British Budget: Progressive or Regressive?

By Nikita Lalwani

LONDON — This past week has been an exciting one for British politics. On Tuesday, George Osborne – the youngest ever Chancellor of the Exchequer – unveiled the emergency budget to much media attention and public debate. As many expected, the budget responded to the economic crisis with fiscal austerity. From the New York Times article on the budget:

The steps outlined to the House of Commons by George Osborne, the chancellor of the Exchequer, would cut the annual government deficit by nearly $180 billion over the next five years, shrinking Britain’s public sector and instituting tough reductions in public housing benefits, disability allowances and other previously sacrosanct aspects of the country’s $285 billion welfare budget.

Only time will tell if these cuts will herald a new era of prosperity and smart spending or catalyze a double-dip recession. What was readily apparent from the post-budget debates, though, was the way in which the three parties interacted with each other and the strategic way each chose to portray the coalition.

Conservatives seem pleased with the budget. They argue that cuts were necessary, and they constantly remind Labour that they are at fault for Britain’s financial predicament. The numbers, they say, show results – the increase in value-added tax alone will raise $18 billion by 2012. Of course, the budget suits Conservatives ideologically as well, as it puts them on their way to small government and to a smaller public sector. To counteract this, Conservatives have highlighted Liberal Democrat contributions to the budget, emphasizing their commitment to protecting the most vulnerable in society.

Not surprisingly, Labour MPs have claimed just the opposite: they have criticized the extensive budget cuts, claiming that Tories are trying to bring back Thatcher-era reforms while harming society’s poorest and most vulnerable. They have criticized Liberal Democrats for compromising their ideals in support of a budget they perceive to be quintessentially conservative. Labour’s strategy seems to be to undermine the coalition at all costs. They constantly refer to the “Tory budget” – although the budget is a combination of Conservative and Liberal Democrat policy – to portray Liberal Democrats as an insignificant and ignored part of government.  Their rhetoric seems designed to create a rift between the two coalition parties. In Thursday’s budget debate, for instance, Labour MP Edward Miliband all but urged Liberal Democrats to unite against Conservatives in next week’s vote.

Liberal Democrats, by contrast, are quick to point out their contribution to the budget, which most seem ready to support. Deputy Prime Minister Nick Clegg, in a letter to the party, emphasized the more progressive elements of the budget. Liberal Democrats are right that their contribution is apparent, from an increase in Capital Gains Tax that will target the wealthy to an increase in state pensions that correlates to earnings and inflation. So far, Liberal Democrats have stuck to their line that the budget will result in a fairer Britain for all. Ultimately, Liberal Democrats are smart not to rock the boat. The coalition is still new, and the two parties are still learning how to work together. It is best for the success of the coalition if the two parties seem to be on the same side, at least for now. But how much compromise is too much? Many Lib Dem voters may feel betrayed, particularly when they start to feel the effects of the budget in the coming years (I have already opened several derogatory letters at the office). Britain’s third party must walk a fine line between sticking to their Liberal principles and effectively compromising with the Conservatives. It is a tough balance to strike.


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Filed under controversy, economy, Europe, partisan politics

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