Britain: The Comeback Country?

“Never has the gap between the chancellor’s rhetoric and the reality of people’s lives been greater” – Labour leader Ed Miliband

“Mr Deputy Speaker, five years ago I had to present to this House an Emergency Budget. Today I present the Budget of an economy stronger in every way from the one we inherited. The Budget of an economy taking another big step from austerity to prosperity.

We cut the deficit – and confidence is returning.

We limited spending, made work pay, backed business – and growth is returning.

We gave people control over their savings and helped people own their own homes – and optimism is returning.

We have provided clear decisive economic leadership – and from the depths Britain is returning.

The share of national income taken up by debt – falling.

The deficit down.

Growth up.

Jobs up.

Living standards on the rise.

Britain on the rise.

This is the Budget for Britain. The Comeback Country.”

So concluded Chancellor George Osbourne at the end of yesterday’s budget statement. Mr Osborne painted a picture of Great Britain brought back from the abyss by a resolute government’s astute economic management. Yes, there were a few pre-election sweeteners in there too but in the main this was a steady-as-you-go budget with one clear message to voters – the job isn’t finished so don’t let Labour loose on the economy; they will wreck the ongoing recovery and undo all the good work of the last five years.

Welcoming the statement Scottish Secretary Alsitair Carmichael said the budget will bring in a range of measures which will support key Scottish business sectors, workers and families across Scotland.

The Chancellor announced significant changes to the tax system which will see 2.33 million people in Scotland take advantage of more generous personal allowances, benefiting by an average of £555 in real terms.

The allowance will increase to £10,800 in 2016-17 and to £11,000 in 2017-18. This means people in Scotland will be able to keep more of their pay before being taxed. This also means 287,000 people in Scotland will have been taken out of paying income tax altogether.

The Scottish Government will benefit from additional funding of £31 million in 2015-16 through Barnett consequentials. This means it has seen additional spending power of £2.7 billion since 2010.

This Budget also delivers a substantial package of support for important Scottish industries including the oil and gas sector, the Scotch whisky industry and the video games industry, much of which is centred in Dundee, will benefit from a £4m support package.

Vehicle owners will also benefit from the cancellation of the September 2015 fuel duty increase. By the end of 2015-16, a typical motorist will have saved £675, a small business with a van £1,400 and a haulier £21,000.

Mr Carmichael said: “This Budget is another positive step forward for Scotland in the wider journey to economic stability which has taken place over the past five years.

It gets the important things right, with a focus on helping create a fairer and more generous personal tax system which will benefit thousands of people in Scotland and giving a helping hand to some of our key business sectors, securing jobs and prosperity for the future.

This progress has been hard-won by this Government and builds a strong base for Scotland’s economic future as part of the UK.”

It wasn’t what was announced, it was the things that weren’t mentioned that worry government critics. Labour leader Ed Miliband said Osborne’s budget statement made ‘no mention of investment in our National Health Service and our vital public services’ and added: “Never has the gap between the chancellor’s rhetoric and the reality of people’s lives been greater.”

Mr Miliband said: “Mr Deputy Speaker, never has the gap between the Chancellor’s rhetoric and the reality of people’s lives been greater than today. This is a Budget people won’t believe from a government that is not on their side. Because of their record, because of their instincts, because of their plans for the future and because of a Budget, most extraordinarily, that had no mention of investment in our National Health Service and our vital public services. It’s a budget people won’t believe from a government they don’t trust.”

He added that the Tories also plan to cut NHS spending – ‘That is the secret plan that dare not speak its name today.’ 

The Scottish government’s reaction was also less then appreciative. Deputy First Minister John Swinney said: “The Chancellor had every opportunity to end the damaging cuts from the UK Government and has instead turned his back on investment in public services.

“We face the same £30 billion of unfair and unnecessary cuts today as we did yesterday. That is despite the clear admission from the Chancellor that there is headroom to invest to protect our public services.

“If we are to believe the Chancellor that the economy is making such a successful recovery, then there is no justification for the destructive cuts that impact on the most vulnerable in society. That tells you everything you need to know about the values and priorities of this Chancellor.”

Commenting on the ‘U-turn’ on the North Sea fiscal regime, Mr Swinney said:

“Measures to safeguard the North Sea are a step in the right direction for our oil and gas sector. The Scottish Government has been calling for such measures, along with the industry, for some time. Today’s measures are a glaring admission by the Chancellor that his policy for the North Sea has been wrong and the poor stewardship by the UK Government has had a detrimental impact on our oil and gas sector and the many people who work in the industry. It has taken the Chancellor four years to admit the tax rise he implemented in 2011 was a mistake. A heavy price has been paid for this mismanagement.

“Today I cautiously welcome the U-turn by the UK Government to take action on the future of the North Sea. We will study the proposals in detail. It is now essential that work is focussed on boosting investment and growth in the North Sea sector.”

The Scottish Greens also criticised Mr Osborne’s ‘fantasy economy’. They said the Chancellor’s rosy depiction of the economy is not being felt on the ground, with low wages, ins, inecure employment and welfare sanctions continuing to reinforce poverty and inequality in the UK.

The Greens are leading a debate in Holyrood today on in-work poverty, and are campaigning for a £10 minimum wage by 2020. Patrick Harvie, Green MSP for Glasgow, said: “This is not a plan to make the UK a fairer or more sustainable society. Instead of an eye-watering £1.3 billion subsidy for fossil fuels, the Chancellor could have provided a gigantic boost to locally-owned clean energy or backed the return of our railways to public hands.

“This Coalition has delivered five years of hacking away at the public good and at the foundations of our welfare state. It’s been a devastating and costly campaign by an elite in Westminster and the prospect of another round should terrify everyone who is fighting for social justice in this country.”

Alison Johnstone, Green MSP for Lothian, said: “The Westminster coalition try to paint a rosy picture but what they describe will seem to many like a fantasy economy, far removed from the reality of rising rents, insecure low paid work and the misery of welfare cuts. The Greens want to see a £10 minimum wage and the small rises announced today are completely inadequate in a world of extreme high pay at the top.”

Wednesday was show day, today is the day the boffins scrutinise the Budget in fine detail. I wonder what they’ll discover as they pick through the bones?