Budget 2008: Combating child poverty & helping the environment
John McFall 7:13pm
Devising this year’s Budget can’t have been easy for the Government.
On the one hand, a slowdown seems likely over the next year or so. Two intertwined factors — tightening credit and slowing or falling house prices — will constrain consumer spending and tax receipts. The Government is already nearing the limits of its fiscal rules. Of course, any slowdown in the UK will not be on the scale of, say, the expected US slowdown (many analysts believe that growth is likely to pick back up in 2009). But the Government will nevertheless need to keep a very firm hand on the public finances.
On the other hand, the Government faces urgent pressures to spend to meet various goals it has announced in the past — most notably, the 2010 child poverty target (announced in 1998), but also other goals, such as the aspiration to raise state school spending to the level of private schools (announced in 2006).
A ‘fiscal stimulus’ like the one that has been announced in the US would not be appropriate for the UK. Since 1997, the Government has achieved unprecedented price stability, low interest rates and low national debt, and we do not want to put this at risk. In any case, given the current pressures on inflation (which are predicted to remain high over the medium-term), any such package would simply force the Bank of England to raise interest rates — cancelling out any good effects the package might have had.
Therefore, like Gordon Brown’s 2007 Budget, this year’s budget will probably be balanced — not increasing or decreasing the overall tax take.
Child Poverty
Whilst I recognise that the Government is facing spending constraints, there is one area which desperately requires action in this Budget.
The Government is on track to miss the 2010 child poverty target by 700,000 children.
Since 1998, child poverty has fallen by 600,000 children — a considerable achievement, brought about by the Government’s economic policies, such as welfare-to-work schemes, the National Minimum Wage, increases in Child Benefits and, most importantly, the introduction of Child Tax Credits. But progress on this front has slowed, and the Government is likely to miss its goal of halving child poverty by 2010.
A number of groups, including the Institute for Fiscal Studies, believe the target should be met by a steep increase in spending, principally on benefits and tax credits. But to meet the targets solely by such a rise in spending would not be sustainable. The best way to bring children out of poverty is to increase the incomes of their families on a permanent basis, by enabling parents to find work that pays. Some additional investment will be needed in this Budget to help bring this about.
Green Taxes
Another area which I hope the Government will focus on is green taxation. This year’s Budget is already being dubbed the ‘Green Budget’ amid expectations of an environmental ‘breakthrough.’
The Government’s record on green taxation before 2007 did not live up to expectations. As the report from the Environmental Audit Committee noted last week, green taxation as a percentage of GDP has been in decline since 1999. Budget 2007 made some effort to remedy this, and the Government has indicated that further announcements will be made in this year’s Budget (further details on Air Passenger Duty, for example). But decisive action is needed to return to 1999 levels and make a real difference on climate change.
Awareness of climate change is now higher than ever, and I am happy to see that many people have begun to change their lifestyles to reflect this. But this alone will not produce lifestyle changes on the scale required to really make a difference to climate change. It is up to the Government to shape people’s incentives — the environmental costs of the goods and services we use must be reflected in the prices we pay for them. Tax policy can therefore make a very significant contribution to tackling climate change.
Taxation is not always the most elegant way of achieving this; other schemes, such as emissions trading, can potentially work much more efficiently (if they are well managed). But green taxes can work in a great many cases. I hope to see the Government regain the lead on climate change in this Budget.
John McFall is the Labour Member of Parliament for West Dunbartonshire and Chairman of the Treasury Select Committee.
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Northernhousewife
March 11th, 2008 7:58pm Report this commentI was reading this article thinking 'Who is this wally going on about low national debt?' Scroll down... Labour MP for....and it all becomes clear, to me, if not to him.
Nicholas
March 11th, 2008 10:24pm Report this commentI liked the nonsense about green taxes: "It is up to the Government to shape people’s incentives — the environmental costs of the goods and services we use must be reflected in the prices we pay for them." Yeah, so that they can squeeze us as much as feasibly possible to facilitate their continued public spending waste on a grand scale. Is there no end to the cynical manipulation practiced by this government? The sad thing is that so many people actually fall for it. Shape our incentives indeed! What utter rot!
The Chocolate Orange Pandit
March 11th, 2008 10:37pm Report this commentAnd trying to sell the socialist wish-list agendas of "child poverty" and man made global warming and "emissions trading". At no point did he justify his claim that there is such a thing, on a national scale, as "child poverty", or such a thing, on an intergalactic scale, as "man made global warming", and I too thought, "Who is this jerk?" I too noted, without surprise, that it was a Labour MP. At no point did this individual offer any evidence that either of these two fantasies are a real problem in Britain. They are both tools of control and are presented as though they are proven and real and don't need explanations. That's where you're wrong Mr McFall. You picked the wrong group to preach to.
chris
March 11th, 2008 11:44pm Report this commentThis is the same guy who recently stated they (government) didn't know the value of the Northern Rock mortgage book! If this wasn't a venal, money grabbing load of imposters they would reduce tax on eco-frinedly items rather than increasing them on whatever thy want. "Green" is an excuse to tax more and cover up the black hole!
The Chocolate Orange Pandit
March 12th, 2008 12:13am Report this commentChris says: "Green" is an excuse to tax more and cover up the black hole!" Hell, yeah. But it's a double agenda. Yes, it's to raise more taxes camouflaged as saving the planet (the planet needs saving from people like Mr McFall) and it's a weapon of control. One more wriggle into the private lives of citizens who are being commanded how to behave in their own homes. What lightbulbs to buy and what other products to buy. Just a wild guess here, but do you think that McFall is in favour of forcing Fair Trade on free enterprise organisations like supermarkets? For "childhood poverty" in other countries?
Roy
March 12th, 2008 7:00am Report this commentLike Nothernhousewife and others I must agree. I think this man speaks a lot of absolute twaddle. Whether he thinks he is saying the right things, trying to influence his constituents or fellow dumbbells in parliament is a mystery. As if there is nothing better to talk about in the huge mismanagement of the country other than increasing the reliance of the people on government handouts is a pity. The green thing is nothing but a side issue, get the people concerned about something politicians can't do anything about . . . but can find a tax that suits the bill.
Averagejoe
March 12th, 2008 9:40am Report this commentThe thing about green taxes - according to 'What Car' Magazine the cost of off setting the CO2 output of my ordinary family car is £24 per 12'000 km's (incidentally what the average motorist does in a year). However I am obliged to pay in the region of £180.00 a year road tax. Given the percentage of this that is actaully spent on the roads I calculate I am already paying more than enough tax to off-set my carbon emissions at least five times over. Would a Labour politician like to explain why I should be obliged to pay even more and what exactly this profligate government is doing with the excess?
Chuck Unsworth
March 12th, 2008 9:52am Report this commentThis Government's sole response to any difficulty or problem is to increase taxes. It has made a speciality therefore of disincentives. Taxation per se does not bring further benefits to society - particularly when those revenues are spent in such a casual and profligate manner as has been witnessed over the last decade. There are countless examples of truly appalling waste of public (our) money in recent years, much of that cash going to 'consultants' and the like, none of whom bear any personal responsibility or penalty for failure. Disastrous housekeeping is the order of the day, and Ministers skip nimbly from post to post thereby avoiding having to accept and deal with the outcomes of their personal actions and decisions. This is simply a game, in which individuals hold power without responsibility. It is morally bereft and administratively bankrupt. These politicians have done precious little for the nation, but a great deal for themselves. What real achievements have there been in ten years? The blind enchained Minotaur Brown stands at the Dispatch Box bellowing out his tired, meaningless litany of expenditure every week. But where is this Government's real success? Are we a prosperous, civilised society, at ease with itself and with other nations? Blair, after ten years has achieved an appalling 'Legacy' of national loathing and profound contempt. Brown will do no better. If McFall has any sense at all he will be taking steps to distance himself from these monsters. Nemesis looms.
Verity
March 12th, 2008 1:39pm Report this commentChuck Unsworth says: "If McFall has any sense at all he will be taking steps to distance himself from these monsters." McFall has his feet firmly tucked under his seat on the gravy train. He cannot possibly believe in "child poverty" and man-made global warming. If he really believes any of this, he is not mentally fit to be in government. Mr McFall, if you're reading this, and I am sure that you are, define "child poverty" for us, there's a good chap. A child who doesn't have a computer in his bedroom? A houseshold (oops! - I almost wrote "family", which the socialists are trying to abolish) with only one TV? A kid who doesn't have a cellphone? And don't get me started on the "green" issue.
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