Richard Exell
There is not much about social security and tax credits in today’s Budget Report – apart from a threat of much worse to come in one of the appendixes.
The most significant change has been on Child Benefit. The government is still going ahead with plans to levy extra income tax to take Child Benefit away from families that pay the higher rate; but instead of removing 100 per cent of the benefit once a taxpayer crosses the higher rate threshold they now plan to ‘taper’ it away for taxpayers with an income over £50,000. This is not an insignificant change, and the cost of the concession will peak at £390 million in 2013-14. It’s encouraging that the Chancellor felt he had to show he was responding to the widespread support for CB as a universal benefit; but the much more damaging policy of freezing Child Benefit till 2013 – 14 stays in place.
Compared with the previous two Budgets and the spending review, however, benefits and tax credits got off quite likely. In the Spending Review, for instance, welfare accounted for £18 billion of the £81 billion cuts.
But there was a menacing throwaway remark that should have sent a shiver up the backs of everyone who cares about poverty and inequality. Early in his speech the Chancellor announced:
But even with the Act, the welfare budget is set to rise to consume one third of all public spending.
If nothing is done to curb welfare bills further, then the full weight of the spending restraint will fall on departmental budgets.
The next Spending Review will have to confront this.So I am today publishing analysis that shows that if in the next Spending Review we maintain the same rate of reductions in departmental spending as we have done in this review, we would need to make savings in welfare of £10 billion by 2016.
Nigel Stanley
Sarah Jackson
Alison Garnham
Kathy Peach
Nicola Smith
