Thursday, 21 March 2013

Budget 2013: the lowlights

Morning everybody. Did you enjoy the budget? In the small print, all sorts of nasty shocks await anybody who might be ill, disabled, unemployed or poor: exactly what you'd expect from a government which sees its role as redistributing from 'shirkers' to 'strivers' (i.e. from the poor to their own Randian donors).

But what of the headline decisions?

  • A new mortgage subsidy scheme
  • 1p off beer duty
  • A halt to petrol duty
  • Corporation tax down, national insurance payments abolished for small companies
(And of course subsidies to the dead-end fossil fuel industry)

I should be overjoyed by these, and ready to vote Tory. I'm 37 and can't scrape together the cash for a deposit. On the Tory campaigners' database, I'm a prime candidate for membership of the Home Owning Democracy, that mass of people persuaded to switch to Conservatism in the 1980s. All they have to do is use taxpayers' money to lend me a deposit: after that, I can afford the monthly mortgage payments. It's a simple idea really: mortgage rates are historically low, but lots of people don't earn enough to save enough for the large deposits required to get a mortgage.

So why am I not jumping for joy and polishing my I Heart Maggie badge? Well, firstly I don't think there's an essential link between property ownership and full citizenship. It smacks of the 19th-century's requirement that only citizens owning property could vote, on the basis that everybody else had no 'stake' in the country. Secondly, we're in the midst of an obscene housing crisis. People on housing benefit are being forced out of their homes if they have a spare bedroom, even though there aren't nearly enough smaller dwellings. Pouring money into the housing market without building enough houses won't help people: it will increase house prices. Great for the Tory-voting Mail readers who see house prices rises as Progress, but it massively screws up the entire economy for home-owners and home-seekers alike. Remember the 90s: all those TV ads encouraging you to remortgage your house ('release the equity') to take advantage of the rising market to buy holidays and boob jobs and jacuzzis? It will all flood back, and this time, it's subsidised by the state. Not only that: they'll be helping people out up to the tune of £600,000 and include 2nd homes, so if you fancy getting yourself a holiday cottage at the expense of the poor, you're in luck – George Osborne will spend my taxes on your luxury lifestyle!

Am I more likely to buy a house under the new scheme? I doubt it. I don't like paying my landlord too much money for a cold, noisy and unmaintained flat, but a mortgage is little more than renting from a bank. I'll buy a house one day… that day being when my beloved parents fall down the stairs. That is, if they haven't blown the loot on cigars and gold-plated crucifixes and all the other things they like. As for the population which doesn't have an inheritance in sight: you won't just be no better off after this budget in housing terms, you'll be far worse off, because the state-subsidised boom will put even the humblest abode way out of reach again – and there won't be any social housing for you either.

So let's be clear: this is redistribution from the poor to the rich. Worse than that, it's not even aid for homebuyers: it's aid for the property developers who've crammed us into smaller, more expensive, badly-built hutches for generations. Coincidentally enough, they fund the Tory party.

Next up: the reduction in beer duty. Clearly this is just meant to get a cheery headline in the tabloids. Who could object to 'blokes' getting a slightly cheaper pint? Except of course, that we're meant to be concerned about binge drinking, and that it's economically meaningless. It won't even reduce beer prices much: like most tax cuts, it will inflate profit margins and shareholder prices rather than depress prices.

Petrol duty? Do I really have to remind everybody that burning fossil fuels is literally killing us and everything else on the planet? That the UK has the worst air quality in Europe? That this small island is crammed with overpowered, underoccupied vehicles spewing out poison? But this is a sop to White Van Man who doesn't give a damn about killing his own kids, let alone the bunny rabbits. And of course once again it's economically meaningless: compared with the profit margins of the oil producers and petrol refiners, a penny here or there makes no difference at all. Personally I'd be taxing engines ruthlessly, banning large, heavy and inefficient vehicles unless individuals have particular requirements, and generally making life very uncomfortable for people who choose selfishness over mass transit. (Though of course I'd be spending a hell of a lot more on public transport infrastructure and nationalising the lot).

Finally, the reductions in corporation taxes and NI employers' payments. These are the things which pay for schools, road, healthcare and everything else the state provides. Cutting corporation tax is meant to attract companies to set up here rather than elsewhere. It is, of course, nonsense. Ireland has a mega-low corporation tax. Companies appeared, then disappeared when some other barrel-scraper offered a further 1% off. When the crash came, the state didn't have enough money to maintain services or a decent way of life for its citizens because it pursued corporations without regard for the future or the people. It's a race to the bottom. The same goes for the NI cut. Will they improve the economy? Of course not: these cuts don't mean there's more money sloshing around to be spent on beer and cars and cinema tickets and corporate investment and higher wages and more jobs. British companies are notorious for exploiting their workforces. That money will be shovelled into management bonuses and shareholder dividends. It will go offshore where it can't be taxed and won't be recirculated into the UK economy. If it was properly taxed and fed into the Treasury, the government would get a boost, by spending it on new railway lines and hiring more tax inspectors etc…: that would get it flowing round the economy as salaries are spent on decking and nappies and dreamcatchers or whatever. That's what we need: more money in the hands of ordinary people who need things, not fattened executives' tax-evading yacht funds.

But what do I know?


chris y said...

But this is a sop to White Van Man

Really? I thought it was a sop to the yummy mummies in their Discoveries doing the school run twice a day because heaven forfend that little Otto should have to walk half a mile.

The Plashing Vole said...

Good point. Them too! Though Discoveries are frightfully common these days. I think you mean Cayennes or Audi Qwhatevers!

Anonymous said...

'...a mortgage is little more than renting from a bank...' As usual I agree with everything you say accept this. I'm also a lowly-paid lecturer in the midlands and I've just bought my first property (yes, due to an inheritance from my father who passed away recently), however I feel liberated to be away from cheating landlords who don't do repairs, often don't return deposits and charge £750-800 for a two-bed run-down house in a semi-decent area. Yes, I agree with you but I do think that buying a place can be a positive thing and we should not label all house-buying as an exploitative act akin and related to capitalistic cruel Toryism

Jake said...

I can get behind a freeze on fuel duty, to be honest; I'm all for disincentivising environmentally damaging behaviour but it's gone well past the point of diminishing returns, especially since neither the Tories nor Labour-In-Name-Only can be arsed with doing anything about the mediocre state of public transport in this country.

AnnaD said...


Isn't that what PV is saying? But I see your point.

The Plashing Vole said...

Anonymous: yes, I do see your point, and I too am sick of an exploitative landlord. But I worry that the obsession with property ownership is disciplining us to become obedient, scared capitalists, and that it creates a permanent divide between those who can afford it (I'll be one of them at some point) and those who can't. I definitely don't think individuals can be blamed for wanting the security of their own home: it's the system that's rotten. Because it drives demand beyond supply and therefore keeps prices unaffordably high, we're all trapped and forced to behave irrationally. And now it seems to be starting again.

Jake: Agreed, there is absolutely no governmental or popular pressure to fix public transport or the environment. I think we're screwed actually and I'm glad I'll be dead before things get unbearable. I just feel guilty that it's poor, brown people who haven't had any of the benefits of industrial capitalism who'll die first as a result of it. Seems very unfair.

Anonymous said...

I think the comments about parents falling down stairs is in very poor taste - especially with the story of Stephen Seddon killing his parents for his inheritance hitting the media at this time, trying once under the guise of an accident and then resorting to more simple tactics - a sawn-off shotgun.

If they want to spend their money on cigars or crucifixes good luck to them. You seem expectant for an inheritance. Remember you came into this world with nothing and will leave with nothing. From dust you came and to dust you will return.

Speaking of dust, if you have children one day what use will all those books be when they want help with a mortgage.

The Plashing Vole said...

Sorry you're offended, Anonymous. But the point of satirical writing (you did get that I was being satirical, didn't you?) is to get your attention by brute force. If I considered every news story before hitting the keys I'd never write anything.

I'm not 'expecting an inheritance': see previous comment about satire. I have no children, but quite frankly, inheriting several thousand books would be a damn good thing. The gift of knowledge. Tax free too!