Campaign spending
A pre-election UK Budget offers more good news than bad but the deficit still looms in the background.
Give-aways were in short supply as Alasdair Darling took to the despatch box on 24 March although it was clear that, the financial news that day could have been a lot worse. Labour’s pre-election preparations meant that deep spending cuts or tax rises were avoided, at least to satisfy potential voters across the water.
Darling’s main headline was axing stamp duty on house sales under £250,000 to help first-time buyers, paid by higher duty on sales worth over £1 million. Motorists can also take some satisfaction in a gradual 3p duty rise at the pumps, just up 1p in April. Pints and cigarettes both received expected price increases.
A drop in the estimated deficit – down to £163 billion from £178 billion – is naturally a move in the right direction but represents a rather modest fall given the size of the remaining debt. Treasury figures foresee a much larger cut to £131 billion next year, decreasing to £74 billion by 2014-2015.
Nothing was being done to clear up the economic mess, the Tories taunted, while the Lib Dems said both main parties were in “denial” about the necessary cuts.
No new personal tax rises will fill the financial hole, although last year’s 50 per cent rate was to take effect from 1 April. Corporation tax also stayed steady.
The real financial risk for Northern Ireland lay in the Chancellor’s warning that the toughest spending cuts in decades will take shape from 2011 onwards – and that will ring true whatever party is in power.
This Budget promises slight increases in child tax credits, continued support to help businesses spread out their tax payments and £60 million for wind energy development, which employs 3,800 people locally The Government also wants everyone to have a bank account and a guarantee to make that happen was also included.
Increased spending by UK Government departments will also result in an extra £33 million allocation to the Executive, although this must be seen in the light of a £367 million shortfall in the province’s public finances.
As tradition dictated, the Chancellor commended the Budget to the House of Commons yet he was also sending a message to the country in his closing remarks.
A choice, in his view, existed between Conservatives “suffocating” growth or Labour, which had been consistently “right” about the recession and recovery.
David Cameron, for his part, contrasted a “completely out of steam” outgoing government with his party’s “energy” to get the economy going again.
With the general election widely expected on 6 May, that judgment will soon be made by voters across Britain and, to a lesser extent, in Northern Ireland. The poll itself means that several Budget measures may be shelved as Parliament will quickly run out of debating time.
Depending on the ballot box, the final finances may well be decided in a snap Conservatives post-election Budget or negotiated by a hung Parliament which could give local MPs a say on public finances that they would otherwise not have.
