Views
Fairness at the heart of budget decisions - for the Inverness Courier
MY appointment as chief secretary to the treasury came a few weeks before the most important budget Britain has seen for decades.
Having been closely involved in putting it together, I wanted to explain to Inverness Courier readers the thinking behind some obviously controversial decisions.
Britain faces its toughest financial position since the World War II. We are spending £150 billion more than we raise in tax. That means that one pound in four we are spending now has to be borrowed - and paid back by our children.
We have the worst position of any major economy.
At the heart of last month's budget was one big judgement. We must go further and faster to reduce the deficit to protect the people of this country from the biggest risk to our future economic growth and prosperity - failing to take this problem seriously.
The choice is very simple. If we stuck with the denial and complacency of Labour, we would expect higher interest rates, fewer jobs, less growth and more debt for our children to repay. And we would leave ourselves massively exposed to the much greater risks of financial irresponsibility - being forced by others to cut harder, less discriminately and with less control over our own destiny. That is the position of some European countries - it must never be ours.
Instead we have chosen to take responsibility. We are taking the necessary action now to restore order to the nation's finances, credibility to our position internationally, and confidence in our economy that is essential for future growth.
So having made the big decision to clean up the unprecedented financial mess that is Labour's legacy, the question was and is how to deliver the unavoidably difficult measures required. Fairness is one of the three governing principles of our coalition, and it has been applied to the full in this most difficult of budgets.
As a result, we have made sure that the impact of the measures we will ask Parliament to agree is fair across society. The budget lifts nearly a million low income workers out of tax altogether and substantially increases child tax credit to help the most vulnerable. By uprating the basic state pension in line with earnings immediately - with a "triple lock" to protect pensioners in years where earnings are low - we have done something that Labour failed to do in 13 years.
We have made sure that the toughest budget for 60 years has no negative impact on measured child poverty. After Frank Field's review, we will take further action to lift children out of poverty and tackle the decline in social mobility that makes poverty so intractable.
My task is now to work through in detail the spending review that will decide how much money each department has to spend for the next four years. Even with the unprecedented growth in public spending in recent years - with much money wasted by the previous government - these choices will be very difficult. But the choices will be driven by fairness and a real drive to get better value for the taxpayers' money government spends.
Some of our decisions will be particularly positive here in the Highlands. We have reversed the previous government's unfair decision to impose an extra tax on self-catering and chalet businesses that would have hurt tourism locally.
We are working hard on how a fuel duty discount for remote areas can be made to work. Many local businesses will be helped by other tax decisions, helping to create jobs.
With average incomes here lower than the national average, our decision to exempt a further £1000 of earnings from income tax will make a real difference. The government is committed to delivering, over the next few years, the Liberal Democrat manifesto commitment to exempt the first £10,000 you earn from income tax.
No one should listen to lectures on fairness from a Labour Party that presided over an increase in child poverty, that slashed rates on capital gains tax to reward the very richest at the expense of the least well off and after 13 years had still failed to restore the pensioners earnings link.
This budget will cut our deficit, provide growth and restore confidence in our economy. The country faces a choice between responsibility and fairness, or denial and decline. In terms of the future health of the Highland economy, I believe the budget made the right choice.
Posted on: 20/07/2010
