Real budget analysis

Forget KPMGs analysis of Osbourne’s latest budget – here’s the real analysis.


A 1p per litre cut – no, it’s simply a delay until the new year of a guaranteed 5p rise.  Duty on fuel is 60% to the government and while we’re at it, let’s not forget the 5 individual taxes on purchasing a new car.

Vehicle excise duty increases in line with RPI (5.5%) – funny how that doesn’t link through to the 4.5% annual inflation rate that the government bandies around – government rule; if in doubt raise to the higher level – double standards and spin rule.


There are announcements that there are no “new” increases yet there are increases – doesn’t make sense unless you figure that the government hasn’t found a new method of taxation but rather depend on the tried and tested increases.  Of particular note is the increase in tobacco duty of 2% above inflation (that’ll be a 6.4% increase then) in a year when the value of the money in your pocket is shrinking by 4.4%.


Personal tax allowance increase by £630 or £126 in cash terms according to the government – we make that a 1.56% increase when adjusted for inflation becomes a 2.84% drop in real terms.

Consultation announced on merging national insurance and income tax – as the government will be running this consultation we can naturally assume that it will cost a fortune to set up and will run severely over budget with net recommendations that could have been garnered in 5 minutes from any small  business owner.


£250million fund for first time buyers under the shared equity scheme.  This is where the government provides 25% deposit on the purchase of a new home.  Based on the average house costing £250,000 and a 25% deposit being £62,500 that means that a whopping 4,000 (out of a possible 175,000 per month) people can look forward to benefitting from this scheme – that’s 2.23% of those looking to set up home for the first time across the entire nation.

When you consider that Suffolk council is spending £247million on training for their senior staff, this puts the scheme into perspective doesn’t it!

When will the government learn that the only significant change will be to reduce stamp duty which remains unchanged?


The Office for Budget Responsibility forecast growth of – 2.1% (2011); 2.6% (2012) and 2.9% thereafter.  Put this in perspective with the increase in RPI of 5.5% this year alone and you can see that the word “growth” should not be used but rather “gradual implosion” is more appropriate – and that’s on the optimistic side.


We like how the national debt forecast by the government is “to be 60% of national income this year before peaking at 71% and falling to 69% by the end of the spending review period”.  When we went to school, this meant a national debt forecast of 71% – no matter how you might spin it.

Let us not forget the £931billion (not including bank bailouts debt of £1.5trillion) debt that the country carried forward, the interest alone on which is nearly 20% of GDP (Gross National Product).

You don’t need one of the new government’s fake school certificates to see the implications of this over time; on the £931billion alone, every man, woman and child owes £14,800 or £32,000 for every person in employment.  Each household will pay £1,800 this year on interest alone.

UK plc is struggling to pay its mortgage, has maxed out its credit cards, has taken its kids out of private school, sold the new car and bought a banger and is now wondering whether to pay the utility bills or feed the kids and can’t afford a trip to the cinema while at the same time has picked an expensive fight with a bully in the middle east.  Where will it get the £1million a pop for all those missiles?


The government propose an extra 80,000 work experience placements over the next 2 years; remember that these are temporary placements and not sustainable jobs.  Quite where these placements will come from is not explained; with H&S and CRB requirements gone mad, the 80,000 small businesses who might offer these placements are looking closely at the costs and red-tape required and thinking “not worth the effort – where’s my support?”.

Personally, we are fed up with the maximum amount of funding being announced to a huge fanfare when in reality the total is spread over a number of years: the government yesterday announced funding for up to 50,000 additional apprentices over the next four years; we make that 12,500 nationally per year somewhat different from the peak of 118,000 per year under a previous Conservative government.

Funding for colleges is being cut back; the cost of University places is rising and there are very few people looking at “practical” courses because there are no manufacturing industries into which you can take such skills.

Charities offering opportunities for youth volunteering are closing their doors due to lack of funding and small businesses are suffocated by lack of funds and availability of investment where on earth does this government think this growth is going to occur (see Growth above).


To another huge fanfare, central funding will be made available to help councils repair potholes to the tune of £100million.  How terribly equitable when total car related taxes now exceed £50billion a year – that’s 0.2% on 250,000 miles of road or £400 per mile; so at an average of £40 per pothole repair (we’re being generous to allow for one permanent repair rather than the several temporary and grudging final repair the councils conduct) and judging by where we live, say 100 potholes per mile, that means councils are getting an extra £4 per pothole towards the £40 cost they already say they can’t afford – wow!

For anyone living in Berkshire, they could do with the entire £100million themselves as it seems to be the pothole capital of the UK.


A pay rise of £250 for armed forces, teachers, NHS, prisons and civil servants earning less than £21,000 – that’s another whopping 3.6% pay CUT when adjusted with the government’s own figures on inflation (see above).  So the £250 increase is actually worth £756 reduction in their annual salary and they can’t even stick it in their pipe and smoke it because tobacco has gone up.

We’ll be running our Lear Jet on Scotch as it’s now cheaper than fuel (and tastes better as well so I’m told).


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