Monday, 26 March 2012

I’m not drinking to this

It’s difficult to avoid the conclusion that David Cameron brought forward a statement about a consultation on a new Alcohol Strategy to try to get the media attention off the budget. This was only the fourth time in the last ten years that a government statement had been made on a Friday. The other three occasions had been on the Iraq war, swine flu and Libya.

The budget was presented as ‘fiscally neutral’ – that is, the amount of extra tax being collected from some is the same as that given away to others. Noticeably, the terms ‘we’re all in this together’ and ‘this is fair’ suddenly seemed to have disappeared off the agenda. It’s probably worth reflecting on who won and who lost as, clearly, millionaires won and millions lost. 

First, 14,000 people earning – or, rather, getting paid – more than £1m, or more, all got a tax cut of at least £40,000 a year. 300,000 high earners will gain an average £10,000 a year. Of those, only 4000 households a year will be caught by the increase in stamp duty.

By contrast, a family with children earning £20,000 will loose £253 a year, after the much publicized rise in personal allowances, because of the increase in petrol duty and the cuts in tax credits and child benefit. This will be the outcome for about 70,000 families in Sheffield alone. In addition, the VAT rise will cost the average family £450 a year.

Secondly, there was a £3 billion tax raid on pensioners. The freeze in the personal allowance for pensioners will see 4.5 million pensioners who pay income tax losing an average of £75 per year next April. People who turn 65 next year will lose out by £314.

However, there is a group of families who are really going to get a hammering who were not mentioned in this budget, because the decision to increase the eligibility criterion for working families’ tax credit was made last year, but only comes into effect from April this year. They will be losing up to a massive £728 a year.

In Sheffield alone, this will affect more than 2000 families. Bizarrely, government figures suggest that not a single one of these families live in Nick Clegg’s Sheffield Hallam constituency. No wonder, he felt able to say ‘Every Liberal Democrat can be proud of the Chancellor's Budget.’

Well, I’m not. And, I won’t be drinking to it either. And, it won’t be because of the Alcohol Strategy.