Philip Pearson

The cut in corporation tax is a multi-million missed opportunity to target investment in low carbon growth industries.

Business leaders may have welcomed the cut in corporation tax from 28% to 24% by 2014. They say it delivers a message that “Britain is open for business.” But spread indiscriminately across the whole private sector, including banks, what chance is there that the £1.6bn tax cut over the next two years will be used to tackle the recession now and stimulate new green jobs and skills?

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Nicola Smith

The detailed budget documents reveal some of the policy assumptions behind the Government’s spending estimates. With respect to Disability Living Allowance, the policy costings document reveals that the £1.075 billion reduction in DLA costs (2014/15) is intended to come from:

a 20 per cent reduction in caseload and expenditure once fully rolled out.

The document also states that all claimants will be required to undertake a new disability test every three years.

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Bryn Davies

Understanding the difference between an arithmetic mean and a geometric mean might sound like something that can be left to statisticians. But now, because of a change proposed in the Budget, it has become crucially important to the great majority of current and prospective pensioners. The difference means that they are all going to be worse off in their retirement.

The change is the Government’s proposal to adopt the CPI rather than the RPI for the indexation of benefits, tax credits and public service pensions from April 2011. So the change directly affects every current or future pensioner who is entitled to a State Second Pension (previously SERPS) or to a pension from a public service pension – that means almost everyone who has ever been employed.

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Philip Pearson

The Chancellor announced a levy on banks’ balance sheets “to ensure our banks make a fair contribution to reflect the risks they pose.”

But the cut in corporation tax from 28% to 24% by 2014 is expected to negate the impact of the levy on bank profitability. Banks could be better off as a result of as a result of tax changes announced in the Budget.

Headlined as raising £2 billion, in fact the levy is set at the low rate of 0.04% initially, rising to 0.07%. In truth, the levy on balance sheets will not reach £2 billion until 2012.

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Nicola Smith

Direct Gov has published an analysis of post-Budget benefit changes. It reports that:

If you’ve been claiming Jobseekers Allowance for more than 12 months your benefit will be reduced to 90%.

Yesterday’s budget announced that people on JSA who have been on Housing Benefit for 12 months will have their Housing Benefit reduced (which Direct Gov notes). However, there was no mention in the Budget documents of a JSA reduction for people facing long-term unemployment. Is this an error or an early announcement?

UPDATE: Direct Gov have confirmed that this is wrong – and are correcting their site.

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Owen Tudor

The ITUC World Congress has seen universal trade union support for the idea of financial transaction taxes. So it was good news that IMF head Dominique Strauss-Kahn confirmed that despite the IMF backing an alternative, no decisions had yet been made.

IMF head Dominique Strauss-Kahn addressed the World Congress in Vancouver this week and spoke of the global trade union movement’s support for a financial transactions tax (FTT). Noting that the IMF had expressed its preference for a different kind of financial activities tax based on profit and compensation, he agreed with the ITUC that a substantial contribution from the financial sector is justified to pay for the cost of the crisis and to dampen overly risky behaviour in the financial sector. He stated that the specific choice between the FTT and another type of tax is “a technical discussion” that needed to take place.

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Nigel Stanley

Public sector pensioners have been told that their accrued benefits are safe and therefore would not come under attack in any restructuring of public sector pensions. 

Yet hidden away in the small print of the budget is the news that in future public service pensions in payment will be linked to CPI rather than RPI. Richard and I blogged about what this means yesterday. (And thanks to commenter Paul for pointing this out – and apologies for first being sceptical). 

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Adam Lent

The IFS Budget analysis concludes that, contrary to George Osborne’s claim, this was not a Budget that protected the poorest.  It also concludes that the evidence for progressivity presented in the Budget was misleading because it only looks at reforms planned to 2012-13. 

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Nigel Stanley

Ministers are shortly to announce the terms of their review of the 2012 pensions settlement. I am one of the consumer representatives who have signed a letter to ministers warning that this could seriously damage a hard-won consensus for change.

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Nicola Smith

IFS’s budget analysis suggests we are facing the “longest and deepest sustained cuts to spending on public services since at least WW2″. The presentation can be downloaded here, with more details on their main site.

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