GEORGE Osborne’s Budget will take from the poor and give to the rich, according to economic heavyweights the Institute for Fiscal Studies.
In what was a savaging post- mortem of the Tory Chancellor’s Budget, the independent think-tank claimed wages were set to fall, living standards would sink, and that the headline grabbing, Irn-Bru-killing, sugar-tax could even be bad for the health of the nation.
There was, head of the IFS Paul Johnson said, a “disingenuousness” in the Budget when it came to taxes, and only a 50-50 chance of Osborne meeting his target to scrap the deficit and have the UK in surplus by 2020.
With forecasts predicting less productivity and poorer growth, Johnson said the British public should prepare for deeper spending cuts: “If there was another downgrade in fiscal forecasts of a similar magnitude and the Chancellor did wish to remain on course to deliver a Budget surplus in 2019-20, then this would surely require more real policy change.”
The IFS also rubbished Osborne’s claim in his autumn statement to have found a £27 billion windfall. They say the UK’s public finances are now £56bn weaker than expected over the next five years.
“The Chancellor made rather too much of the £27bn the OBR found down the back of the sofa in November,” Johnson said. “As I’ve said, that was a small change to forecasts and, being cumulated over several years, was not a useful number. What Mr Osborne didn’t tell us is that rather than finding £27bn, the OBR lost £56bn down that same sofa.”
This, he said, came largely from the OBR revising down assumptions about future productivity which, if right, would lead to lower wages and living standards, not just lower tax revenues for the Treasury.
The IFS also criticised the Chancellor for not raising fuel duty for the sixth year in a row, saying the low prices at the pumps would have been the best chance he had.
Johnson then said the Chancellor’s claim to have taken people out of tax by increasing the personal allowance to £11,500 was flat-out wrong.
“The Chancellor boasted the increase ‘means another 1.3 million of the lowest paid workers taken out of tax altogether’. No, it does not. Taken out of income tax, but not taken out of direct taxes on income. It remains the case National Insurance contributions start to be paid once earnings rise above about £8,000. Low-paid workers are not taken out of tax by raising the personal allowance.”
On the sugar-tax he claimed limiting it to soft drinks could be counter-intuitive, pushing people towards non-taxed sugary snacks: “Only around 17 per cent of added sugar consumed comes from soft drinks.
“Obviously the soft drinks tax won’t have any impact on the other 80-plus per cent of sugar consumption – indeed it might increase it.”
The think-tank also said the plan to cut CGT from 28 per cent to 20 per cent put Osborne as “very much a giveaway to the better off.”
There was also criticism for the chancellor’s pledge to help whisky exporters: “Mr Osborne linked freezing spirits duty to the importance of whisky exports. Duties are not paid on exports. This is rhetorical nonsense,” Johnson said.
Cuts will leave 40,000 disabled Scots poorer
AT least 40,000 disabled people in Scotland will be worse off because of George Osborne’s Budget, according to Nicola Sturgeon. The First Minister made the claim during question time in the Scottish Parliament yesterday.
In a bid to cut £4.4 billion from the welfare bill, the Chancellor announced changes to how Personal Independence Payments are calculated.
In their report yesterday, the IFS said 370,000 disabled people in the UK will lose an average of £3,500 a year because of the cuts. Answering a question from MSP Stuart MacMillan, Sturgeon detailed what impact the new calculations could have north of the Border.
“These changes to Personal Independence Payments are cruel on some of the most vulnerable people in our society,” she said.
“They are going to result in Scotland of around 40,000 disabled people being made worse off. And of that 40,000, two-thirds could be worse off by almost £3,000 per year. And the remainder could be worse off by almost £1,500 a year.”
She continued: “As power over disability benefits come to this parliament we will make sure we build a social security system that treats people, particularly our disabled people, with dignity and the respect that they deserve.”
The First Minister’s comments came as Osborne faced a growing backlash from his own MPs. Tory MP Andrew Percy said the changes were not something he could support and said they would have no support in the Commons: “Most colleagues are expressing similar concerns as the changes will impact disabled people, many of whom have considerable needs.”
One prominent disabled Tory activist Graeme Ellis resigned from the party saying Osborne was robbing from the vulnerable to pay for the rich.
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