Tuesday, June 22, 2010

The Budget at a glance

The unavoidable budget, says Osborne

"I am not going to hide hard truths from the British people."

"Everyone will share in rewards when we succeed - we really are all in this together."

Structural deficit should be in balance by 2015/16.

There will be a fixed target for debt to fall as proportion of GDP by 2015-16.

Not sure I understand why it has to go down quite so quickly.

"False choice between going for growth and dealing with debt. What's happening in Eurozone shows growth won't happen without dealing with debt."

"We have overspent. We are not undertaxed."

Net borrowing to fall to £20 billion in 2015-16 compared to £149 billion today.

Debt interest payment £3bn a year lower by end of this Parliament than it would have been under Labour.

"We won't be joining Euro in this Parliament." There's a surprise.

Euro preparation unit in Treasury has been abolished.

£30 billion per year to be cut from UK expenditure. Same size as Scottish Budget!

Civil List to be frozen and subject to auditing.

25% over 4 years but more looked for from social security and welfare.

Spending review to be presented on 20th October.

Public sector pay: public sector workers "must share the burden", although they didn't cause the recession. 2 year pay freeze for those earning more than £21,000. Those under will receive flat pay rise of £250. Lib Dem idea.

Welfare measures: germany announced 30 bilion euro cut to welfare bill. Increasing number of citizens trapped on out of work benefits for all of their lives. We are wasting talents of millions.

We will increase incentives to work and reduce incentives to stay out of work.

Consumer prices rather than retail prices will be used as measure to uprate all benefits other than state pension and pension credit.

Tax credits: 150,000 families with incomes over £50,000 are getting tax credits and we need to target them on families who need them most.

Abolish for famiies earning over £40,000 - better than expected.

Abolish baby element

Child Benefit: Freeze child benefit for next 3 years to keep intact popular universal benefit while ensuring that everyone (parents?) makes contribution to reducing deficit.

Lone parents expected to look for work when first child goes to school - dreadful. This is going to be really tough for women, who make up the vast majority of lone parents. I'm not sure there's enough benefit gained by rising of tax threshold to make sure that they will be better off by working. Also, are they really going to tell a woman with a 5 year old and a 6 week old baby whose husband has just left her to go and get a job? UPDATE: this, thankfully, is complete nonsense. I misheard Osborne - it's when the youngest child starts school which is much more livable with. However, there has to be enough flexibility in the benefits system so that lone parents are not forced to take jobs which would require them to work outside the availability of child care. Not everyone has family who can help.

DLA: costs have quadrupled to 11 billion a year. Medical assessment for DLA from 2013. Shudder.

Housing benefit to be reformed. Equally scary. Maximum limits to be imposed on Housing Benefit. My eyes are watering.

Corporation Tax for huge companies raking in billions of profits cut by 4% over next 4 years.

Damn! VAT up to 20% from January 2011.

Capital Gains: low and middle income savers who pay income tax at basic rate will continue to pay 18%

higher rate taxpayers will pay 28%

Threshold will stay the same at £10,000 and rise with inflation.

Income Tax: responsible society rewards efforts of those who choose to work. Important to lift low earners out of the tax system. Increase tax allowance to £7475 in April. £170 gain for basic rate tax payers with nearly 900,000 taken out of tax altogether. Commitment to continue to raise towards £10,000.

Child element of CTC up £150 above indexation next year. Budget will not increase measured child poverty.

"we pay the debts of a failed past and lay foundations for a prosperous future"

Bank levy from 2011.

Council Tax freeze in England. I expect we will soon see the end of the freeze period in Scotland. That's going to make the impact of all the other measures so much worse up here.

Ok, that's the main points as I wrote them down. I may have missed some stuff out while being shellshocked. There is some of this that I really feel concerned about but I'm going to take Conrad Russell's advice and read it all through 3 times before I make any more detailed comments.

There are some good Lib Dem wins in there - the raising of the tax threshold taking as near as dammit a million lowest earners out of tax, restoring the earnings link with pensions, a raise in Capital Gains Tax, although not yet by enough. The air in this room is rather full of the word that rhymes with duck, though.


Mr Eugenides said...

Why on earth should Housing Benefit not be capped at £400 a week? I find it disgusting that some people with rent of £1600 a month have it paid in full, if this is really true.

Caron said...

In London? The problem is that there is such a chronic social housing shortage that we need private landlords to take benefit claimants. The LHA changes already have pissed some off to the extent that they will no longer do so.

I'm worried that this could cause an issue with availability of affordable housing.

El said...

Looks like the single parent thing is when the youngest child goes to school, not the first child

Caron said...

El, I had checked, just before you commented, and changed that - just because it seemed so bonkers.


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