It was not the budget I wanted to hear. I would have liked a further reduction in spending, starting with immediate withdrawal of our forces from Afghanistan to save both money and lives. I would have liked the UK to open negotiations with the EU over the excessive EU budget, and seek a reduction. Then I would have liked tax cuts for everyone, including pensioners.
Instead, I did hear a welcome cut in Income Tax for most working people through the substantial increase in the personal allowance. Only the higher incomes miss out on that. The representations I and others have made about the cut in Child Benefit for anyone on higher rate tax did yield some improvement. Now anyone earning under £50,000 will still get full Child Benefit, instead of losing at just over £40,0000. Someone earning between £50,000 and £60,000 will experience a tapered withdrawal, not a complete loss. That is progress which some of you will welcome.
Some constituents have written to me to complain about tax for the elderly. The first thing to understand is there is no tax rise on the elderly to pay for a cut in the higher rate tax. The government has imposed extra taxes on the highest paid to more than offset their view of the cost of the change to higher rate. The second crucial point is no pensioner loses their current age allowance or has to pay more tax next year than this on the same income. The government proposes to freeze the age allowance, whilst continuing to raise the general personal allowance, until the two are the same. Of course pensioners would like a further increase in their personal allowance, but all the time the government spends as much as it does the means to offer more tax cuts are limited.
It is a good time to look back and see how all the measures introduced since the crash have affected differing groups and income levels. The government has published the figures. These show that by 2013-14 the top 10% of earners will be £1800 a year on average worse off, mainly from higher taxes, whilst the lowest 10% will be on average £300 worse off despite having an income tax cut. The remaining income groups will on average be between £400 and £600 a year worse off, despite income tax cuts, through a combination of higher VAT and lower tax credits. This is the collective price we all pay for the very high inherited debt, the continuing large running deficit, and the high levels of public spending which the government has decided to maintain.
Parliament will look carefully at the proposals on Child Benefit, on tax relief for charitable giving and the age allowance for pensioners when we come to tackle the Finance Bill. I will ensure Treasury Ministers know people’s feelings. I would also like to reassure pensioners who have heard that the government’s planned change to a combined SERPs and basic pension of around £140 a week for all in 2015 implies that pensioners with higher Second State pensions already will lose out. The Minister assures me there will be no losers, so if you are over the eventual new amount you will keep your full pensions.