What the budget needs to include

By Jonty Pryor

Tomorrow will be the first mid-recession budget since 1993 and is a real opportunity for Alistair Darling and Gordon Brown to make some bold moves to support people across the country.

One measure which we have begun to touch upon it that of tax-bands. The 45% rate for earnings over £150,000 (a tax rise hitting only the richest 1%) was a step in the right direction but simply not as brash a move as we need to get out of recession. The threshold for paying income tax altogether needs to be significantly raised to around £10,000. Currently it is the least well off in our society who are suffering the most from the mistakes of bankers and we need to do all in our power to support them.

To pay for this taxes will need to be raised for the richest – unfortunate but necessary. It is just wrong that while some in our society are struggling to pay for their energy bills and food on the table others are still making more money than they know what to do with. Perhaps a 50% band for £100,000 and over is a realistic figure.

The Government also needs to look at statutory redundancy pay. There is currently a private member’s bill courtesy of Lindsay Hoyle MP going through parliament which offers real and immediate help to those made redundant. Statutory redundancy pay was introduced in 1965 and has not been increased since. The new bill looks to link redundancy pay to weekly earnings and the the retail prices index bringing the pay up to a reasonable standard. This bill is currently at committee stage after having passed its first two readings and really needs the full support of the Government.

When we look at what ideas the Tories are putting forward to help Britain recover we find them, as ever, lacking. They have already made a U-turn, withdrawing their pledge to match Labour’s spending plans. This along with Mr Osborne’s comments a few days ago tells us exactly what a Conservative budget would consist of – simply savage cuts in public spending. Now is the time when the Government must invest for the future, looking to create new jobs through initiative such as building new schools and hospital wards.

To get business and industry moving again the car scrappage incentive scheme offers a way for the auto industry to see a real boost. A simple cash pay off for those trading in their old cars for new. A reported 76% of consumers are in favour of this.

The VAT cut which puts about £250 in the pockets of every family a year is due to end in December. This needs to be extended. According to the Centre for Economics and Business Research there was an immediate boost to sales after this cut leading to a £2.1 billion higher turnover for retailers than it otherwise would have been. Now tell me that the tax cut was ineffective!

Although recently there has been a real push from Number 10 for an international response to the global problem (and rightly so) we need to now focus on those individuals being hit hardest by recession and those facing unemployment. We did what was necessary with the banks – now Messrs Darling and Brown need to do the same for jobs, manufacturing and taxation.