So, here it comes. Britain’s worst kept secret is out as the Coalition government starts cutting public spending. The emergency budget delivered by Chancellor George Osborne was typically downbeat.
It was probably the first in a long series of fiscal cutbacks which will be felt across the country. The headline issues in the Budget include:
- VAT to rise from 17.5 per cent to 20 per cent from Jan 4th 2011
- Council tax levels to be frozen across England from April 2011.
- The controversial landline tax to fund the rollout of broadband internet services to be replaced by money allocated from the digital changeover coupled with private investment.
- Child benefit to be frozen for three years.
- Key reductions in overall welfare. Tax credits, jobseekers’ allowance and housing benefit will be cut.
- Public sector workers will face a two-year pay freeze.
- State pension retirement age to rise from 65 to 66.
- A new bank tax will be levied from January 2011.
- No increase on alcohol, cigarettes and petrol duty
The government optimistic hopes that the books can be balanced by 2016 seems wishful thinking. The disturbing thing about this is that there seems to be very little opposition to the cuts, and if there are, it’s split into various factions. Even many political commentators have swallowed the myth that there isn’t any alternative.
When these cuts really begin to bite (and in some cases they’re happening already), there’s going to be maximum pain to be felt across the country in the next few years, particularly for the poorest, but there seems to be very little appetite for widespread civil disobedience… for the moment.