This may of course, merely be an impression I have, but throughout my adult life, the annual Budget statement from the Chancellor (whomsoever it may be and from either party) tends to pass me by. As do the pages and pages of newsprint expended in the days afterwards, explaining what it all means. Most of it is, to my uneducated ears, financial gobbledegook, and talk of ‘billions’ for this, and ‘billions’ for that, nothing more than disingenuous telephone numbers with a monetary slant.
I suspect I am not alone in this; how many ordinary people, from all walks of life and across the UK, can really grasp the sums of cash so easily sliding off the tongue of the incumbent, the man responsible for (the bottom line) what we pay to stay alive?
I notice the effect only when the price I have to pay for anything goes up, which everything does immediately after the Budget statement. This of course, leads to one instant question: why is it that no Chancellor in living memory has ever caused prices to go down rather than in the other direction? The cost of buying any particular something may stay the same, at least for a time, but otherwise, the inexorable rise of what ordinary people must pay for ordinary items carries on dizzily spiralling.
Going back to that newspaper coverage, depending on which party is in Government at the time, some often describe the Budget as a good one, how helpful it is, while those on the opposite side of the political spectrum tell people how awful it is and how ordinary folk have been disadvantaged by it.
So what’s it for? Does it have any real purpose, other than a little grandstanding for the Chancellor? Let’s face it, the man holding one of the great offices of state (and it has only ever been a man) is rarely seen at the despatch box in the House of Commons. Only when making his Budget statement does the Chancellor get to hold court over all. Yet it is the one office of state that has the most daily influence on the everyday lives of those who elect people to be Members of Parliament, from whom those holders of great offices must come.
Put simply, the annual Budget is the Chancellor’s plan on how to spend taxpayer’s money.
And that’s it - just how he wants to spend the cash that the Government takes from you.
There is a much deeper purpose of course, and it is the same purpose that everybody has, and, to one degree or another, something that we all have to look at, a purpose to plan for and then follow. Again put simply, it is how to make ends meet.
Once more in simple terms (as a simple person I find things easier that way) all of us need to look at how much money we have coming in, from where, how long that income will come in for and thus how much of that money we can spend, on what, when, and whether or not we can spend less on something and perhaps even put some by so we have some savings.
The amount we have coming in is never what we get paid however. The ‘gross’ pay, that which we see in job adverts, and officially what we are paid for doing our job, is not what will be in our bank accounts. That’s our ‘net’ pay, what is left after the Chancellor has taken his whack of our hard-earned, primarily in income tax and national insurance deductions.
As a slight aside, if you are ever in the fortunate position of being able to negotiate how much your employer is going to pay you, always discuss net, never gross. You might be delighted with a gross figure but once what the Treasury, via Her Majesty’s Revenue and Customs, takes out of your gross pay, what is left is often a little disappointing. I’m always a little bemused by the way in which Trade Unions go about their discussions over pay; the figure talked about is a percentage, not what people will actually get. Big smiles of victory from Trades Union leaders over the percentage they have successfully got for their members has often been something like £3 or £4 (or less) in the pay packet.
For the Chancellor however, it’s a little different. The Chancellor doesn’t have to negotiate with anybody (except other Ministers of State, who always demand more for their departments) and he knows that your tax and NI isn’t going to change what he gets from you. Only the Chancellor himself decides how much tax he is going to grab, so he knows fine well how much he will get from the UK’s citizens. But tax and NI doesn’t cover all the money available to him. The rest comes from anything the state owns that accrues an income and what he can borrow.
That borrowing – UK Plc is just like you; you may have an overdraft with your bank, you might even have a loan on top of that and although an overdraft usually doesn’t have a specific time limit on it and thus doesn’t have to be paid back by a certain time (as long as you stay within it), your loan does. Once you have paid enough of it back however, and your income allows it, you can get another loan, pay off what’s left of the first, and have more cash to spend on something. Just like the Chancellor.
In other words, with your ongoing overdraft and a new loan replacing the existing one, you are continually spending more than you are earning. Just like the Chancellor.
Running one’s own personal finances like this, as many do and sometimes have to, is often criticised by the Government (both Labour and Tory) and continual exhortations for ordinary people to ‘save more’ tends to sound a little annoying when pay either doesn’t actually cover the cost of living (hence our overdrafts and loans) or is such that most people get by with a little leeway – just - regarding their personal finances. Most people are not rich however, and for most, the talk of ‘billions’ being spent on whatever gets the best headlines means nothing.
The bottom line once more, is that the Chancellor has to spend what the UK earns, rather than what looks good in the newspapers. And it means creating a budget that allows people to have a home, with warmth in winter, light when it gets dark, have enough food, to clothe themselves and put shoes on their feet. It means getting the cost of staying alive down.
You can read more on daily life in the UK today in ‘Comments of a Common Man’ now on offer at only £9.99 from Amazon.
© Kevan James 2018