Thursday, 22 March 2012

Julian Huppert MP: Response to Yesterdays Budget

Cambridge Liberal Democrat MP Julian Huppert has posted his response to yesterdays Coalition budget announcement via the Cambridge City Liberal Democrat Activists mailing list (in response to a request from Cllr Sarah Whitebread);

"Hi all,

I'm still, like you, trying to digest all the details of the budget.

But I thought I'd write to you with some of the key issues, and my thoughts on it. I've seen Sarah W's email, and I know I'll miss out many details - ask me and I'll do my best to answer them.

I think it's fairly clear which bits of the budget were Lib Dem, and which were Tory.

Our key priority was to increase the threshold at which people start to pay income tax. This was our key policy at the General Election, and we agreed in the coalition agreement to prioritise it as well. Our aim was to lift the threshold to £10,000 by 2015.

The announcement was that it has been lifted to £9,205 - very close to the £10,000 objective, after less than 2 years. This will result in 2 million poorly paid people being lifted out of tax compared to 2010, and cuts for 28 million people, amounting to £546/year for most basic-rate payers, and less for higher-rate earners.

We should be very proud of that achievement, and remember to tell people about it!

For someone who works full-time on the National Minimum Wage, we will have halved their tax bill. I hope we can go further in the next years - I think that no-one earning the minimum wage should pay any income tax at all!

The Tory priority - obsession even - was the 50p tax rate, which is to be cut to 45%. This is not where we would have chosen to focus, but we insisted on countervailing measures to tax high earners - stamp duty on houses over 2 million, reducing tax relief amounts for high earners, and a few other points. These are estimated to raise 5 times as much as the lost income from the tax rate change - so high earners will be paying more (1.3k/year on average, according to the best estimates).

It's also worth remembering that the top rate was 40% for all but 35 days of the Labour Government, and this is still higher than that.

There was also good news for pensions - they are going up by 5.2%, and Steve Webb's Citizen's Pension idea is going ahead, with the State Pension moving from a base £97.50/week, plus extra for some, to a minimum of £140/week for all. There is no change to the income tax threshold for pensioners, who will continue to not pay anything on the first £10,500 (£10,600 for those born before 1938).

There are lots of other details as well - some that should be very good for Cambridge, such as tax credits for video games, assistance for university spin-outs and entrepreneurs, extra money for research infrastructure and 50M for super-broadband in smaller Cities, some of which we will get. And much, much more.

It's not the budget we'd have written ourselves. But it is good for low-earners, and it takes more money from the richest.


Dr Julian Huppert MP
Member of Parliament for Cambridge
Liberal Democrat"

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