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How a Lib Dem budget could respond to the real challenges our nation faces

October 31, 2017 11:21 AM
By Chris Key in Liberal Democrat Voice

Budget Cut graphicAs we approach the forthcoming Budget, we have the opportunity to present ourselves as the party of business which also cares about the dreadful level of inequality in the UK today.

Brexit is obviously the key issue affecting the economy and there is nothing more pro business than our stance of wanting to remain in the Single Market and the customs union. Rising inflation is hitting the low paid particularly hard. Public sector workers need and deserve a proper pay rise. It is a disgrace when one reads that nurses are having to rely on food banks.

Outside of Brexit, fixing the broken housing market has to be our number one domestic economic priority. Ending the scandalous and wasteful right to buy scheme has to be the easiest way of helping to cool the housing market. Enabling local authorities to borrow to build social housing also has to make sense. We spend billions a year on housing benefit tenants, money which could be much better spent on building up affordable housing stock which has been so badly depleted since the 1980s. To address concerns over immigration extra funds have to be made available for house building in areas which have seen higher population growth.

Secondly we need to address the impact the internet is having on our economy and tax base. Business rates are a 19th century tax in the digital age. We need to reform or replace these with an alternative such as a tax on turnover which enables high street businesses to compete more fairly with online equivalents.

When it comes to transport, millions of us waste hours a day commuting on overcrowded public transport to an office when we could work from home. A budget which provides a real tax incentive to encourage staff to work from home could have a huge impact on productivity as well as meaning real savings for hard pressed workers who are sick of train fares chewing up an ever increasing proportion of their income.

Tax simplification reform and cutting the cost of compliance for individuals, small businesses and the self-employed would also be part of my budget. There are 10 million words in our tax laws. Despite being a Chartered Accountant it took me hours to complete my tax return when I used to have a buy to let property, so I feel for those who have to manage their taxes without the help of advisors.

We also have to do something to tackle the debt crisis and lack of savings in our economy. Vince has put forward some sensible proposals on providing debt relief and breathing space for people already deeply indebted.

Finally perhaps the most important lesson of the General Election is the inter-generational unfairness in our economy. A simple way to address this issue would be to remove the higher rate tax relief for pensions savings for those close to retirement. Some of the money saved could be used to provide genuinely affordable child care. The Conservatives have failed to adequately fund the "free" 30 hours promised in 2015. Rates provided by some councils such as mine in Richmond are nowhere the actual cost of childcare. By making good on the promise of genuinely free child care it would also encourage parents back into work, especially in lower paid jobs where child care eats up a large proportion of their after tax income.

Sadly, whatever we may like to plan for now, if we have a hard Brexit and no transition with the EU, all bets are off for the future. Any budget written now may soon have to be ripped up anyway. Who would want to be the Chancellor right now in that scenario?

* Chris Key is dad of two girls, multilingual and internationalist. Lib Dem member in Twickenham who likes holding local council and MPs to account.