Sell Out Lib Dems for Unfair Budget

Last Tuesday, 22nd June, the Chancellor of the Exchequer, George Osborne, delivered, arguably, the most significant Budget in over a decade. The UK faces the longest, deepest and sustained period of cuts to public services spending since World War Two. In an extremely politically brave move, it is unfortunate that the Budget, with an opportunity to rebuild the economy in a benevolent way, actually presents itself as regressive and unfair. But, importantly, it also highlights how far the Liberal Democrats have come from their original policies before the election outcome.

The rise in VAT, from January 4th next year, is the best example to demonstrate all of these points. This tax is set to rise from 17.5% to 20%, falling down hardest on those earning in the lower economic bracket; this tax increase will account for a much larger percentage of a poorer income, than that of a wealthier earner. Therefore quickly anyone can see that this regressive tax will hit the poorer harder than the wealthy – typical Tory? This is clearly an unfair method the government is prepared to use, in order to increase its revenue to deal with the deficit.

Not only that, but this Tory tax plan was exactly one of the issues the Liberal Democrats were campaigning against in this year’s election. The party claimed that an increase in VAT will lower demand for goods, because of an increase in the price level. With less spending, this is a very unattractive policy to use, when the UK is painfully recovering from the longest recession since the Depression of the 1930s. This almost certainly signifies that the Liberal Democrats do not have the great influence over Tory policies that they said they would have. Many Liberal Democrat backbenchers are not happy with this tax increase; Colchester MP Bob Russell warned he was considering voting against it, as he had campaigned against it on the doorstep during the general election.

Is it possible this tax rise may cause a rift within the Liberal Democrat party? Simon Hughs, the Liberal Democrat deputy party leader, stated yesterday that the Liberal Democrats would come forward with proposals to amend the Budget in areas which they felt fairness could be improved, ‘because that is where we make the difference.’ But later, a Liberal Democrat spokesperson said there were ‘no plans’ to come forward with amendments to the Finance Bill. With many backbenchers against the rise in VAT, and with other sources saying the Liberal Democrats are voting for the Budget, it is clear to see that the Liberal Democrats are starting to altercate over this issue.

This could begin the test of the coalition government’s strength; with divisions starting to show, many will start to wonder how long it will last.

The Liberal Democrats voting for a Budget with a tax rise they originally campaigned against did not go missed by Harriet Harman, the acting leader of the opposition, who criticised the Budget for being ‘reckless’ and will cause thousands of jobs to be lost.

Using the latest forecasts by the Office of Budget Responsibility, Ms Harman went on to say economic growth would be lower next year than would have been the case under a Labour government.

‘It is the chancellor's first Budget, but we have seen it all before,’ she added. ‘It is the same old Tories, hitting hardest at those who can least afford it and breaking their promises.’

This is certainly true for the rise in the VAT tax.

Mr Osborne responded, stating the measures were ‘tough’, but were needed to ‘pay the bills for past irresponsibility’ and put the public finances on a sustainable footing by the end of the Parliament.

How far the public agree with the, potentially unstable, coalition’s Chancellor that these cuts were ‘unavoidable’, is yet to take fully solidify. What is clear to see though, that this budget could not be further away from, ‘fair’.