A UK Budget In Touch with Business? 22 Mar 2012
Following the UK Budget on 21st March, we are still in the period after the Budget in which its effects are being assessed, evaluated and debated by politicians, journalists, businessmen and ordinary people across Britain.
In the run up to the Budget, it was remarked how Chancellor George Osborne was able to carry the burden of office exceedingly lightly due to the complete trust he was able to place in his chief economic adviser Rupert Harrison, who has come to be referred to by some in the government jokingly as ‘the real Chancellor’.
The Chancellor had some good news just before the day of the Budget, from the independent Office for Budget Responsibility. Improvements in the economic outlook would enable the Chancellor to ease austerity measures and enable £5 billion of future giveaways.
The Chancellor had come under considerable pressure from the business community to do away with the 50p higher rate of income tax. Introduced as a temporary measure by the previous government when the financial crisis first hit, it was argued that the tax did not raise the revenue intended and only had the effect of deterring businessmen from investing and creating jobs, and driving entrepreneurial talent abroad. The Chancellor’s response, negotiated with the Liberal Democrat coalition partners, was to reduce the top rate of income tax to 45p, although this was no longer designated temporary.
In the aftermath of the Budget a story that has maintained people’s interest is the so-called ‘Pasty Tax’. This is where VAT has been added to hot baked takeaway food sold in bakeries and supermarkets, in line with what is already charged in Fish and Chip shops and other takeaway outlets, so creating a ‘level playing field’.
The difficulty of determining whether VAT would be charged when the pasties cooled down, or in hot weather, was soon remarked upon. Chancellor George Osborne was unable to remember the last time he went to Greggs to buy a pasty, leading to charges that he was out of touch with ordinary people. Prime Minster David Cameron did a little better by recalling an incident when he bought a pasty at Leeds railway station, only to be reproved for ‘Pasty snobbery’ for favouring the West Cornwall Pasty Company, a more expensive brand of pasty than most people normally eat. The Labour leadership were quick to visit a branch of Greggs to buy sausage rolls, and Party Leader Ed Miliband declared that the Pasty Tax showed the government to be out of touch.
Posted in bizzy blog on 22 Mar 2012.