Lord John McFall of Alcluith is a Labour Backbench Peer and former Chair of the House of Commons' Treasury Select Committee
The power and influence of Twitter was in evidence minutes after the Chancellor sat down yesterday when he presented his budget to parliament. It was there that George Osborne’s carefully crafted and supposedly voter friendly budget was labelled a “Granny Tax” one.
For weeks the Tory / Lib Dem partners had publically trawled over every dot and comma of the budget’s contents. So there were no surprises – save one.
When Osborne lost eye contact with the House, head bowed to the Despatch Box and sotto voce uttered that he was simplifying the age related allowances for pensioner on the basis that many didn’t understand them. Well they certainly do now.
This is a budget which has raised £4bn for the government with £1.5bn extracted from pensioners - almost half of the total. As a consequence this Granny Tax storm will take some time to abate.
This budget is big on politics and small on economics.
Being fiscally neutral there was little he could play with - hence the political emphasis where Osborne set about positioning himself as the darling of the Tory Right and at the expense of Nick Clegg who inexplicably went along with the 50p tax abolition. But what has it done for jobs and growth? Precious little.
For all the emphasis on business innovation and investment, the OBR has substantially pruned its forecasts for growth in 2012, following very weak figures for the final quarter of 2011. Even the corporation tax reduction has been described as a zero sum game where the interaction with personal income tax will encourage corporations to retain rather than invest earnings. Thus it will exacerbate the existing black hole with less investment.
Bad news indeed for the 1 million young unemployed with little prospects and an absence of budgetary policy initiatives to assist them into work. Economically, the Chancellor is an onlooker waiting and hoping for good times to come when they are praying for a balanced budget in 2017. Two years into a new parliament and well behind their 2015 target seems it’s a case of more borrowing - £157m and more praying that they reach the sunny uplands.
And all of this is overshadowed by the issue of fairness. Are we all in this together? The omens of this Tory mantra are not good. Whilst 14,000 people earning £1m are receiving a tax cut of over £40,000 each year, a family with children earning just £20,000 loses around £700 a year from this April when one includes the VAT rise alongside the other cuts.
It is without doubt that the winners include rich people who can save lots of money whilst the vast majority of taxpayers gain £14 a month from the LibDems inspired tax threshold initiative. Nick Clegg called it a Robin Hood budget - but far from being the poor benefiting from the rich, it is the other way round.
‘Robbing who?’ will be the question addressed, and many poorer and aspiring citizens will realise that it was them that were well and truly mugged in this budget.