The Budget failed the fairness test and the jobs & growth test – my Daily Mail article

As George Osborne’s Budget continued to unravel this weekend, it is now clear it has failed on two key counts: on the desperate need for a plan for jobs and growth, and on fairness for families and pensioners on middle and low incomes.

First, on jobs and growth, the Chancellor promised in last year’s Budget to ‘put fuel into the tank of the British economy’. But since then our economy has stalled and unemployment has soared to a 17-year high.

Britain has now flatlined for 18 months but in America, which has taken a more balanced approach to the deficit and supported recovery, the economy has now recovered all the output lost after the global financial crisis and unemployment is falling month by month.

It was vital that last week’s Budget put jobs and growth first. But the Office for Budget Responsibility delivered this damning verdict: ‘We have made no other material adjustments to the economy forecast as a result of Budget 2012 policy announcements.’ Worryingly, the OBR revised down business investment by 6.9 percentage points this year and 2.5 percentage points next year.

Of course there have to be tough decisions on tax, spending and pay. But we won’t get the deficit down unless we get our economy moving again and get people off the dole and into work.

As the Budget confirmed, slower growth and higher unemployment means an extra £150bn of borrowing to pay for this economic failure.

By choking off the recovery, hitting confidence and pushing up unemployment, the Government’s gamble of raising taxes and cutting spending too far and too fast has backfired.

The Chancellor could have taken even one of the five points in Labour’s jobs plan, which includes bringing forward infrastructure investment, a temporary VAT cut and tax breaks for small firms taking on extra workers.
Instead we found a gaping hole in the Budget where there should have been a plan for jobs and growth. And there should have been greater urgency on bank lending too.

After the failure of the Project Merlin deal, which actually saw net lending to small businesses fall by £10bn last year, George Osborne promised his credit easing scheme would be a short term fix. But six months on not a single business has been helped.

Labour is looking at plans for a British Investment Bank to help small and medium-sized businesses, but there was no such longterm vision in the Budget, as even Vince Cable himself said of the Government’s policy in his leaked letter to David Cameron.

Second, at a time when families and pensioners on middle and low incomes are really feeling the squeeze, we needed a Budget that was fair.

Instead we got a £3bn tax cut for the very richest in our country – an average of £10,000 for 300,000 people earning over £150,000 and which will give over £40,000 to 14,000 millionaires.

At the same time millions of pensioners will be hit by a big tax rise next year – the so called ‘granny tax’ – with the biggest hit on those who turn 65 from next April.

Despite the rhetoric about making work pay, thousands of working couples with children will find themselves better off quitting their jobs after next month’s unfair and perverse changes to tax credits. And as we learned this weekend, despite our health service being under pressure with waiting times now rising, £500m has been silently taken out of the NHS budget by George Osborne, so breaking the Government’s promise to plough back all efficiency savings into the front line.

This was an out-of-touch Budget where millions were asked to pay more so millionaires could pay less and which stuck with policies that are not working on jobs, growth or the deficit.

That is why Labour MPs will be voting against it in the House of Commons tonight.

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Posted March 26th, 2012 by Ed