For many years I have sat at my desk listening to the radio (in recent years via the computer) attempting to cut through the political spin and techno-babble, to try and make sense of what the Chancellor is actually saying; and I have to admit, having sat through dozens of Budget speeches over the years, I find myself becoming ever more cynical as to whether they are designed for the alleged benefit of the people or mainly help the chancellor’s cronies, whether it be big business and the rich by the Tories or the Looney left and the Unions by Labour. But read on …….
David has spent many years listening to the budget
Most of my clients are SMEs (small to medium sized enterprises) and the first salient point that floated through the ether was the news that to help SMEs, the AIA (Annual Investment Allowance) is going up from £25,000 to £500,000. I’m not sure if George Osborne and I both live on the same planet. From my experience, at £25,000 the AIA had already covered the plant and machinery expenses of nearly all small businesses. This apparent largesse for SME’s is actually only likely to help the bigger players.
The next bit of news I picked up on was that a massive 1p was being lopped off the price of a pint, whoopdeedoo! In the days when a pint of beer cost less than 2/- (that’s 10p for younger readers) then a penny off beer duty might have made a difference. When a pint can cost £3.50 or more in a town centre pub, it looks like window-dressing. Our local giant of an MP, the tallest ever in Parliament at 6ft 9in, glibly commented that country pubs would benefit by not passing it on to the drinker and collecting the extra pennies. He is another one not of this planet, as do any of you really think that most breweries /pubcos wont snaffle it up first.
But enough of scoring points against politicians; let’s move on to the many problems in the real world, that you might expect the Budget would take some notice of, like…
Climate change:
- It’s real and even the most hardened sceptic who’s read the recent United Nations report, has to admit that something bad is happening out there. Unfortunately nobody will do anything about it because there’s no short term fixes so hey, let’s not worry about it, freeze fuel duty and reduce green taxes and let the next generation sort out the problem.
Job Market:
- Next we have the low wage/part time/no jobs for the under 25s economy. I must admit that this is to some extent structural with the major loss of unskilled and semi-skilled jobs to those damned robots over the last 50 years or so. The building industry has survived and so have the other services orientated jobs gardening/childcare/old people care/ catering etcetera, but manufacturing continues to need fewer and fewer bodies.
Employment:
- The growth of zero-hours contracts, unpaid internships and the massive rise in the ranks of the self-employment does not help matters. The chancellor gave some positive new on pensions but just how are people with low earnings, job uncertainty, student loans and the rest going to save for a pension?
Banks:
- Despite a lot of hyperbole from both sides of the House, neither Alistair Darling or George Osborne or anybody else for that matter, has sorted out the banks and they are at it again; miss-selling, illegally fixing rates, paying huge bonuses and the stock market is racing away. We have a classic unsupported boom in share prices and a new dotcom bubble; it can only end in tears.
Housing:
- The latest housing bubble is portrayed as a London only problem, but even in the less affluent parts of the country prices rose by 5.9% last year, with wage rises averaging 1.7%. It is the people with lower paid jobs who are in danger of being priced out altogether, not being able to buy and increasingly not being able to afford the rapidly rising rents. The one part of the budget that addressed this issue was the extension of the “Help to Buy” scheme, but rather than seeing more houses built it only seems to be stoking up the flames of the overheating housing market.
Pensioners:
- There was some good news for pensioners in the Budget and I am already on record as welcoming it, but nothing was announced about the spiralling costs of looking after an ageing population. On present trends the ongoing costs of people living longer will very soon become unaffordable even without the planned welfare cuts.
So what has the Budget done for these real problems? To quote Paul Daniels “Not a lot”. I believe that it’s about time that all politicians joined together on these issues; as they will require uncomfortable and unpopular decisions to be made and no single party has thusfar risked political suicide by doing what is needed, rather than what is popular.
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David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.