Thursday, 24 March 2011

No pint of lager and not even a packet of crisps

After a Budget that saw council tax fall in most places, leaving many of us around 35p better off each year, I found myself musing on just what I could spend this windfall on.

Now I’d want to be sensible, of course. And would it be possible to be much more sensible than a loaf of bread? Well, a small, white Hovis loaf from Ocado or Tesco is currently retailing at 66p. So I’ll have to save a bit before I can make myself a butty.

A pint of milk is 45p. A 150g tin of baked beans (same sources as above) is 38p – so near, but yet so far! And a packet of crisps seems to start from well over that 35p mark.

In less of tweedy two-piece and sensible shoes mode, according to the Telegraph, the Budget has hiked cigarettes to around £7 a packet of 20: I’d be able to afford a whole one fag!

There’d be no chance of anything boozy to numb the pain though, but I’d only be a penny away from a 330ml can of D&G Old Jamaica ginger beer.

At least, at 32p for a second-class stamp, I'll be able to send someone a letter to tell them of my predicament.

You could be excused for asking, given what will have to be cut in order to fund this dramatic tax cut, was it really worth it?

In my neck of the London woods – Hackney: the second poorest borough in the country, apparently – the population is around 212,200, at a density of around 28,835 people per square mile. The council isn’t giving us this 35p bonus, but freezing council tax at present levels.

While this is happening and to help ensure that frontline services are not cut (no library closures, I’m pleased to discover), central government funding is still being slashed, so council tenants are to see inflation-busting rent increases of 6.1%, while leaseholders face a rise of an average of 5.1% in the fees they pay.

It’s difficult to see how either will help the economy to grow, since one will reduce the amount people have to spend, thus affecting local retailers – and retail has become so important to the national economy that quarterly retail figures are now a major news story – and the other will make trading more expensive, and will particularly hit small, independent businesses.

But this isn’t just the rambling of some old (middle-aged!) ‘leftie’: according to, the Budget “delivered good news for small businesses and lower-level workers” (unless the former get hit locally, as above, presumably), “but offers little hope for hospitality operators as a whole”.

That’s what Davis Coffer Lyons is saying, claiming that “measures to increase the basic rate tax threshold increases from £7,435 to £8,100 and extend the rate relief holiday for small businesses … is [sic] not enough to sustain the future of the industry”.

“The Budget offers little help to alleviate pressure on operators’ suffering and does little to kick-start consumer spending,” says Mark Sheehan, managing director of Coffer Corporate Leisure.

“Altogether, the net increase in income tax and national insurance against savings for many earners will hit consumer spending further. This is compounded with the recent VAT increase in December and the outstripping of wage increases by inflation – a hard combination to bear for operators.

“With 4-5% predicted inflation for the year above compared to 1.7% predicted growth in the economy, this further illustrates a very tough trading environment for the leisure and hospitality sector, which employs over 2 million people and adds £19 billion to the UK economy every year.

“Operators need more help than they are being offered in this budget to help lead the economy out of recession and creating local jobs at a time when national unemployment levels are so high. In provincial areas especially, the hospitality sector should be better supported in keeping jobs alive and therefore helping to sustain the economy.”

There was an interesting news report on the other night, looking (in part) at how French president Nicolas Sarkozy is having to back track on his ambitions of dragging that country into the sort of laissez faire economic state that has proved so damaging to the UK and US.

But that’s a subject for another day – although: fingers crossed.

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