James Plunkett

Yesterday’s budget had been pre-billed as a boost to living standards, and in particular as targeting the ‘squeezed middle’.  Of course, for most in the group this was always going to be small beer in comparison to the impacts from last year’s Spending Review and emergency budget.  But overall, did yesterday bring good or bad news for low-to-middle earners?

Much of the bad news for the group came from the Chancellor’s failure to offer any relief to those about to be a hit by a multi-billion pound grab on tax credits.  One of the biggest worries is that the Government didn’t change course on plans to cut childcare support which will see half a million working parents lose £440 from April.  Our recent survey with Netmums says one in five working mothers affected may have to give up work.  It’s the kind of cut you’d only want to make in the most desperate of circumstances, and it looks even stranger now that the Chancellor has found £1bn for a £48 tax-cut to everyone in Britain earning between £8,000 and £100,000.

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Richard Exell

The Budget Report includes a section on the impact of tax increases, cuts to services  and benefits and it points out that the richest will lose more than everyone else. What it doesn’t point out is that the government’s policies mean that, in the long-term, the reverse will be true.

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Nicola Smith

No news yesterday on the last ‘pro-growth’ measure that the Chancellor announced in his June Budget: a national insurance holiday for business start ups. As Richard wrote at the time, evidence from the past suggested that it’s impacts would be minimal and in February we learnt that take up was extremely low. Yesterday, despite calls for the scheme to be extended, no more news was available on its progress.

At a projected cost of around £320 million a year the funding allocated to this initiative is significant – it is, for example, 16 times more than the Chancellor saw fit to spend on young unemployed people yesterday. But it seems that it isn’t working – and that it may well prove to be a telling example of the limited impacts that such micro measures, even with relatively high levels of funds, can have in the face of severe spending cuts and depressed demand.

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Nicola Smith

Despite David Cameron’s claim that the Budget would be the most pro-growth for a generation, the OBR have a less positive view. As well as downgrading growth for 2011 (for the second time since the election – their November forecast also cut 0.2 points off projected GDP)  their forecast states that:

We do not believe there is sufficiently strong evidence to justify changing our trend growth assumption in light of policy measures announced in Budget 2011.

It seems that Enterprise Zones aren’t going to save the UK  economy.

It’s also interesting that while the forecast does not include the impact of the increased corporation tax cut (the OBR were not notified in enough time), they do feel able to state that they believe any second round effects it will have on the economy will be ‘minimal’.

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Bryn Davies

The Budget promises us that there will “shortly” be a green paper on a “simple, contributory, flat-rate” state pension that is above the level of the means-tested Guarantee Credit. The appearance of the green paper has been rumoured for some months but this the first confirmed sighting, with the Chancellor suggesting that such a pension would be around £140 per week. We obviously need to wait for the green paper to see what is being proposed but the statement in the Budget Report that any changes would be “designed so as not to increase public spending dedicated to state pensions” means that we should not get our hopes up high. In particular, it is clear that the proposed changes will only apply to future retirees, which means it will do nothing for the millions of current pensioners who are already in poverty. And the only reason why even this limited measure will work is that the majority of new pensioners already get at least £140 per week from their state pension, simply because most have build up a second earnings-related pension since 1978 on top of the basic pension. In other words, the Government’s plans are only feasible because of the changes to state pensions that Barbara Castle and the Labour government introduced more than 30 years ago.

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Iain Murray

One of the few positives in the Budget was the announcement that there is going to be additional funding to boost the number of apprenticeships.  An extra £180M has been allocated “for up to 50,000 additional apprenticeship places over the next four years”. Forty thousand of these opportunities will be focused on young people not in employment, education or training (NEETs) with an expectation that many of them will access an apprenticeship by progressing from the expanded work experience programme. The remaining 10,000 new opportunities are for higher level apprenticeships in SMEs.

Welcome as it is, the further boost to apprenticeships will have relatively little impact on the escalating rate of youth unemployment.  According to Anne Marie Carrie, Barnardo’s Chief Executive, “40,000 apprenticeships are a drop in the ocean [and] the government’s growth budget has left the most disadvantaged young people in the shade”.  There will also undoubtedly be question marks about the willingness of employers to recruit NEETs as apprentices and whether the work experience programme will provide the necessary support and training that such young people will require to prepare them for an apprenticeship.

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• Biggest three year fall in household incomes since early 1990s
  Research by the Institute for Fiscal Studies estimates that in the three years from 2008 to 2011 real household incomes fell by 1.6%, or £360 a year. Households are likely to be about 6% worse off than they might have expected had incomes risen in the normal way.
• Third Sector can’t fill gaps left by the state, says Institute of Fundraising
  The Institute of Fundraising says cuts to the voluntary sector 'threaten to derail the big society before it has even got off the ground.'
• The Hardest Hit in the Cuts
  The Hardest Hit is website about the cuts in disability benefits. It has some stories from disabled people and their families and key actions for individuals to take.

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Richard Exell

This country has an unemployment crisis and the position for young unemployed people is particularly bleak. Yet today’s Budget did next to nothing to address this problem. I have a post over at Left Foot Forward, looking at what little there is and contrasting it with last government’s programmes, which the coalition scrapped almost immediately after the election.

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Philip Pearson

 Alongside, the Budget, the Treasury has published a plan for growth combing some things new – pricing carbon at £30 a tonne and funding carbon capture from general taxation – and some recycled ideas. As Tim has blogged on these pages, there are aspects to today’s Plan for Growth that the TUC can and should welcome. The Green Economy Council is rightly seen as a key initiative. And we look forward to the Roadmap to a Green Economy signalled (again) in the plan for growth. But is there enough green policy here to make a plan out if it? 

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Janet Williamson

Despite the banking sector’s major contribution to the financial crisis that has provided the context for the last four Budget Days, the banks were barely mentioned by George Osborne in his budget speech. And the Budget itself devotes just six paragraphs of its 104 pages to the banking sector, in which it basically repeats what has already been agreed under the so-called ‘Project Merlin’.

There is no mention of plans for Northern Rock or the other state-owned banks, and the opportunity to provide some flesh on the bones of Project Merlin has not been taken, perhaps because there is none to be provided.

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