Budget

3.21.42pm BST (GMT +0100) Mon 28th Jun 2010

The Budget announced by George Osbourne last week received mixed reviews but has been generally accepted by the electorate, which broadly recognised the coalition government had no choice but to clear up the financial mess left by Labour.

Perhaps the most contentious item was the decision to raise VAT next year by 2.5%. Liberal Democrats did not campaign for such an increase but the structural deficit was much bigger on taking office than previously anticipated. In order to avoid the fate of the Greek and Spanish economies, therefore, it was necessary to fill the additional £12bn gap by either raising taxes or implementing yet more spending cuts. The coalition government chose the former.

The wealthiest 20% of families will pay on average over £500 a year in additional VAT; almost three times more than the poorest 20% of families. All current exemptions and reduced rates (food, children's clothes, domestic fuel, books) will be maintained for the full Parliament and the Government is committed to monitoring the impact of any changes that may arise in purchasing power.

The Budget, along with the Coalition Agreement, reflects many of the key policies Liberal Democrats campaigned for during the General Election. Tax changes on income tax, capital gains tax, the banks and increased tax credits for children and the poorest families were all featured in the manifesto.

The measures in the Budget are designed to ensure the burden of the deficit reduction programme is shared fairly by everyone. The Government is being honest with people about the difficult road ahead and is striving to deliver the kind of government the country wants and needs. Increasing membership numbers suggest most Liberal Democrats support the leadership in its efforts to build a fairer Britain and I do not think they will be disappointed.