UK Budget 2015 Analysis: Apart from his “baby tax” Chancellor of Exchequer commits to NATO recommended defence spend of 2% of GDP

by | Jul 8, 2015 | History, Military space, Satellites, Seradata News | 0 comments

The UK’s finance minister, Chancellor of the Exchequer, George Osborne, effectively stole the clothes of some of his own side’s critics in the Conservative Party and those in UKIP by reiterating a commitment to bring UK Defence spending up to the NATO recommendation of 2% of GDP.  While there is a bit of chicanery here – some of the new money is actually going to the Security Service (MI5) and to the Secret Intelligence Service (MI6) – this welcome rise will likely bring benefits to the UK space industry, not least because the Ministry of Defence will have now have the funds to replace the current Skynet satellite communications system.

Having said that, the principle beneficiary of this move is likely to be the US aerospace firm, Boeing, whose P-8 Poseidon maritime patrol jet aircraft is now likely to be ordered as a replacement for the Nimrod.  The British-built Nimrod maritime patrol aircraft fleet was scrapped during previous defence cuts – not wisely mothballed – but actually cut to pieces. And this was after £4 billion had, even more foolishly, just been spent on re-engining and upgrading the fleet.

It was not Ministry of Defence’s (MOD’s), nor the UK Treasury’s finest hour, to say the least, especially after it was realised that the Nimrod’s demise has now left a major gap in UK defences, especially against submarines. The UK MOD also belatedly accepts that instead of needlessly blowing four billion quid on trying to upgrade an old aircraft, the more modern Boeing offering should have been chosen for procurement in the first place.

In fact, there is a precedent to this whole sorry saga, and one that also involved Nimrod.  While Nimrod was an excellent maritime patrol aircraft in its day, £1 billion was also wasted on it in a failed attempt to turn Nimrod into an Airborne Early Warning (AEW) radar control aircraft.  In the end, the Boeing E-3 Sentry aircraft was purchased for the RAF, as it should have been in the first place.

The budget, announced on 8 July 2015, was not good news for the insurance industry or anyone in the UK wanting to insure their car, house, boat, plane etc.  Insurance Premium Tax (IPT) is going up from 6 to 9.5%. Mind you, UK-based satellite operators cannot moan as they became exempt from most space insurance IPT last year.

It was not just those wanting to insure their stuff on Earth that the budget had hits for. As part of a general policy of cutting taxes and raising minimum “living” wages, but also cutting benefits across the board, those poorer couples planning large broods got a warning that they should get a move on. This is because having more than two children after April 2017 will not yield families any more tax credits or benefits.  No doubt the UK Government’s opposition will dub Osborne’s not-quite-King-Herod-like move as a “baby tax”.  Mind you, perhaps George (nee Gideon) Osborne is not all bad…apparently triplets get a by.

If they get old enough, apart from fretting about the ongoing (lack of affordable) housing crisis, these young babes will still have their pensions to worry about.  After the dramatic change in last year’s budget which freed UK pension savers from having to buy poor value annuities from their admittedly greedy overcharging pension companies, Osborne’s announced Green Paper on pensions (a bid to cut tax relief on pensions and also let the Treasury get its hands on the savings) might now want to consider how to stop pensioners spending all their pension savings at once.

A better idea would have been for the State to offer better value (possibly tax-free?) annuities in the first place as they do in Sweden.  This would allow the government and its Treasury to get its hands on the massive piles of saved pension cash in return for these annuities.  There would, of course, have to be cast-iron guarantees that future governments will honour these annuities, no matter how unhealthy the state finances are at the time.  You never know, perhaps they could use this money to fund a proper UK space programme?

There is, of course, another downside to state-run annuities: it might encourage the government to set up state-run euthanasia farms for the elderly. Gulp! Always assuming that NHS has not already done this!

Ah well.  Who said it was easy to be young? Or old? Or for that matter, a finance minister?

Still, at least George Osborne is probably grateful that he is not a Greek one. 🙂

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