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Rene Kinzett

The first cuts….

June 22nd, 2010 by René Kinzett

The short period of time between the General Election and now has been littered with “watersheds” and “political landmarks and today’s Budget has given us yet another “historic moment”. However, the now almost familiar sight of the LibDem Leader sharing the Front Bench with Cameron and Osborne makes one wonder when the Labour Party will themselves grow bored of screaming “but you are sitting with the TOOOORIES” at the Liberal Democrats.

Sadly, about the only consistent theme of opposition from the Opposition to today’s Budget has been just that – a tired and rather tiresome attack that seems to rely on the fact that the LibDems MPs don’t actually know that they are in coalition with the Conservatives and that if only Labour MPs can shout loudly enough and go on about it enough then the poor hapless dears will wake up, see a Tory and run for the hills.

Another tactic employed by Labour MPs today was the “but we’re nicer than them” argument, a wheeze designed to get under the skin of the leftist elements of the LibDems. This involved a parade of Labourites slamming the Conservatives’ record in govenrment (ummmm….I’m trying to remember back then, too….) and then rather unconvincingly painting a picture of the Utopian landscape of the toppled Labour Government. The vetran LibDem MP Malcolm Bruce did try telling Labour MPs that they had 13 years to put through progressive and radical budgets but instead chose, in 1997, to give the rich the largest single Capital Gains cut than any previous government.

Now that everyone knows that Brown and Darling cooked the books prior to the election in terms of fiddling the growth figures, the arguments against making public spending cuts and adjusting taxation now seem even more hollow and knee-jerk than before. A public sector pay freeze, an end to middle-class benefits and a war on waste in government spending are all welcome developments, as is the rise in Capital Gains Tax (something which I called for before the Budget), a banking levy (again something I supported and was much derided for by some fellow Conservatives) and the gradual increases in the income threshold for the lower-rate tax band.

The VAT increase from 17.5% to 20% has, of course, been seized upon by the ghosts of the old regime as an outrageous attack on the poor and destitute. VAT has always caused political rows and, of course, a tax on goods and services paid by everyone at the same flat rate regardless of income does not strike one immediately as a “good thing”. David Cameron himself, before the election, attacked VAT as a regressive tax and the LibDems said that they would not be looking to raise the current rate of 17.5%, but stealthily avoided making that a policy commitment. Given the state of public finances and the other options for income tax changes and other fiscal measures, the VAT rise of 2.5% seems like the lesser of several evils to me.

What strikes me about the Budget process as a whole is the collegiate and rather consensual way that the Coalition Government is working, not just internally but also in its outward-facing relations. Businesses, trades unions, local government, charities and other groups have been engaged with and will continue to be engaged with by a Government that not only commanded the majority of the support of the electorate at the last election, but which, by its very nature, must govern in the wider national interest as opposed to narrow sectional interests.

Unavoidably, there has been much talk and “analysis” (made up round the table at lunchtime by lazy journos) of splits and “challenges” for the Coalition at the time of its first Budget, but the LibDems and Conservatives are serious political parties, both want to be able to offer the nation a better future and to improve the prospects for our economy, jobs and society. This project, unlike others built on the shifting sands of focus groups and media headlines, will stay the course.

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