I confess to being mystified, not about the budget but about the media responses to it. This is not because I am uncritical of the budget but I do not understand Thursday's headlines attacking Mr Osborne for his 'raid on pensioners'. His budget raised the basic State pension by £5.39 a week, the biggest single increase in history. On top of that pensioners also benefit from the raised income tax threshold that will take the poorest out of this tax system altogether. Only pensioners with substantial incomes will loose as a result of the removal of age-related tax allowances. In any case, their removal will simplify a complex aspect of the tax system which most pensioners will surely welcome.
A second issue that has evoked howls of protest is the reduction in the top rate of income tax from 50p in £ to 45p. The 50p rate has yielded only a third of what was forecast when it was introduced. The rate cut loses £100 million but the measures to tax the wealthiest will bring in five times that sum. These measures block loopholes whereby people buying properties for £2 million or more avoid paying stamp duty by making their purchase through an overseas company. In future they will pay a 15% Stamp Duty Land Tax and wealthy non-residents will pay a capital gains tax on properties bought and sold in this way.
This is not to be uncritical of the budget. Unemployment remains high and is expected to rise to 8.7% this year before slowly falling as new jobs are created. However, a projected rate of economic growth of 0.8% does not suggest that unemployment will fall fast enough to satisfy the electorate in 2015. Admittedly this is a better rate than that in some of our European neighbours, which will make it tougher to export to them. Reducing Corporation tax to 22% to make Britain more competitive will help but much more needs to be done to create jobs, especially for graduates and young people whose talents and energy are being wasted.
Mr Osborne has gone some way to reduce the injustice in last year's projected changes to child benefit entitlement. He had planned to remove this benefit from anyone earning more than £42,745, but a couple both earning just below this figure would keep Child benefit even with a combined income of £80,000. Now he has raised the bar to £50,000 and introduced a sliding scale so that only those with incomes of £60,000 lose Child benefit altogether. This is still unfair but affects fewer people.
Managing the economy, especially one with a huge national debt, is a tough responsibility. The deficit is falling but the Chancellor's target of eliminating it by 2015 has now slipped to 2016-7. This meant that any giveaway had to be matched by claw-backs elsewhere. There is room for criticising the Chancellor but not all of it has been fair or well-informed.
