Budget 2015: to those that have, shall be given more...

I was dwelling on some of the more dramatic elements of the Budget, and found myself drawn to the introduction of a Personal Savings Allowance, to be introduced from April next year. Under the proposals, anyone receiving interest on their savings will be exempted from income tax on the first £1,000 of any interest received. Now, given that interest rates on savings accounts are, at best, around the 1% mark, you would need to have £100,000 in savings to get the maximum benefit from it.

However, how many people have that level of savings? Indeed, how many households have savings of even as much as £1,000? According to research carried out by HSBC published in late 2013, 25% of households had no savings at all, and another 10% had £250 or less, and those figures are unlikely to have changed significantly since then.

In addition, savers already have a tax-free vehicle for their cash savings, one that has been made highly flexible by recent reforms, the Individual Savings Account, or ISA. Most savers have taken the opportunity to use ISAs to shelter their savings from income tax already - why wouldn't you? So, what George Osborne has done is to offer a tax break to those who, in all honesty, probably have quite a lot of liquid cash. And do such people really need even more incentive to save?

Don't get me wrong, the creation of a savings culture is undoubtedly a good thing. Financial resilience is one of the core requisites for stable families and communities - the impact of relatively minor financial shocks in poorer households is dramatic and frightening - but for those struggling to meet their day to day living expenses, the idea of building savings is just a pipe dream.

It would have been nice if we could have found funds to provide financial advice to those who are struggling instead. Baroness Jenkin took rather a lot of stick for suggesting that some of those who currently struggle might improve matters by better use of the food they buy - she was right in some ways, but clumsy in her language. People today, myself included, have less experience of reusing leftovers but, whilst he comfortably-off can afford the waste, the poor can't.

Poor people pay more for their energy, reliant as they often are on meters for electricity and gas, they pay higher bank charges by running overdrafts or living in areas where the banks have withdrawn free cash machines (poor people really aren't that profitable for banks, they argue), they aren't able to take advantage of bulk purchases in the same way that the relatively well-off can.

Helping the poor, the vulnerable and the unlucky to make better use of their limited resources would help them in terms of financial resilience, and perhaps make it more likely that they could build up even a small reserve for a rainy day. After all, most people don't want to be poor, they don't want to be dependent.

As a Liberal Democrat, I don't want people to be enslaved by poverty. I also suspect that giving a bonus to relatively well-off people at a time when the nation is still running a significant deficit is not necessarily the best use of our national wealth...

A budget for whom, exactly?

Given my interest in matters financial, I was listening to the Budget Statement whilst wrangling a technical problem with my computer (I won in the end, thanks to a colleague). And, in terms of rhetoric, it was an interesting forty-five minutes or so. Lots of references to the Leader of the Opposition and his kitchen, his family issues, his personal tax affairs - anything to wind him up, although you would need to be either inside, or a keen observer of, the Westminster bubble to have gotten all of the jokes.

And, there is little doubt that some of the measures are probably a 'good thing'. Continued efforts to take more of the 'working poor' out of income tax should be applauded, although as the noble Lord Greaves of Pendle rightly pointed out two years ago, we're not actually doing that much now for those who were taken out of income tax by earlier increases in the personal allowance. We could, and should, have addressed the threshold for National Insurance Contributions - swapping the threshold per discrete job for a higher overall threshold, perhaps? - and the logic of subsidising low wage employers by giving their staff tax credits to make up the gap between subsisting and living.

It does strike me as perverse to allow such a obfuscation of the cost of employing people to do tasks. I require, for example, someone to stack the shelves of a supermarket so that I can find the things I want to buy. The price I pay for an item is therefore not the entire cost if I am paying taxes to subsidise the shelf-stacker's salary. Perhaps it would be better if I paid more for the item in the first place, therefore gaining a clearer understanding of the actual cost of my purchase.

And, of course, we need to address the issues surrounding those who want to work but can't, for whatever reason. At the moment, we seem to be happy to allow those in receipt of benefits to run the gauntlet of a system of sanctions for failures that may, or may not, be deliberate. Stuff happens, buses run late or are cancelled, meetings are missed because of ill-health or conflicting demands of childcare or personal crisis, and the system of sanctions kicks in without consideration of the impact.

Don't get me wrong, there should be a sanctions regime in place, but it needs to be considerate of its impact on individuals, not punitive and impersonal. We are, after all, trying to help bring people back into the productive economy, not driving them towards hunger and despair.

And, with Labour offering merely more pressure on benefit claimants, which undoubtedly means more sanctions (and please don't patronise me by trying to explain how you can be tougher on benefits without being more intrusive and more draconian), there is a space in British politics for anyone wanting to explore how you can focus DWP compliance and investigation work so as to enable those genuinely wanting to do their bit to focus on seeking work, and those who are playing the system to be tackled. That should be the Liberal Democrats, but if at present it is, we need to be more vocal in making the case.