the additional payments for the Child Element but seems progressive and recognises that some of the pain caused elsewhere needs to be addressed.

Housing Benefits - New limits seem completely reasonable.

Benefit linking to CPI - Unfortunate, as RPI still widely used by employers to set pay and for measuring inflation, but necessary.

Public Sector Pay Freeze - Just what many private sector workers have had to endure.

State Pension - Earnings link long overdue. "Triple Lock" one of the best outcomes of the coalition agreements.

Corporation Tax - Reducing levels should help ongoing recovery and growth.

Bank Levy - Tricky, but welcome if handled carefully. Good that others have agreed to similar measures. At the end of the day many owe there very existing to the state and this needs to be recognised.

Fair Fuel Stabiliser - To be looked at by the Office of Budget Responsibility but eminently sensible measure. Again, long overdue.

I could go on, I'm sure, but I've gone on long enough already. In the circumstances the budget was fair and balanced. Cuts were always inevitable, scale and timing the only issue. The fear that large cuts this year may be too early is still there although some of the spending commitments announced will temper this. In any case international thought is going in this direction and global and market pressure may have taken the timing out of our hands if things had got worse throughout the year.


Andrew