Money makes the world go aroundThe world go aroundThe world go around
By and large, how one feels about a Chancellor’s Budget depends upon how much an individual will be fiscally affected by it. Unless you are lucky enough to be able to afford to be altruistic, chances are, the worse off you personally will be, the less happy you will be with it.
I described Jeremy Hunt’s first attempt at balancing the books, last October as Ouch because he had to prove to the money markets that he was no Truss-like headless chicken, running around throwing good money after bad. I’d say, given the markets’ reaction to last week, he more or less achieved that. The markets have been way kinder to Hunt than they were to Kwasi Kwarteng. Even though, if you dial down into the detail, there is easily as much largesse and money being spent by Hunt as by Kwarteng. Context I guess is everything. Hunt needed to show he was a safe pair of hands. The scrapping of the 45p tax bracket was reckless, the lifting of the lifetime pension contribution less so, and, indeed will affect far fewer people.
The giveaway at the top of the tax pile is also in marked contrast to the number of people lower down the food chain for who the freezing of the tax allowances will see them paying more tax. Unless your salary remains the same and never increases of course, in which case it’s inflation that’ll scupper you. As I said at the top, how you feel about this budget depends how it will affect you. Anyone in the middle of the income bracket, for whom a million quid worth of pension contribution is the stuff of fantasy will probably be thinking “meh’. There’s more to the idea of retirement than a limit on how much pension you can squirrel away. Sometimes, some people, have just had…enough. Just because you can work later in life do you want to? Life is for living: if you can afford to look at it that way, who could blame you?
What about career progression? We talk a lot about the need for younger people to come into businesses and industry to replace those who are moving off at the other end. If those retirees decide to stay put, where are the growth and development opportunities for youngsters?
Those employees with tiny children, who want to get back into the workforce but for whom childcare costs make such a move prohibitive will be pleased with Mr Hunt. I think. However. As usual, the devil is in the detail. I suspect it will be less help than the headlines suggest. For a start we need to stop thinking about it as free childcare. It is subsidised childcare. For term times only, usually, and doesn’t reflect the actual cost of providing that childcare. Plus, it’s all very well allowing people to get back into the workplace when their children are small babies, but what happens when those children grow up a bit? School hours don’t tend to reflect office working hours, so wrap-around care becomes even more important. The thing that most people I know in the squeezed generation between children and ageing parents need more than anything is time.
The extension of the price cap on energy prices will, of course, help to reduce financial pressures on UK households. However, its only temporary.
While the Budget’s help for individuals was welcome, as was the whole expensing of business investment angle, it would have been nice to have seen something more on the bigger picture, on infrastructure and something to really help push us along the road to the net zero target that is looming horribly close.