Friday, July 10, 2015

The Budget: a few thoughts in the aftermath

I don't judge budgets by the "what's in it for me?" criterion that most commentators tend to apply. There's this rather worthy-sounding streak in me that says they should be judged on what they do for the nation, and especially those in most need. It's also quite complex to assess the impact as it's being delivered.

George Osborne's latest budget has left us with plenty to think about. Beforehand, he passed on the cost of the free TV licence for over-75s to the BBC. That was a welfare top-up by Gordon Brown to win favour with pensioners At the time, the money would arguably have been better spent on more targeted help for those who really needed it. As my (now 87 yr old) dad said, it was very nice, but he could afford his licence quite easily. Now the cost is carried by the BBC, and by implication licence fee payers. Any attempt to remove or reduce the benefit will now generate ill-feeling for the BBC, not George Osborne. He has effectively delegated a liability and potential blame.

This tendency to offload things went through the Budget itself. Costs were passed on to businesses, and the big surprise was a new living wage (in fact a rebrand of the minimum wage, set below the level of what was previously known as the living wage) This passes on responsibility for lifting people out of poverty from government to business. At one level, that seems entirely reasonable. The tax credit regime may well have enabled businesses to get away with low levels of pay. But this budget sought to offload the responsibility for what will become about £4bn relief to business, whilst £12bn was cut from welfare (including 'in-work' benefits) not necessarily from people who would benefit from a minimum wage increase.

That brings us to the tax credit cuts. They seem to have had a peculiarly adverse effect on clergy. One friend of mine has 3 school-age children, and his wife has chosen not to take paid employment in order to give voluntary time in the community. He took advice and found he will lose £207 per month. That's a lot to readjust your domestic budget for. Other colleagues report annual cuts of £1700, £1500 and £1300. According to the BBC online calculator, we'll lose about £890. The changes in minimum wage won't make any difference and the changes in tax threshold are already taken into account.

Now it's true that the majority of clergy don't go into the ministry for the money - you'd be a mug to do so, and most of us accept that a call to ministry means sacrifice. But clergy don't run the risk of being made homeless, as the house is provided (although that's a problem at retirement!). For most of us, it will mean being a bit more careful with the heating, using comparison sites for every major purchase or utility, shopping around at budget stores and supermarkets and taking more modest holidays. Clergy are also fortunate enough to have some charitable grants we can apply for to help with finance in times of need. It all makes things a bit harder work, and bit more austere, but we won't be homeless.

What really worries me is that if it's bad for clergy, then what are the proposed cuts going to do to others who are struggling to pay their mortgages and other bills. These changes could mean families losing their homes, and all the problems of homelessness that follow. If the calculations are right, then some of the poorer families will be absolutely clobbered by this budget. Foodbanks have already seen a surge in demand in the cuts so far; I fear we will see much more in the weeks and months to come.

So is it really worth putting people's homes at risk to enable £1,000,000 to be left in a will, tax free? Were there no alternatives? Were the money markets really so worried that we had to cut back so quickly? Is it really such a pressing necessity to get a budget surplus? It hasn't been for most of the last century.

So thanks, Mr Osborne. I'm sure I'll find ways to save £75 per month from our domestic budget - we will cope, but don't try to fool us that we will be better off as a result of your budget. We won't.

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