The Budget 2014’s Implications
Wednesday the 19th of March, George Osborne posed proudly for the press clinging on to his little red brief case, seemingly to have a great validity in his optimism. In fairness, the past year has been a great turning point for the Chancellor as the economy is reported to be growing at its fastest rates since 2007. Many news stories this past week have paid praise to Osborne at his delivery of 2014’s budget, but we should not fail to examine whether Osborne’s budget is a safe choice to win public support rather than to tackle economic growth in the long run.
A new report, founded by the IFS, revealed that the tax cuts that Osborne has promised in the budget are only funded for the next few years. Also, many new regulations will only be implemented in the next couple of years. The theory is that promising fiscal responsibility will give confidence in the UK economy, allowing it to recover. However, there is a serious question about who should feel confident following the revelation of the budget on Wednesday.
Why is the New Pound Design so Crucial?
The most noteworthy change that has provoked great murmurings across the UK is the adaptation of the pound coin: how will this work for vending machines, what will happen to all the old pounds and why is this even necessary? Osborne’s reasoning is that roughly 3% of pound coins in our economy are fake and can only be distinguished by their weight. This new pound would be harder to recreate as a fake because of its two metal design and its complex shape. Perhaps it’s the cynic in me, but I didn’t think this was a crucial policy that needed pushing through, in fact, this announcement seems more like a media ploy to distract from what the budget actually means for households across the UK. Cathie Jamieson is correct in saying: “I think people are going to be worried about how many pounds they’ve got in their pocket, rather than the shape of it”.
Osborne and the Older Generation:
It should have come as no surprise that the Conservatives promised a more flexible system for pensioners. One of the key policies from the budget announced that tax restrictions on access to pensions would be removed and there would no longer be requirements to purchase an annuity. Some have raised fears that this is a reckless move that will encourage people to spend their pensions carelessly and so leave many reliant upon the welfare system, whereas, Age UK representative Anne-Marie Doohan says the new system will “revitalise pension saving” giving younger generations more hope of “security in retirement”. Either way, this focus on the older generation has undoubtedly got a political motive. Matthew Goodwin (a political academic) stated that the “key demographic for Ukip is Britons aged 60 and above” and, to neutralise the increasing threat that Ukip poses to the Conservatives, Osborne’s budget needed to focus on pleasing the older generations ahead of the 2015 election.
What Does This Mean for the Conservatives’ Election Chances?
There are other policies such as an increase in tax free saving allowances for Isas, cuts in beer duties and a cap in the budget for welfare, all of which seem to be fairly safe policies. This budget is so crucial as there is only one left in the Conservatives’ term and it will come too late for it to make any change upon voters opinions of the party. This budget is Osborne’s final chance to prove he can regulate the UK’s economy. He’s had success with his austerity measures, even if they weren’t reached as early as predicted, so is Osborne now just playing it safe and trying to please the traditionalist voters? After all, this budget doesn’t come close to tackling the living wage crisis that Britain faces with rising inflation. But can one government truly solve all of a country’s economic problems at once? In reality, such an idea is improbable. Osborne’s budget isn’t revolutionary, it is safe. Perhaps it is a good stepping stone for the Conservatives’ election campaign though the political future of the UK is not just a debate about the economy. It’s certain that there will be greater factors to consider in the run up to 2015. The Conservatives can only hope that their Chancellor’s budget is mild enough to be consider like a safe and reliable option.