Westminster budget

Written by Kirsty Williams AM and published in Mid Wales Journal Friday 3rd May 2009 on Wed 6th May 2009

The budget's failure to help ease the burden of families and businesses struggling their way through this recession is a tragedy. It was always going to be the toughest budget of recent times and a very difficult balance to make the best out of such a dire situation. The successful budgets of our history have been ambitious and coherent in their vision for an improved future, sadly in this years budget the government has failed . Instead of practical solutions for the here and now to help struggling businesses and the 108,000 unemployed in Wales, the budget has left a large black hole in public spending and an aspiration for a solution through the economy returning to normal by itself; taxing people a bit more and spending a bit less - all of which will happen after the coming election.

As the cost of food, heating, water and transport continue to rise, with families spending more of their cash on the basics, with more and more people struggling to make ends meet the burden could have been lifted by tax cuts for those on low incomes. The Government has instead tried to win populist support by raising the top rate to 50% on incomes over £150,000. This does not create the fairer tax system the Liberal Democrats plan for, it is simply a token gesture which is ineffective without plugging loopholes. Our plans would be much further-reaching - we would lift 4m people out of tax by raising the threshold to £10,000 and cutting the annual tax bill for most people by £700; putting money back into peoples pockets at the time when they need it the most. We would pay for this by taking aggressive action to clamp down on all the loopholes and exemptions that benefit the richest people and biggest businesses.

In contrast to these proposals the Budget actually raises tax on middle and low earners by £1,000 a person. This is as a result of the delayed increase in National Insurance Contributions as well as alcohol and petrol duty. The rise in alcohol duty will also increase pressure on our local pubs which play such a key role in our rural communities. Low earners, pensioners in particular, already face relatively high inflation because of the costs of food and domestic heating and the Government has missed an opportunity to correct for this burden and create a fairer tax system.

The continuation of the VAT reduction is money wasted which has little impact on individual's pockets but could have a big impact on frontline services. A better use of public money would be to take the remaining £8.5bn assigned for the temporary VAT cut and redirect it to public investment in affordable housing, public transport and large-scale home insulation, creating green jobs.

It is hugely disappointing that the Government has given us such a hotchpotced and whitewashed budget, free from real solutions and lacking in a coherent pathway out of the current crisis. The budget seems to be aimed more at seeing them through the looming election than seeing hard up families and businesses through the recession.