Ian Murray MP - April Newsletter

posted 8 Apr 2011, 13:16 by Alistar Frater
Welcome to my Parliamentary update for April 2011.

This is my first e-newsletter to constituents in Edinburgh South.  I thought I would concentrate on the budget and the effects of the budget as we enter the new financial year 2011/2012.


George Osborne’s second budget was delivered late last month but it is only when you read the small print that you find out what is really happening.   There wasn't a great deal that was new in the Budget, not surprising really since we had the emergency budget in June and the Comprehensive Spending Review in October. 

There are, of course, 2 viewpoints at the moment in politics.  We all know that the global financial crisis caused unprecedented pressure on the finances of the UK.  There is no doubt that there is a record budget deficit.  That deficit came about largely because the last Labour government decided to bail out the banks to protect people’s savings, homes, jobs and businesses.  The deficit must be greatly reduced.  The question is “How quickly?”

The Chancellor has set out a course of action that sees the deficit wiped out in 4 years.  I believe that this is too fast and too far.  A more gradual approach would allow protection for those least well off and keep enough public money in the economy to generate growth and more jobs.  At the moment, we are heading for a jobless and rocky recovery and I think there needs to be a reassessment of the Governments plans.  This was emphasised by a shock contraction in the economy of 0.5% in the 4th quarter of 2010.  At the General Election growth was 1.1% and unemployment was falling.

The Office of Budget Responsibility, which was set up with a big fanfare to provide independent figures and projections of the results of Government policy has predicted lower growth for 2011/12 than they were predicting in either June or October and higher unemployment.  This must be very uncomfortable reading for the Chancellor who delivered what he described as a “budget for growth” that had the effect of lower growth and increasing unemployment in every year of this cycle to 2014/2015. 

I believe you can’t have a proper economic recovery without jobs and the government have delivered a budget that doesn’t produce jobs.  Every 500,000 people out of work costs the tax payer around £4bn.

Combined with last June’s Budget it is clear that families up and down the country are facing a serious squeeze on their living standards, and I’m really worried that we could see at least another 200,000 people out of work. We’d all been hoping for better news and a plan for growth and jobs. 


But according to the latest unemployment figures, fifteen months after the recession ended, unemployment has hit a 17 year high and youth unemployment has hit the highest level ever.


The budget is hugely complicated but I would like to look at 3 other issues that after closer inspection are not really pieces of good news:

1.        The reduction of 1p in fuel paid for by an additional tax on the oil companies – I welcome the additional taxation on the increased profits of the oil companies in times where oil prices are high, however, the potential damage to jobs and development of the oil industry in Scotland is not a price worth paying for a 1p drop in fuel that most people will not see.  If we are to tax the oil companies we must use the resources for real benefit.

2.       The reduction in the Winter Fuel Allowance for pensioners was really hidden in the small print of the budget.  I grew up watching television news tally the number of pensioners who had died due to the cold weather.  With winters being particularly harsh in recent times and fuel prices continuing to rise the Winter Fuel Allowance, in my opinion, should not have been cut.

3.       The taxable allowance at the lower end has been increased to just over £8,000.  Whilst this is very welcome it is completely negated by a sleight of the Chancellors calculator as he has changed the uprating of taxable allowances from RPI (the higher index) to CPI. This almost wipes out any gain within 2 years.  Additionally, the increase in VAT to 20% in January costs the average family £450 per year, virtually x10 the allowance threshold benefit.

A raft of changes have just taken effect this week, including:

·         Cuts to the amount parents can claim on childcare – worth up to £1560 per year for families with two or more children

·         Child benefit frozen for three years – a cut in real terms of £75.40 this year for a family with three children

·         Baby element of the child tax credit scrapped – worth £545 per year

·         Benefits set on a permanently lower path of inflation – a real terms cut which means less generous benefits this year and every year going forward

·         Basic and 30 hour elements of the Working Tax Credit frozen – an overall loss of £391 a year by 2013 for some families

·         Second income threshold for family element of Child Tax Credit cut – fewer families eligible for tax credits

·         Withdrawal rates for tax credits increased to 41% – a loss of £400 a year for someone earning £26,420 and in receipt of tax credits

·         Tax threshold increases moved to the lower CPI from RPI – taxing you more over time.


I spoke in the budget debate and used the limited time to emphasise the concerns of residents of Edinburgh South being squeezed in terms of income.  The effects result in the largest reduction in comparable living standards since the 1920s.


You can read my budget speeches at:



Keep up to date with all I am doing at Westminster at www.theyworkforyou.com.  You can get an email every time I make a speech, ask a question or get involved in a debate.

Lastly, if you have any comments, suggestions or feedback on the e-newsletter or issues you wish to raise please do not hesitate to contact me.

Best wishes,