Wednesday, 21 March 2012

#Budget2012 – The View From Great Aycliffe

All the politicians and pundits have given their verdicts – TV has been full of it.
Down in Westminster, the buzz is all about the political opportunities which the Budget gives the opposition, and whether it increases or reduces support for the government.
But out here in the sticks, the budget is not a political opportunity – it is something which will affect our everyday life and standard of living.

So what do ordinary people feel about the budget?
Well – here’s the response from a small town in the north east.

Before I start, and at the risk of sounding like a ‘moaner’, I have to say that much of this budget will probably leave most Aycliffe people unmoved and unimpressed.

There is 37% worklessness in Aycliffe, which is in a part of Britain hardest-hit by the cuts, so a budget which boasts that it ‘rewards work’ doesn’t really scratch where it itches here.
One third of the people of Aycliffe will simply have noted that the £10bn cuts have not been mollified, and that nothing has been done to address rising rents, which are their main worries right now.

I personally don’t smoke, but there will be a lot of people for whom the 5% above inflation rise in tobacco duty will be the main news and the last straw.

Taxing the rich
Indeed, there is a great deal of the budget which will simply go over the heads of ordinary Aycliffe people.

I don’t think many people will get very excited at the news that – after receiving the toothless Aaronson report on a GAAR (general anti-avoidance rule) – the government does not even intend to implement that, but merely intends to consult on it ‘while maintaining the attractiveness of the UK as a location for genuine business investment’. I think the reaction of most people in Aycliffe will be ‘oh yeah?’

Meanwhile, the 7% stamp duty on homes worth more than £2million simply does not apply in Aycliffe. You can get a three-bed terrace home here for £35,000, and a new four-bed on a posh estate for £170,000. So the idea of a mansion-tax is something for a pub quiz, but won’t provoke much excitement.

I suppose there will be a degree of faux-outrage about the end of the 50p tax for people earning more than £150,000, but the idea of earning so much is so foreign to most people’s experience here that, again, it will be a matter of theory rather than actual experience.
MPs earn at least £65,738, and they get expenses on top of that – I am sure that figures like £150,000 are meaningful to them. But to most Aycliffe people, the idea of bringing in £150,000 a year is equivalent to winning the lottery (and about as likely).
I don’t think I know anyone who earns even half that amount. Many people here would be delighted to bring home the national average £25,000.

You might say much the same for phased child benefit for people earning more than £50,000. Anybody in Aycliffe knows that you are rich enough not to NEED child benefit if you earn £30,000, never mind £50,000.
And the idea of feeling aggrieved for a couple earning £49,000 each and losing their child benefit is laughable.
In Aycliffe, people need their child benefit to buy their child food.

Helping the Poor
There will, by contrast, be large numbers of people in Aycliffe who benefit directly from the raising of the basic tax threshold to £9,205 ‘leaving millions of working people over £200 better off’.

But if Mr Osborne is expecting them to vote Conservative next election he is going to be disappointed.
Putting £4 a week into the family pocket won’t make all that much difference when your rent has just been raised by £8 a week, when the fuel duty rise of 3p a litre has just increased the cost of filling your Ford Fiesta by £1.20, when the price of a packet of cigarettes has just risen by 37p, and when the cost of the weekly shop at Tesco’s is rising by 50p a week.

The Council Tax freeze will be welcomed, but tempered by the realisation that this will mean more cuts in essential services. In Aycliffe, it looks as though we are going to lose CAB, which will be a disaster for many – especially as the cuts bite the poorest people.

Neither will it be lost on most Aycliffe people that, whereas they are gaining £200 a year from the rise in the basic tax threshold, higher-tax earners will be gaining £400 … which will strike them as somewhat ironic – that a measure hailed as helping the lower earners in fact gets to help the higher earners just exactly twice as much.

Tax losers
I know that everyone is supposed to be OUTRAGED at the ‘Granny tax’, and I am sure that Osborne will pay the political price in the blue-rinse counties, but I fear he doesn’t have too much to worry about in Aycliffe, oddly enough.

For a start, there are proportionally more pensioners here who don’t earn anything above their pension, so the concept of an Age-Related Allowance is meaningless to them.
And for those who are and will be affected, outrage tends to dull with age, doesn’t it!
I think that many pensioners will ultimately appreciate that their ARA has not been cut… it’s simply that the minimum threshold has risen to catch it up.

There will be some wistful irritation that earning pensioners are going to be stung for £1bn+ to pay for the cut in the 50p tax for tycoons, and I am sure they will be furious at Mr Osborne’s statement that he has done so because they are too thick to understand about tax allowances … but I wonder how long that will last. Most people here are primarily concerned, not with what others have got and have not got, but with their own personal circumstances.

Which is why a number of our more upwardly mobile earners WILL be angry at the drop in the higher rate threshold, which has drawn them into the higher rate tax bracket.

The boost to industry
Strangely enough, most thinking Aycliffe people – beyond a quick glance to see whether they are a winner or a loser in the budget – will be much more interested to see what is happening to economic growth in the region.

I, apparently, am going to be overall £80 a year better off as a result of this budget. To be quite frank, handing me £1.60 a week in my pocket is worthless.
What I am MUCH more interested in is the state of the local economy.
Getting the economy going, giving local people JOBS – that is the way this Chancellor is going to make Aycliffe RICH, if at all.

So how much do I feel that this budget is going to do that?
Interestingly, there is A LOT in this budget about economic growth.

We positively welcome the National Planning Policy Framework in Aycliffe, and have already begun planning our Neighbourhood Plan for sustainable development.

I am also positively PLEASED that Corporation Tax is to fall to 22% by 2014. I have for a long time advocated that we reduce tax on business. I also note that Mr Osborne is doing a deal with banks to introduce ‘credit easing’ for SMEs, and pricked up my ears at the ‘Growing Places’ fund.
Having said that, I am aware that businesses currently have huge sums in balances, which they are not using for investment or trade, but are choosing to keep as a buffer against setbacks. It seems to me (as a Socialist) that Mr Osborne is too trusting of business – that if he gives them the breaks, they will deliver the business – and I wish there had been more measures in this budget to proactively tie the government incentives to the provision of new jobs.

Moreover, after that, it’s all down hill for industry in the north east.
  • Newcastle is going to get superfast broadband, I suppose, but what good is that to us in Great Aycliffe?
  • The rail improvements mean nothing to us because they get no nearer than York – which seems daft, considering that we are soon to get Hitachi.
  • An extra £150million to help build new homes is to be welcomed (providing any of it reaches us), but most people will tell you that what we do NOT need is more private residential properties, but more social housing, bungalows and affordable starter homes – certainly that’s what we need in Aycliffe. You can’t sell four-bed homes here for toffee.
And I am positively hostile to the announcement of Enterprise Zones in Scotland, which will unfairly advantage them as we are trying to attract industry to the north east.

Overall, when we hear that the Chancellor is suggesting a growth rate of 0.8%, and we realise that is
0.8% nation-wide, this has to be a gloomy Budget – as far as economic growth goes – for the north east.

There is lots more in this Budget, I am aware, and it is not all negative … but please forgive us if we are less than enthusiastic in Great Aycliffe.

I wonder if a Labour government could offer policies which would create more, proper industrial growth in the region?


  1. good piece.

    Had you also explored tax credits you would have had the icing on the cake.

    Normal families with a combined income of £25k pre-tax will lose £960 in tax credits. That's £80 a month which for many is their entire gas bill or more than twice their electricity bill, or indeed their year's council tax.


  2. And that certainly will hit families up North

  3. And just two days after I commented that we in the north east are fearful of competition from Scotland for industry, Richard Moss ‏(@BBCRichardMoss) has tweeted: "Leith has beaten Hartlepool to be chosen as the location for Gamesa's new wind turbine plant. It's a £125m investment bringing 1,000 jobs."