UK Budget 2009 – from a jobs perspective

Wednesday, April 22nd, 2009 - economics, Education, Employment, europe, government jobs, HMRC, Immigration, job search, job seeking, Minimum Wage, politics, recruitment, regulation, sunday thoughts


UK Budget 2009

Flying
Creative Commons License photo credit: ErrrLomoDeAtun

Today, UK Chancellor Alastair Darling, presented his budget for 2009/2010, and projections forward, in a package he said would steer the UK through to recovery. The headlines were, according to the BBC:

  • UK will have to borrow a record £175bn as he admitted the economy faces its worst year since the Second World War
  • The chancellor tore up a key New Labour election pledge by unveiling a new 50p tax rate for earnings over £150,000
  • Cut future spending plans by £5Bn per annum from 2010, £3.5Bn from the Health and Education budget
  • A “car scrappage” scheme under which people trading in cars older than 10 years for new ones will get £2,000
  • Added 2p on fuel, 1p on a pint of beer and 7p on cigarettes

Conservative leader David Cameron said not enough had been done to get spending under control and “Britain simply cannot afford another five years of Labour.” Liberal Democrat leader Nick Clegg said Labour “have condemned us to years of unemployment and decades of debt.”

The base economics:

The Chancellor proposes to borrow £175Bn, but which according to economists will actually be between £225Bn and £260Bn – for the next two years, that’s £500Bn. 60million UK residents means that’s an effective personal borrowing of £4,166 per year – for every man, woman and child. Now lets just take the number again, except lets assume this time its the tax you pay in your pay packet. £4,166 is 20% of £20,833, or just under the UK average take home pay. Remember, this is debt to fuel spending, not revenues. So at minimum, the Government intend to spend at least twice the amount of money they get in.

In total over the next five years, the Government will borrow £700Bn, or £12,000 for every man, woman and child. No wonder the books won’t balance until 2017 at the earliest.

What is there for jobs?

Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme. In addition, the government will create or support up to 250,000 jobs in deprived areas. This sounds great – and it is – but in effect it hides or tries to further disguise some very frightening statistics:

Did you realise that there are more people in China learning English as a secondary language, that there are people in the UK? To me, the problem is that after 12 years of a Labour Government, this budget is suggesting that it is acceptable that 20% of the population can’t read, and half are under educated. Trying to compete with lower cost economies with lower educated people is not a strategy for the short or long term.

So what is there for those who do educationally achieve over the floor level? Putting aside breaking the New Labour promise of no new taxes above 40% with the new 50% rate for those earning over £150,000pa, the reduction in Capital Gains Tax to 18% suggests that Government want entrepreneurs to invest in their businesses over earn from them for a period. The NHS will be squeezed – I don’t see that as a bad thing, with the number of administrators and statisticians at historically high percentage levels; plenty of efficiency gain there. But it seems daft neigh stupid to squeeze pension contributions in an ageing population, by reducing tax relief.

In summary:

I don’t see this as budget for jobs, but an admission by Labour that after 12years, they can not create an educated 21st century population suitable of addressing the new global economy; or capable of saving enough to cope with the inevitable boom and bust cyclical nature of economies.

I do see this as a Labour killer budget. I don’t have confidence presently in the clarity of the Conservatives plans, but then again with so little to work against – when the Government are digging themselves into a hole – the less thay say the better they look.

Good Luck!

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2 Responses to “UK Budget 2009 – from a jobs perspective”

  1. UFC Says:

    Interesting article, nice design. I have bookmarked it for the future reference

  2. Brian Christopher Says:

    Interesting article, i will come back to your blog soon, best regards, Brian

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