Emergency Budget 2010

June 25, 2010 at 4:20 pm Leave a comment

By Matthew Horne
George Osborne unveiled his emergency budget on Tuesday.

Two things were noticeable.

Firstly, the Coalition Government’s adoption of a new language: this budget was trying to be fair and progressive. Conservative Chancellors have not used that language for a long time. The message was: everyone must pay the price of the mess we are in, but the rich must pay a bigger price and the poor must be protected where possible.

Second, we still have no idea where the cuts are going to fall. Most of the deficit reduction will be done through cutting spending faster and more dramatically than Labour planned. However, we must now wait till the autumn to find out where the axe will fall.

If we put these two things together, the government have set themselves an almighty challenge. They want to cut the deficit and be progressive at the same time.

Most of the headline changes to the tax and benefit system announced were presented as progressive changes: higher tax on capital gains, taking poor people out of income tax; targetting tax credits; freezing council tax; pay restraint for higher earners in the public sector.

However, by the end of the week we learn that most of the new changes introduced in this budget are actually regressive – they hit the poorest hardest – because of big changes to welfare benefits and ofcourse the rise in VAT.

So, it seems that being progressive while raising taxes and cutting benefits is harder than the government thought.

But that was the easy part. Wait, till the autumn spending review. The potentially most regressive changes will come from cuts in spending on services by councils, by the NHS, and the justice system.

How will this government cling to the aspirations of fairness and progressive politics when cutting the costs of social housing, care for the elderly, drug and alcohol misuse, mental health, teenage pregnancy, youth offending, special needs…?

Innovation Unit are working with the NHS and local councils to try and do this in practice. It will be an enormous challenge.


Entry filed under: Local Authorities, Local Innovation, Public Services, Radical Efficiency, Total Place.

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