Gavin Maclure's Musings

My take on politics locally, nationally and internationally

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BUDGET DAY: George Osborne has shot up in my estimations

Help at last: Chancellor George Osborne

The Chancellor of the Exchequer, George Osborne, today announced in the Commons he was setting up a scheme to help millions of people get on the property ladder. Importantly for young professionals like my wife and I the Chancellor also opened up the possibility of help for so-called “second steppers”. These are people who bought a home some years ago and now want to move up the property ladder but because of banks demanding a 20 per cent deposit or higher they are unable to afford to move.

The Help to Buy scheme will see the Government underwrite up to 15 per cent of people’s mortgages for old and new houses, enabling the banks to safely demand a deposit of just five per cent rather than, say, 20 per cent. This scheme is primarily about giving confidence to lenders that up to 15 per cent of a deposit is as secure as it can get – because the Government is backing it. Therefore, it should unlock the desired mortgage lending of £130 billion easily. The scheme will start from 2014 and last three years.

Another part of the initiative is an extension of a shared equity scheme – formerly called FirstBuy – to include all purchasers of new-build homes. If eligible, the buyer will put up a five per cent deposit and the Government will pay a 20 per cent share of the home. The £3.5 billion scheme will be available for homes worth up to £600,000. The 20 per cent Government stake in their house will be paid back to the taxpayer when the house is sold. The loan will be interest-free for the first five years but then borrowers will have to pay a 1.75 per cent annual fee, which will then rise by 1 per cent above the Retail Prices Index (RPI) measure of inflation.

There was other good cheer with Mr Osborne scrapping the 3p rise on fuel duty in September and instead of raising beer duty in April by 3p he will be cutting it by 1p. The “beer duty escalator” of year-on-year increases in the duty was scrapped all together. However, the increases of +2 per cent annual inflation for wine, cider and spirits will remain.

Families will receive a 20 per cent tax break on child care up to £6,000 per child from 2015 which will equate to a saving of £1,200 per year although higher-rate taxpayers (of which far from wealthy families have now been pulled into) will lose out compared to the existing voucher scheme.

A big headline grabber was no one will be taxed on the first £10,000 of their income from 2014 lifting 2 million workers out of paying income tax at all. And a boost to growth and investment was unveiled by the Chancellor with Corporation Tax to be slashed by a further 1 per cent to 20 per cent in 2015.

The good news – for today only – hid the dreadful economic landscape: the Government’s growth forecast for 2013 has been halved to 0.6 per cent from 1.2 per cent as only predicted in December. Debt is increasing at a rate of knots with the national debt as a share of GDP set to increase from 75.9 per cent this year to 85.6 per cent in 2016-17. Borrowing continues at £120 billion a year; some of it is being used to boost the economy with spending on roads and construction projects but the vast majority is being used to keep public spending high with some budgets such as the NHS – where 3,000 people were killed through appalling treatment by nurses and doctors – being ring-fenced. This is despite the average voter thinking NHS spending is being CUT! Why does George Osborne bother ring-fencing over one hundred billion pounds on an institution which causes more harm than good, in the cases of thousands of needless deaths, when the voters give him zero political credit?

But today I want to be mainly positive. The Chancellor did a good job this afternoon and has helped millions of people who want to get on in life –  the same people who pay for the £120 billion of borrowing a year spent keeping the undeserving benefit-claimants at home playing X-Box all day or to help a wealthy baby boomer pay their bar bill with their winter fuel allowance. Thanks for finally thinking of us, George, even if it will be for only three years!


Osborne’s economic plan is akin to the country standing still

Failing: Chancellor of the Exchequer George Osborne

Failing: Chancellor of the Exchequer George Osborne

Moody’s, the credit rating agency, has downgraded the United Kingdom’s triple-A credit rating to AA1. This is hardly surprising and is a direct result of two things: Gordon Brown’s monumental mess he made of the British economy before he was booted out of office in 2010 and Chancellor George Osborne’s complete inability to get a grip on the economic collapse he inherited from Labour. Three years into the Coalition, we are now at the tipping point between these two reasons and today the blame for the economic woes of our country should be firmly laid at the door of the current occupier of Number 11 Downing Street.

George Osborne for reasons I am not fully aware has decided to do almost nothing to reduce the deficit and more importantly, for the future of our children and grand children, completely nothing to reduce the debt pile which now stretches from the Earth, past the moon and into deep outer space (if it was paper notes stacked on top of one another!).

Chancellor Osborne blames the Liberal Democrats for not allowing him to cut faster and deeper. He blames Europe. He blames the last government (although he is right on that one – up until the Moody’s announcement).

Actually, the reason we have lost our triple-A credit rating and the reason it will cost you and I more to go on holiday (if you are lucky) is because George Osborne does not have public spending under control and has instead pretty much followed the trajectory Labour’s Shadow Chancellor Ed Balls would have taken and borrowed billions more on the international money markets. By the time of the next General Election, Mr Osborne will have borrowed an additional £600 Billion taking the national debt north of £1 Trillion. It has got to the point where the interest payments alone may mean we will never pay the debt off unless drastic measures are taken – and that means cuts, cuts, cuts.

The Left bang on about how the Coalition Government is making savage cuts but in reality Dave and George have dented public spending with a little pin prick: a grand cut of 1%. We were promised a bonfire of cuts by David Cameron, a holocaust of cuts. This would have saved us from the high taxes we will undoubtedly be paying for years if not decades ahead and the stagnant growth which comes with such an economic policy.

But we haven’t had any of that. You knew the game was up, even before Moody’s made their announcement on Friday, when Liberal Democrat Dr Vince Cable (a sinister looking man if there ever was one) stated during Thursday’s BBC Question Time that he was happy with the economic policy of George Osborne and agreed with David Dimbleby the Chancellor was being Keynesian in its approach to the fiscal woes of the UK. Keynesian economic theory is beloved by the Left.

I thought Peter Hitchens on the same programme had it spot on when he said of course no politician would get elected on a platform to cut NHS spending but it didn’t matter because sooner or later politicians will be forced to cut public spending, including the NHS. We can’t continue printing and borrowing money for ever. We’ll have to shrink the state drastically and, ironically, George Osborne is making this more of a permanent certainty.