British austerity budget

Written By: - Date published: 6:55 am, June 24th, 2010 - 27 comments
Categories: capitalism, class war, uk politics - Tags: , ,

The first budget from the new Tory-LibDem government is a shocker:

Budget 2010: Pain now, more pain later in austerity plan

• George Osborne delivers £40bn austerity budget
• Controversial rise in VAT to 20% from January

George Osborne has imposed austerity measures on every family in Britain after announcing a £40bn package of emergency tax increases, welfare cuts and Whitehall spending restraint designed to slash the budget deficit by the end of the parliament.

The chancellor said the “unavoidable budget” required a VAT rise from 17.5% to 20% next January, higher capital gains tax, a levy on banks, a two-year public sector pay freeze and less generous benefits, but insisted the package was needed to prevent the financial markets from turning on Britain.

In his debut budget speech, Osborne pleased the ratings agencies and the Organisation for Economic Co-operation and Development by intensifying the £73bn squeeze already planned by the last Labour government. But he signalled a second dose of gloom in October, when a three-year comprehensive spending review will spell out the size of the cuts for individual government departments.

Osborne warned today that ring-fencing the NHS and international development meant non-protected departments would face average real cuts of 25% but that some clemency would be shown to education and defence. …

Seeking to pin the blame for the tough measures on Gordon Brown, the chancellor said: “Today we have paid the debts of a failed past. And laid the foundations for a more prosperous future. The richest paying the most and the vulnerable protected. That is our approach. Prosperity for all. That is our goal.” …

But figures produced by the Treasury purporting to show the richest will suffer most extend only to 2012-3, by which time most of the welfare cuts will not have been implemented. …

Right wing commentators everywhere will be dribbling into their keyboards about “years of incompetent Labour rule” – politics as usual. What this is really about is three things, England’s over reliance on the financial services “industry”, the failure of unregulated capitalism, and the one stupid decision that financial institutions were “too big to fail”. England committed £850 billion to bail out big banks (while around 5000 executives paid themselves bonuses up to £15 million each). Much of the bill was always going to end up shafting the ordinary people. And here’s the first instalment.

27 comments on “British austerity budget”

  1. WOOF 1

    They are a pack of mongrels!

  2. WOOF 2

    What a pack of mongrels!

  3. Bored 3

    The major tenet I took from this budget was the terror the debt mountain is beginning to have around Europe. The attempt to place the burden of debt upon the taxpayer may yield interesting results however, as the increase in VAT appears to make sure it is done at the expense of consumption as opposed to income. It would seem contradictory to cut expenditure in the public sector by 25% (thats the plan), cut benefits and services, and to then expect the people affected to have money to consume and thereby generate tax revenue.

    Overall what we are looking at is the terror of a post industrial economy, long used to income from overseas investments as a replacement to local production seeing the income dry up, and not having any productive capacity left to pay the bills. The Con / Libs with the same tired market mantra dressed up as a socially and economically responsible budget are dancing on the grave of the post war social consensus. How this plays out will be very instructive to societies like ourselves who have exported their own productive capacity and propped up the social consensus on future debt.

  4. luva 4

    Need to change the title of this thoughtful post. It is not England, this is the British government and they have jurisdiction (at least in respect of revenue) over England, Northern Ireland, Scotland and Wales.

    Calling this an English budget is a bit like calling Rudd the PM of New South Wales or the by midday the former PM of NSW.

  5. Gosman 5

    You should be positively jumping for joy at this then. The imminent collapse of the free-market capitalist system will allow the implementation of the socialist utopia.

    I can’t wait for the British Labour Party to start advocating for the nationalisation of the means of production once again.

    • Bored 5.1

      They would if there was any means of production left! Bit like here, its all made in China.

    • Now that would really be something.,If this British budget has the effect we people of the Left believe well the ideas of State Ownership of the monopolies will once again be part of the thinking in Aotearoa . However we have to get rid of this lot in power at this time.

  6. Bunji 6

    It’s a huge budget with so so many changes, but there seems very little comment on the fact that they’ve lowered corporation & small company tax rates at the same time. For all their “we’re all in this together” talk, business gets a free ride. The Libs might have got their rise in the tax free allowance, but it seems a very Tory business friendly budget…
    Education budget cut by 25% – ouch. All civil service other than health takes 25% cut – unemployment at 3 million and a double-dip recession seems to be in the offing for the poor old UK.

  7. Nick C 7

    I think the reason this is nessesary is quite simple: The last Labour government decided to spend more than it earned, putting the country in debt.

    Part of that was the bailout i agree. Another part was the massive welfare spending.

    • RedLogix 7.1

      When will the right learn that robbing the poor box is not a substitute for economic policy?

    • lprent 7.2

      Most of it was from a premature ejaculation of tax cuts. Just about the worst type of fiscal stimulus there is.

  8. john 8

    Above link gives the viewpoint of Workers on this budget which has marked similarities to the one recently given by the key regime

  9. comedy 9

    Is it true that they’re borrowing over 150 bn pounds this year and public sector net debt is to go up to around 75% of GDP ?

    Sounds like they are on the precipice of being truly fucked and must have been pissing money up against the wall for a long time during the boom times.

    • RedLogix 9.1

      Sounds like they are on the precipice of being truly fucked and must have been pissing money up against the wall for a long time during the boom times.

      Well yes. Here in NZ it’s private debt, at around NZ$190b, that totally dominates our Debt to GDP ratio…so yes we’ve been pissing money up against walls too, but possibly not in the way you have in mind.

  10. The Lib/Deb supporters must be devastated! Just as the Maori Party voters may be.
    Unfortunatly when what should be a Left-Wing party supports the Right the Right use their majority and just ride roughshod over them . the lesson for us in the British Budget is that this is what Tories do or hope to do.There is a lesson for both our LP party , the Maori Party and the Greens “the enemy are the Tories ‘, let us all remember that fact and co-operate together .

  11. Draco T Bastard 11

    What this is really about is three things, England’s over reliance on the financial services “industry’, the failure of unregulated capitalism, and the one stupid decision that financial institutions were “too big to fail’.

    All of which was set up by RWNJ governments around the world – Thatcherism, Reaganism, and Rogernomics here. We paid for it in the 1990s as we went into recession with wages stagnating, prices rising and the selling off of state assets that had an income and we’re still paying for it. Our present RWNJ government wants us to pay even more so that they and their rich mates can get richer.

  12. Fred 12

    British public debt is now rising by £3 billion a week

    This should be a cause for some fairly major concern

    • Fred 12.1

      and I do agree about the sentiments about the bankers bonuses. Bankers are up there with politicians as lying cheating thieving shits in the UK.

      This is the default position now.,

  13. Jenny 13

    They say that every budget deserves a name that goes into the common lexicon.

    To start the debate, I would like to suggest:

    “The Zimbabwe Budget”,

    “The Mugabe Solution”,

    “The Insulate the Elite and Sack the Country Budget”,

    “The Next National Party Budget”

  14. millsy 14

    Personally I would rather a country be in debt that throw its most vulnerable people out on the street or let them die on emergency room due to underfunding of health.

    Its a matter of choices.

    The story about the New Zealand lady who lived in the bushes for 10 years in Hawaii really hit home for me. Why in hell would a country leave an eldeley woman live in the bush homeless for 10 years. But I suppose for many that is the price of ‘prosperity;.

    As for Cameron’s cuts, there is nothing that wouldnt have been done by Labour under Blair, but still, the British people are going to have to put up with crumbling roads, homlessness, run down infrastructure and people not being able to get health care for a long while let

    • equality watcher 14.1

      I vaguely remember in the 90s an old lady living in some park in New Zealand who was murdered.

  15. john 15

    The other Major factor in the UK’s economic woes is the decline in oil from the North Sea, they now import oil once again. It was North Sea Oil which boosted their economy for 25 years, where for awhile Brits seemed the rich people of Europe going over to France, Spain, Italy and doing up old properties and commuting between both Countries. Thatcher deindustrialised the UK, it was the oil bonanza which kept the whole show working ,now it’s going going gone the rich will have to use their positions to hold onto what they have got meaning regressive taxation such as VAT.
    Most Brits I have met prefer here, a much simpler lifestyle without the rat race they have over there.

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