Budget notes

It’s flattering and frightening that several people told me that they’re looking forward to my thoughts on the budget.  So here they are, in a crude and hastily scrawled brain dump.

The obvious item to shout about is fuel duty: a 1p cut now and a freeze on previously scheduled increases to help the poor hard-done-by motorist.  Fuel duty is not the problem.  Owning a car is a luxury and it shouldn’t be a problem that it is priced as a luxury.  The problem is that so many people feel they have no option but to buy fuel — that owning a car has become a necessity.  Over the past fifty years people have incrementally lost their railway lines and bus services, their village shops, banks, post offices and doctors’ surgeries; new sprawling housing estates have grown up without any of these services; and employment has moved to car-centric out-of-town developments.

In a recession people cope by giving up a few luxuries.  But this time they can’t give up the luxury of running a car because the alternative options have been taken away.

Fiddling with fuel duty is political pantomime.  Fuel prices are not a problem because they’re especially high — adjusted for inflation they’re not that high.  Fuel prices are a problem because we’re in a recession where people can’t afford luxuries like private motoring — but many find themselves with no alternatives to running a car.  Dropping a penny or two from fuel duty doesn’t change the fact that cars are unaffordable luxuries in recessions.  There is no single quick fix to the problem that we have built ourselves into, but it requires that the government starts putting money and effort into the multiple real solutions now.  The only thing that fiddling with fuel duty does do is send a message to motorists: you don’t need to do anything to change your behaviour or fix this problem; just keep whining and we’ll respond with more tax tweaks.

The chancellor is paying for the cuts in fuel duty with an increase in the levy on oil extraction: ultimately, therefore, the oil companies will be paying for it out of the increased profits that come with higher prices.  (Never mind that this clever scheme can only last as long as Britain’s oil fields, which are well past peak production and in decline.)  He calls the scheme a fuel price “stabiliser”, reinforcing the fantasy that one day oil will be cheap and abundant again: when oil falls back below $75 per barrel (it won’t), fuel duty will rise again, and the extraction levy fall.

Also in the budget there was fiddling with the tax-free mileage allowance for people who drive their own cars at work (rising from 40p to 45p per mile); and to the tax on company cars.  I don’t think there’s anything interesting to say about either — they’re minor tweaks.  There are no changes to the cycle to work (tax free bicycle benefit) scheme.  The budget does abolish tax deductible “cycle to work breakfasts”, as recommended by the Office for Tax Simplification.  I’d never heard of the benefit before and would have difficulty believing it had any importance.

Far more important than any of this headline grabbing tax fiddling, but barely talked about, is the fact that this budget steps beyond its traditional remit and strides into the field of planning law, kicking down many of the safeguards against bad planning that were introduced over the past twenty years.  To aid employment and economic recovery, the chancellor announced the introduction of “enterprise zones”: 21 areas in cities around the UK England where companies moving into the zone could benefit from tax breaks and a streamlined planning process that is weighted in favour of any proposed development.  When done well — with careful consideration of residential, retail, employment and transport needs — planned redevelopment can work excellently.  The Docklands are not a bad example.  But without that careful consideration and planning control, quick-profit companies will build edge-of-town low rise offices and big barn retail outlets in a sea of sprawling car parks — exactly the kind of bad development that helps drive the car-dependency problem.  At the exact moment when action to reverse poor planning is most needed, the government is dropping the guards against it.

The precise details of these zones have yet to be announced, so we don’t know how bad they will be.  The “West of England” zone could be an excellent mixed development of appropriate density with decent architecture and public spaces replacing the harbourside wastelands and scruffy industrial estates near Bristol Temple Meads station; more likely it will be barns and staff car parks amongst the motorways on the northern fringes.  The London zone could be a revived Battersea, but it might be a cloned Brent Cross.  The government has the power to put innovation and employment back into our city centres, where people don’t need to struggle to support a car.  But it also has the option to push existing businesses out into isolated industrial estate zones, sucking life out of cities, forcing people into cars, and moving congestion to the next level.  So far, the signs suggest the latter.

4 thoughts on “Budget notes”

  1. Agree with everything here. The budget fails to address the cause of our economic problems – the banks being able to punt, using our money, on speculative investments. It was sub-prime (which banrupted RBS and Lloyds TSB), then precious metals, and currently it’s oil and commodity prices.

    What is required is separation of the ‘vanilla’ banking functions – current and deposit accounts, funds transfers and consumer and commercial credit – from the trading operations. Then if a trading house failed it wouldn’t jeopardise the whole banking system and could be allowed to go under.

    The Bank of England’s action to print money has given the gamblers a second chance in the casino which is causing price inflation.

  2. How do we get politicians to understand that “The problem is that so many people feel they have no option but to buy fuel — that owning a car has become a necessity.” ? In an era where our politicians are only interested in style over substance, and are increasingly believing their own spin?

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