Published: October 29, 2018Will it really make a difference to you?
I write this blog post on the morning of the Autumn 2018 Budget in the UK before anything has been announced. But I reckon the information will be timeless, no matter which party’s in charge.
Each year in the UK we have the Autumn Budget of the British Government. I expect other countries have the same system, maybe at a different time, but it works the same.
In the budget, the public is informed about the annual spending plan for the year ahead based on revenues gathered by the government during the previous year.
The Inevitable Reaction
Every year I seem to go through the same process.
- Start watching it on TV.
- Get bored.
- Wait for the reaction and see people getting very upset on social media.
Inevitably when it’s a Conservative Government the left-wing press make nearly everything out to be negative and say that the budget shows signs of terrible things in the year ahead. The right-wing press makes out like it’s a fantastic budget and focus on areas where people are getting tax cuts or there are increases in spending.
Of course when Labour are in charged things flip-flop and the papers that don’t support them make every budget out to be terrible. One thing the mainstream newspapers generally are is incredibly predictable!
That means reading them isn’t much use. You can garner a bit of information from them. But their bias will be heavily present.
Here’s the thing
Every year you see so many people getting upset about the budget. Social media always kicks off. People always complain because some areas of society will be “losers” in the budget, while others “winners”.
My favourite phrase I hear people say is, “they give with one hand and take with the other.”
But here’s the thing. What the hell do people expect?
Do you genuinely think they’re going to give tax cuts and increase spending on everything every year? Obviously not!
In a democracy, it’s all a juggling act. It’s always about compromise.
Realistically the only way everybody could be “winners” in an annual Budget is if the Government massively raised taxes the year before and had a load more cash to play with. And in that case, everybody would have been going crazy the year before due to massive tax increases.
So whatever you do, try not to get wound up too much if you’re in the “losers” category this year. You may well be in the “winners” category next year.
The British public are a funny bunch overall, of course, I’m part of the British public! To be honest I imagine it’s similar around the world. Politicians are in an unwinnable situation.
- Raise taxes and people complain saying that’ll be less money in everybody’s pockets.
- Lower taxes and people complain when public services like policing and health care start to struggle.
- Use debt to raise money and people complain about the national debt.
- Cut debt by cutting costs and people complain about public services.
It’s a no-win situation! No matter what people say about politicians. In a democracy people always complain with a very loud mouth about huge amounts of things.
Bear in mind there’s been a Conservative Government in charge since 2010. During that time they’ve been trying to give lots of tax cuts and also reduce the national debt. Funnily enough, I write this in October 2018 and the national debt continues to rise, and public services are also struggling. Who’d have thought it! Huge amounts of people complain about the Conservatives and yet they’re the most popular party (as per the last election in June 2017 when they won the most seats). Go figure!
A good way to approach things and what to remember
Inevitably in any budget, there are so-called “winners” and “losers”. For example, the state pension may get a generous increase and pensioners are heralded as “winners”. But petrol and car tax go up and motorists are branded “losers”.
Let’s quickly mention the political side of things. And then the personal finance side of things.
This obviously isn’t a politics blog but from a political point of view it’s best to always remember there’s more at play than just your money. There’s your vote at the polling station.
The Budget is used to try and please certain voters across the country. Here’s a good example of when George Osborne was the money man. I actually laughed out loud in one Budget when he announced the “church roof fund” of £15 million to fix leaky churches. In the grand scheme of a budget where most things talked about are mentioned in billions, or hundreds of millions, yet funnily enough, he felt the need to smugly mention church roofs. It gave him the opportunity to appeal to churchgoers and make a joke to Labour at the same time. It was purely a political tactic.
In every detail, you see about the budget you have to try and think how much of it’s for the genuine good of the country and how much of it’s just for good headlines in the newspapers and to appeal to certain voters in the short-term. Obviously, sometimes there are things for the good of the country and also to appeal to floating voters.
The only reason I say that is because when it comes to personal finances you don’t want to think, “This is great because the last couple of budgets I’ve been a winner. Therefore I’ll go out and vote Conservative again.” Yet you may only think you’re a winner because of the headlines they’ve grabbed.
My pet hate is when they brag about the price of a pint getting cheaper by cutting tax. I’d rather pay an extra 5p per pint but know that when I get ill there’ll actually be a hospital bed for me! Cutting the price of beer is purely a headline grabber.
Does good in the short-term mean good in the long-term?
You have to remember that during the process of the Budget being announced and written about, the press always cherry-picks their statistics and sometimes choose to conveniently ignore the bigger picture.
What you think may be good for your personal finances and make you more inclined to vote for that party, in actual fact, they may well screw over the rest of the country. So your personal finances have been a little bit better but you get ill and die in the hospital when you really wouldn’t have if the NHS had more cash.
I hope that makes sense. Just because something positively affects your personal finances in the short term. Doesn’t always mean it’s a good thing for you in the bigger picture of overall life. Likewise, the Budget may have changes that are bad for your finances in the short term but better for you in the long term because you’ll enjoy living in a better country.
Adapting to each Budget
If you leave the politics aside and find a way to not let it influence you as a voter, then you can use it purely from a financial point of view.
For example, if motoring’s going to get more expensive. Look into reducing how many miles you drive.
If there are big new subsidies for a type of renewal energy. Jump on board that while it’s most cost-effective to do so.
If the government announce you’re able to now save more in an ISA. Make an effort to save more cash.
Use whatever sources you want to find the meaty details of each budget. I prefer the BBC because of how they present the information about the changes to the budget. Use whatever you want, just be aware of the bias and the headline-grabbing. Then go through everything properly and see how it affects you.
If it’s bad then don’t just let it be negative for you and moan on social media. Think about what you can do to avoid the extra costs. If it’s something like a tax raise then unfortunately you may have little wiggle room.
If they announce good things for you then that’s awesome. Extra cash in the pocket! But remember to avoid the traps of thinking that means you should vote for them.