The Chancellor’s reaffirmation of the government’s commitment to bringing down Britain’s unsustainable deficit is welcome. However, nobody could accuse the coalition of not being flexible when it comes to balancing the books: as a result of harsher economic winds, primarily from the eurozone, the government is borrowing tens of billions of pounds extra for many more years.
While relaxing the deficit reduction target in the short-term is sensible to avoid compounding the economic difficulties, this should not mean elongating the process any further. The country’s borrowing binge needs to end, and the pain involved in doing so should not be continually prolonged.
It is of course extremely welcome to see the Lib Dem policy of allowing people to keep more of the money they earn by raising the income tax threshold being implemented faster than previously planned. Those on low and middle incomes are over-taxed, and it is the Liberal Democrats who are committed to reducing this burden.
We also welcome the shifting of further funds from current to capital spending, but we think the government can do more. There are many areas of day-to-day government spending which can be reduced further, with the savings used to fund both deficit reduction and infrastructure projects. Welfare spending on the wealthy is a prime area for such savings.
We are sceptical as to whether the Chancellor’s measures to help people purchase houses will really work: the key thing standing in the way of greater house-building is an overly-restrictive planning system.
This was a budget with Liberal Democrat fingerprints all over it, but we once again urge the Chancellor to be more ambitious when it comes to deficit reduction, tax cuts, supply-side reform and infrastructure spending.