Richard Exell
The Budget increased Value Added Tax, which will hit the poorest hardest, and gave no promises about protecting the poorest families from the effects of this change.
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Richard Exell
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Janet Williamson
The Chancellor claimed that his budget was ‘progressive’, which would probably be a surprise to those who might justifiably expect to benefit from any usual definition of progressive measures. He also claimed it would boost the prospects for economic growth. How do the corporation tax cuts fare judged by these claims?
The headline policy on corporation tax is the reduction of the main rate from 28% to 24% over the next four years. The Budget does not claim that this will have any impact on growth, but does boast that it ‘will give the UK the lowest rate of corporation tax in the G7’. Is this really a top priority at a time when the Government is trying to save billions of pounds and is cutting the benefits paid to protect the health of pregnant women?
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Nicola Smith
Today’s Budget contains some severe cuts in Housing Benefit. The Budget reveals that from October 2011 Local Housing Allowance (LHA) will be set at 30 per cent of local rents. It is currently set at the median of local rents. This means that in any given area the amount available to pay for housing for eligible claimants will fall significantly.
Shelter in Scotland have said:
This is at a time when nearly half of LHA claimants are already making up a shortfall of almost £100 a month to meet their rent. By ripping out this support from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.
Further changes are also proposed.
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Nicola Smith
Today’s Budget included the announcement that the Savings Gateway, due to be introduced next month, has been cut. This progressive scheme aimed to support people of working age on lower incomes. The Government would have added 50 pence for each £1 saved into Saving Gateway accounts.
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Richard Exell
A seemingly technical change to the way benefit increases are worked out in today’s budget will short-change hundreds of thousands of people on benefits over the coming years.
The Chancellor announced that, from April 2011, the Government will change the measure it uses when uprating benefits (and public service pensions) – switching to the Consumer Price Index, (CPI).
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Nigel Stanley
We don’t alway agree with the CIPD, but there’s some strong words from their chief economist – and labour market expert – John Philpott today:
“The Chancellor has introduced what must surely rank as the most astonishing UK budget statement in modern times. Mr Osborne’s combination of £32 billion additional spending cuts by 2014-15 and an £8 billion net tax hike amounts to an unprecedented fiscal squeeze, including an extremely severe clampdown on the welfare bill. Yet both he and the independent Office for Budget Responsibility (OBR) reckon there is a greater than evens chance that the government will meet what the Chancellor calls its ‘fiscal mandate’ with barely any serious short-term impact on economic growth and employment.
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Nigel Stanley
The Chancellor deserves some credit for going ahead with a unilateral levy on UK banks. This may well have helped encourage the French and German governments to take similar measures today.
It should not be forgotten that Labour spent the election campaign rubbishing a unilateral bank tax, as part of their quixotic campaign for the business vote.
But what has emerged today is very modest.
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Richard Murphy
So, the Lib Dems got their sop capital gains tax increase. And George Osborne got the last word. The capital gains tax rate for those on higher rates of tax has been increased to 28% – but not to be in line with income tax rates. That, Nick Clegg will hope, may be enough to keep his backbenchers in line.
But at the same time there was no reduction in the annual allowance for the tax – which at over £10,000 per annum is far more generous than that for income tax, especially as it is, in effect, completely transferable between married couples and civil partners. And entrepreneurs – the funders of the Conservative party – get a massively increased exemption so they can make £5 million during their lifetimes and pay this tax at only 10% on it.
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Philip Pearson
The coalition manifesto promised: “a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy”. But the coalition’s first Budget offered little more than a passing reference to the Green Investment Bank, future reforms to the price of CO2 and a renewed promise on energy efficiency.
No green “full programme of measures” emerges, instead we get old style, big picture macro-economics. A 4% cut in corporation tax over this Parliament, reversal of NIC increases, and a regional growth fund for new business from next April, that “will help provide a stable economic foundation for private sector growth”.
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Nicola Smith
Today’s Budget set out how the poorest pregnant women and families with very young children will see their incomes fall.
- The Sure Start Maternity Grant will, from April 2011, only be available for the first child in a family. This is a cut of £500 for low income pregnant mothers.
- The Health in Pregnancy Grant has been abolished – this was a universal grant of £190 available to all mothers to promote child and maternal health and engagement with health services.
- The Baby Element to Tax Credits has been cut. This is an additional payment of up to £545 a year for families in receipt of Tax Credits with a child aged under one.
In addition, the previous Government’s introduction of a new Tax Credit for low income families will not go ahead. This Toddler Tax Credit would have provided an extra £4 a week for families with children aged one or two. This is essentially a further cut of £208 .