The Government’s Not So Usual Giveaway

Chancellor George Osborne will present his last Autumn Statement of this Parliament.

Chancellor George Osborne will present his last Autumn Statement of this Parliament.

It is soon to be the election and this week is the governments or more precisely the Conservatives last chance to spend their way to an election victory. This government infamous for its cuts in order to reduce the deficit is now turning on the fiscal pump to try and spend their way out of electoral doom which currently occupies them; while also keeping a firm grip on the reigns of responsible government. This has led to a serious of announcements recently by the Conservatives and the Liberal Democrats.  This spending to election victory is best seen in the NHS increase.  This is the area where Labour has a big lead in the polls and is a prime area where the Conservatives are trying to claw back ground with a credible increase in spending in a department which has been ring-fenced from the cuts imposed.

However it won’t be a giveaway of the type Gordon Brown was used to, with borrowing for the year up compared to last year as from April to October borrowing was up 3.7 billion on last year. This will have disappointed Mr Osborne that despite the economic growth which has been achieved borrowing isn’t coming down as much as he would like. It is expected net borrowing overall for the government will come to a total of around 90 billion pounds, around 4 billion more than projected for the financial year. Despite the economy growing tax receipts have been a problem; with wages not growing with inflation and with the £10,000 taking many of the poorest out of tax has been an expensive measure.  The extra £560 which was implemented this year has cost 1.04 billion pounds, a not altogether expensive measure. However if you add up from 2010 all the previous costs of raising the bar for income tax it has come to a total of 13.6 billion pounds during this Parliament. There is also a predicted extra 1.4 billion of costs next year when the income tax allowance goes up by another £500. In an effort to sure up tax receipts even he is going after big companies over tax avoidance and is trying to tighten loopholes, an area which has only seen a perfunctory performance from the government so far.

The biggest political announcement is likely to be the two billion pound increase in the NHS budget, including an extra 1.1 billion going to modernise the decrepit GP surgeries across the country in a four year plan. The modernisation will mean more services such as chemotherapy and dialysis can take place in community centres rather than hospital. The money for the GP surgeries will be coming from the fines from the Libor scandal. The additional monies will be coming from a 750 million pound underspend in the Department of Health and from other ‘underspends’ in the departments across government. Essentially much of this isn’t ‘new money’ but merely the money saved coming back recycled into the system. While this may seem like the government pinching pennies it has to be remembered this is the same government which is still committed in name to be cutting the deficit.  Labour has claimed they would put in an extra 500 million on top of what the conservatives have promised with its plan to care fund which would sit at 2.5 billion; this fund would focus on 20,000 more nurses, 8,000 more GP’s, 5,000 more caseworkers and 3,000 more midwives. They plan to fund this through three main areas, firstly through mansion tax receipts, secondly through cracking down on general avoidance of tax and finally ensuring tobacco companies contribute to the cost they impinge on the NHS.  However both are woefully short of the needed 8 billion a year increase needed by 2020 which the NHS itself claims it needs to function effectively.

Not only has the government pledged to increase NHS spending, it has also pledged to increase numerous other items in structural spending projects as outlined by Danny Alexander, indeed the Liberal Democrats have to announce something.  This is based around the building of around 23,000 new homes; thirteen thousand of which will be a new Garden city in Bicester and 10,000 built at a former RAF site in Northstowe. The government has also committed to a 2.3 billion pound fund for flood prevention projects which will include 300 million spent in Thames valley but it being distributed across the county.  Osborne also announced an extra 400 million going into the enterprise capital fund to help small and medium businesses apply for credit. All of these measures are there because they’re necessary but also to act as a counterweight to the claim made by Ed Balls that the government are merely intent on cutting everything to the bone in order to balance the books.

The bonuses for pensioners will also be there for all to see, with the Conservatives relying on the grey vote they cannot afford to hit pensioners in any way. Indeed pensioners are one of the few groups who have not had to deal with any sort of cut, despite pensions taking up 52% of the welfare pot. Some of the goodies include a new savers bond, as interest rates remain chronically low, Osborne has come up with a way to solve this, from January over 65’s will be able to buy bonds with a possible interest rate of 2.8% for a one year bond and 4% for a three year bond. People will be able to invest up to £10,000 in each of these bonds.  The cap on premium bonds will be lifted to £50,000 next year and the savings rate will be cut to 0% for up to £5,000. Have pensioners ever had it so good?

Whether this autumn statement will affect how people vote is something up for debate. After-all this is the election which has seen the rise of fringe parties to the national setting and gaining ground on the traditional parties. What is for certain however that even in the coalition in times of need will use the machinery of government to try and build some goodwill towards them, even if the Conservatives are leading heavily on the economy they may want to make the economy the prime subject of this election.  The giveaways are there, but will need to be supplemented by harsh spending cuts in other areas in this not so usual bribery to the voters, for them to have a second chance.

By Sam Mace, Junior Writer at Daily Political View

Twitter: (@thoughtgenerate)

Further reading:

Autumn Statement 2014 (GOV)


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