Monday, 24 March 2014

The 2014 Budget: The Flaws

by Christopher-James de Wilde


 
On the 20th March, the Chancellor of the Exchequer, George Osborne, announced his most recent Budget review. Although it was received quite well by the media and public alike, various concerns were raised as a number of measures left many questions unanswered whilst some issues were left unaddressed entirely.
Here is what I believe to be the biggest flaws in the budget review:
No reformation of business rates- Serious reform of business rates and the way they are calculated has been a request for over a decade. They are often far too high, restricting investment and development (with consequent negative effects on the economy as a whole). They also do not adequately vary for businesses in different regions (many businesses in the north are paying far too much whereas thriving businesses in London are not paying near enough). Finally, they often do not take into account the type of business and their subsequent profit margins. For example a café might have to pay the same business rate as a successful law firm simply because their buildings are of a similar size.

£119 billion cap on welfare- Despite a small adjustment in 2018/2019, this cap will not account for inflation. If the economy returned to old high inflation rates (unlikely, however, only 5% or so necessary for a few years) this will not be sufficient to pay the approximately 20 million families receiving some form of benefits. Any change in this cap would have to go through Parliament first, so, whilst being highly unlikely that the Government would vote against extra being spent on welfare (if it was necessary), it is in in the simplest form changing benefits from a right to a democratic privilege, which is unacceptable.

The beer duty reduction is political - Finally, the duty on beer being reduced by 1p might make Osborne quite popular, but, if you take the average beer to be about £3.50, you would have to be drinking a pint every day for a year before you would receive your one free pint - that is, if this 1p reduction is even passed on to the consumer.

Overall, while various aspects of the Budget Review may have been beneficial, it still left much to be desired.
Seee Tom Fuller's article. 2014 Budget: The Winners

 

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