No Time for Cuts to Public Finance

It certainly confirmed my worst fears that the economy is in a worse state than most of us thought. I do not believe it offered any real solutions. Last week I asked that Banks and Building Societies be encouraged to resume responsible lending and to bring an end to the increasing number of job losses. There is no Government proposal to bring the banks under control. Banks which, to all intents, are now owned by the taxpayer are not being required to clean up their acts and then to lend in order to keep businesses going. Viable businesses, both large and small, are under serious threat due to a shortage of the vital credit which aids their cash flow. As each business closes it contributes to the number of unemployed. This figure is rising nationally by 100,000 per month and is likely to reach 3 million by the end of the year. We are not unaffected here in East Sussex. In March 2009, the number of people out of work and claiming benefits in East Sussex increased by 201 to 10,255. The monthly increase of 2% was considerably lower than both the South East region (5%) and Great Britain as a whole (4%) and much lower than last month when numbers increased by 18%. However in the same period last year, claimant numbers in East Sussex fell by 3.5%. As has often been the story with this Labour government, the budget was a missed opportunity to level out our tax system. It is a tax system which is dysfunctional. It is over-complicated and not sustainable. There is a clear need for it to be rebalanced and to be more fair. Liberal Democrat proposals do just that. By closing loopholes and tax avoidance schemes used by the wealthy and big corporations Liberal Democrats believe it would be possible for the personal tax allowance to be raised to 10,000, lifting families on low income out of income tax altogether. There was also an element of using the ideas of others in the budget. But this time it was an idea which we Liberal Democrats had abandoned some time ago. I refer to the 50p tax rate for higher earners. The main reason we abandoned this proposal is that it is unworkable. It will of course result in bonuses not being paid as cash and therefore attracting the lower capital gains tax rather than income tax. Finally there is the threat of cuts to public finance. Most people's immediate thoughts are that this will mean cuts in funding for health, education and infrastructure. I strongly believe that these should be the last things to be cut. In recessions such as we are experiencing now it is not the time to cut public works which will result in further job losses and a poorer standard of service to the whole electorate. We have the opportunity to embark on a programme of public works which will not only provide jobs for young people but give us a better public transport system, affordable houses and better insulated homes. This should include the reinstatement of funding for the further education buildings which will better equip school leavers with the work skills which they might not get by going to university.