Another Budget, another series of articles detailing whether or not the squeezed middle were in for tougher times.
To be honest, unless you’re a 20-a-day smoker planning to buy a £2 million house then you probably won’t notice a vast difference in your day-to-day spending.
But there were some things the Chancellor could have and should have done differently. And here they are.
Frozen fuel duty
It might be hard to work out the winners and losers from this Budget but there’s nothing quite as tangible to the average Brit as the cost of running their car.
Every month it is slightly more expensive to fill up, so it’s a constant reminder that times are tight and getting tighter.
The Chancellor’s decision to press ahead with the fuel duty increase in August will add 3p a litre to motoring costs.
But the rising cost of fuel means that the Treasury is raking in more from taxes anyway! Drivers could really have done with some help and George didn’t deliver.
Left the 50p tax rate
Osborne made a compelling case for scrapping the 50p tax band for those earning £150,000 a year or more, claiming it raises “next to nothing” but damages the country’s competitiveness. I can absolutely agree that a tax that raises barely any money is a colossal waste of time.
But unfortunately, that means that this is a Budget that gives headline-grabbing tax breaks to the super-wealthy at the same time as cutting the Age Related Allowance, prompting stories like ‘Pensioners pay for tax cuts for the rich’.
If we’re all in this together then the chancellor should have waited to cut this tax, spin matters in tough times like these. Otherwise it looks like the French nobility feasting while the peasants starve, which didn’t play out terribly well for the rich in the end.
Sorted out stupid taxes
There wasn’t as much tweaking of taxes as normal in the recent Budget, however, the Chancellor did at least pledge to wipe out some of the VAT loopholes that mean the tax is payable on some products but not on near-identical products sold elsewhere.
But Osborne missed out on the opportunity to end some of the silliest taxes out there. VAT on children’s car seats? Women’s sanitary products? Smoking cessation aids?
Come on, it’s obscene. Read our editor’s article: VAT: The stupidest tax in the UK for some even crazier examples.
Extended help for first-time buyers
Did you know that in some parts of the UK, the average age at which people buy their first home is 37? That’s according to the government, which is why it’s launched its NewBuy scheme to help new buyers onto the property ladder.
But there was no mention of extending the stamp duty holiday for aspiring homeowners, meaning it comes to an end on March 24th. That’s been a real help for new buyers, saving them a large cash payment at one of the most expensive times of their lives. And now it’s finished but the market is far from fixed.
This is a punishing environment for savers, which is why many rely on their tax-free ISA allowance to hang on to a little bit more of their returns. But the stock market is also pretty volatile and many people don’t use their full allowance because they don’t want to risk their money in stocks and shares.
If George had wanted to help sensible savers, he could have removed the limit on cash ISA saving. If people want to hold their full £10,680 allowance in cash accounts then they should be able to.
Protected struggling families
These are tough times for everyone but particularly the country’s poorest working families, and they are about to be hit by a double whammy of cuts. According to the Resolution Foundation, there will be £2.4 billion in cuts to tax credits this April, potentially making it less profitable for people to work.
For example, the minimum couples with children will need to work in order to benefit from Working Tax Credit is set to rise from 16 to 24 hours.
But unemployment is high and these families may not be able to increase their hours – meaning they have no way to avoid the cut to their incomes. It’s not an incentive to work, it’s a punishment for an economic situation beyond their control.
Not only that but the Working Tax Credit isn’t going to increase with inflation. I know that most of us face pay freezes right now, but this is going to hurt families on the breadline the most. That’s not fair.
Kept it quiet
There had been a number of presumably carefully orchestrated ‘leaks’ to the press over the last few weeks, meaning there were few surprises in the big red box.
In fact, several commentators have pointed out that it felt more like a round-up of the last two weeks’ headlines than a Budget announcement.
Perhaps what George should have done is keep quiet until the big day.