Ed Balls was very effective yesterday, ridiculing George Osborne’s National Insurance “holiday.” This is one of the government’s new employment programmes, letting new businesses off paying National Insurance Contributions for the first 10 employees hired in their first year. Back in 2009, the Conservative Party claimed that it would create 60,000 jobs in two years, but by the time of last year’s Budget this had risen to 400,000 businesses (and presumably more jobs) benefiting. The government was so worried that this offer was going to be over-subscribed that they excluded businesses in London, East Anglia and the South East, and even so, budgeted to spend £50 million in 2010-11, rising to £370 million in 2012-13.
Well, how’s it going? As Mr Balls pointed out, figures the Treasury tried to slip out on the quiet showed that the actual figures so far are 3,000 businesses and an estimated 6,000 workers. Total cost so far? £5 million.
Ahem …
The TUC has argued for some time that the government has talked up the National Insurance holiday to a ludicrous extent. It isn’t actually harmful – some jobs will be created, but it doesn’t come anywhere near matching the scale of the problem. And it certainly doesn’t compensate for the vandalism of closing down the Future Jobs Fund. Of course, it’s possible that this is just a slow start, eventually it’ll be a great success and I’ll have egg on my face.
But somehow I don’t think so.
Showing posts with label George Osborne. Show all posts
Showing posts with label George Osborne. Show all posts
Tuesday, 10 May 2011
Wednesday, 6 April 2011
Government suggestions that 80% will be better off are fundamentally untrue
The Institute for Fiscal Studies has disputed Chief Secretary to the Treasury Danny Alexander’s claim that 80 per cent of families will be “better off” as a result of the tax and benefit changes that came into force yesterday morning.
Politics Home reports:
“James Browne, the IFS senior research economist, told Politics Home that there are “winners and losers” in each of the eight lowest deciles of the population – and that it was therefore misleading to say eight out of 10 families would benefit.
“Mr Alexander’s assertion was based on statistics compiled by the IFS… which suggested that measures introduced in the Budget would see the eight lowest deciles of population benefit from an increase in net income in 2011…
“In its post-Budget Briefing, the IFS described the changes in the Budget as “very minor”. But the group acknowledged that the “very richest households lose the most” from the Budget’s personal tax and benefit changes.”
The chief secretary told Sky News:
“On the basis of the changes happening today, 80% of families on average will be better off.”
While yesterday, he told the Today programme:
“As a consequence of the changes coming in today, as the package rightly said there are spending cuts that are coming through the system and will keep coming through the system and other things that affect people and I don’t want to belittle that in any way but the changes coming through today will on average mean that 80 per cent of people will be better off, that in particular we are cutting income tax for low and middle income earners.”
Prior to today’s comments, the IFS, in its February Green Budget, said:
“Tax and benefit changes to be introduced in April 2011 involve a net ‘takeaway’ of £5.4 billion from households in 2011–12; this is equivalent to £200 per household and comes on top of the £12.8 billion increase in indirect taxes introduced in January 2011, which is equivalent to £480 per household on average…
“Working couples with children also lose significantly from cuts to tax credits.”
A point re-emphasised by Nicola Smith, senior policy officer at the TUC:
“To allow households to gain a better understanding of what the changes mean for them the TUC has launched a tax credit calculator, which shows how changes to tax credits will affect household entitlements over the years ahead - and exposes the reality behind today’s rhetoric about winners and losers…
“Today’s changes reveal much about the government’s priorities. The coalition has chosen to deliver a small tax cut to households above the income tax threshold who are on low or middle incomes, at the cost of far larger effective tax rises for the lowest income households (those who are below the income tax threshold but still pay VAT) and for low to middle income families with children.
“Lone parents face some of the greatest cuts - being more likely to rely on childcare tax credits and only benefiting once from the personal allowance increase - and parents with small children also lose considerably, with the baby and toddler elements of tax credits dropped.
“For these working families the Treasury’s analysis of today’s changes is far removed from the reality of their household budgets.”
Politics Home reports:
“James Browne, the IFS senior research economist, told Politics Home that there are “winners and losers” in each of the eight lowest deciles of the population – and that it was therefore misleading to say eight out of 10 families would benefit.
“Mr Alexander’s assertion was based on statistics compiled by the IFS… which suggested that measures introduced in the Budget would see the eight lowest deciles of population benefit from an increase in net income in 2011…
“In its post-Budget Briefing, the IFS described the changes in the Budget as “very minor”. But the group acknowledged that the “very richest households lose the most” from the Budget’s personal tax and benefit changes.”
The chief secretary told Sky News:
“On the basis of the changes happening today, 80% of families on average will be better off.”
While yesterday, he told the Today programme:
“As a consequence of the changes coming in today, as the package rightly said there are spending cuts that are coming through the system and will keep coming through the system and other things that affect people and I don’t want to belittle that in any way but the changes coming through today will on average mean that 80 per cent of people will be better off, that in particular we are cutting income tax for low and middle income earners.”
Prior to today’s comments, the IFS, in its February Green Budget, said:
“Tax and benefit changes to be introduced in April 2011 involve a net ‘takeaway’ of £5.4 billion from households in 2011–12; this is equivalent to £200 per household and comes on top of the £12.8 billion increase in indirect taxes introduced in January 2011, which is equivalent to £480 per household on average…
“Working couples with children also lose significantly from cuts to tax credits.”
A point re-emphasised by Nicola Smith, senior policy officer at the TUC:
“To allow households to gain a better understanding of what the changes mean for them the TUC has launched a tax credit calculator, which shows how changes to tax credits will affect household entitlements over the years ahead - and exposes the reality behind today’s rhetoric about winners and losers…
“Today’s changes reveal much about the government’s priorities. The coalition has chosen to deliver a small tax cut to households above the income tax threshold who are on low or middle incomes, at the cost of far larger effective tax rises for the lowest income households (those who are below the income tax threshold but still pay VAT) and for low to middle income families with children.
“Lone parents face some of the greatest cuts - being more likely to rely on childcare tax credits and only benefiting once from the personal allowance increase - and parents with small children also lose considerably, with the baby and toddler elements of tax credits dropped.
“For these working families the Treasury’s analysis of today’s changes is far removed from the reality of their household budgets.”
Thursday, 24 March 2011
The "no help for the poor" Budget
Despite the fact that yesterday’s budget offered little to ease the burden on thousands being made unemployed , the trade body that represents the majority of apprenticeship training providers in England (the Association of Learning Providers) has warmly welcomed the further expansion in the government’s apprenticeship programme which was announced in the Budget.
ALP said the challenge is to ensure a good proportion of the extra places go to young people as well as to converting members of the existing adult workforce into apprentices. Well whooppee-doo, but where do they hope to find these jobs, when companies are reluctant to take on new staff. Or are they going to market apprenticeships as an easy way for companies to acquire little more than slave labour?
Whatever their reason, ALP has been pressing ministers since this Tory-led government took office for adequate pre-apprenticeship provision to be in place to help school-leavers who aren’t eligible to start full apprenticeships. Reasonable, except they are setting up young people to fail – at the moment, the jobs aren’t there and with OBR growth forecasts looking bleak there is little reason to assume it will change.
So what are they key areas of the budget that might affect those less well off? Well, he has proposed a rise in the personal allowance for income tax (£3.3bn) and a rise in the child element of the child tax credit (£1.2bn). As for the rest – well Osborne and the Tories would have us believe his measures will help the world know “Britain is back in business”. But let’s look at some of these key proposals that will help industry so much.
First there is the decrease in corporation tax – well as companies are struggling to make profits this will hardly have a profound effect. In case he hasn’t read the news, many sectors are struggling to expand and some are actually in decline. Admittedly he did offer some tokens to the construction industry, but it was hardly a mass house rebuilding programme - which is something this country desperately needs if it is to adequately address housing problems and homelessness.
According to the FT last night, the winners were most companies and motorists, whilst the losers were banks, oil companies, tax avoiders and people in Lear Jets. In other words; no help for the 2.5m unemployed, no support for pensioners as they face nearly 5% inflation and watch their savings become meaningless; no support for the sick and disabled as they struggle to face daily living on a fixed income that is generally regarded as being below the poverty level; no concrete measures to combat global warming and encourage companies to adopt greener machinery and hybrid vehicles.
Noticeably, when Osborne down and listened to Ed Miliband deliver his response he looked singularly at the accusations being made against him. Admittedly Clegg tried to come to his aid by calling on Miliband to calm down – why Nick? Didn’t you like hearing the truth that you are mixing with a crowd that are creaming the wealth out of this country and sharing it amongst their capitalist cronies?
The sooner we can dump this government the better.
This morning, several thousand people working in the welfare to work sector will wake up realizing they are close to their last day in work as their redundancy notices finally expire. Thousands more in the same sector are waiting for the axe to fall on them. Osborne’s budget changes will have done nothing to save them and offer them little hope for finding alternative employment. Yet these are people that have given years of their lives to supporting and helping thousands of people out of joblessness. They never asked for huge salaries – indeed, many earned quite low incomes and nor did they want acclaim and fame. All they wanted was a little job security – but the Tories and the bosses took that away from them.
Some in this sector are in their late fifties and will probably never work again. They had never intended to retire and until recently had hoped for a few more years work to build up a small amount of savings to help them in their later years. They won’t have that now – and the finger of blame lies firmly on the likes of Osborne, Duncan Smith and Cameron.
On Saturday, hundreds of thousands of ordinary people will march against this government to show them we can take their type of politics no longer. We will show the Tories you can’t mess with the working class and get away with it. Some of my readers may not see themselves as political, others are perhaps less left-wing than myself. But I am convinced all of you care about the people in this country.
Whatever you are doing on Saturday, if it can be delayed them join with us – come to London and let your voice be heard. Let Citizen Dave, the people’s toff know we will not sit idly by and watch thousands of good people in the welfare to work sector get pushed aside for the sake of a Tory dream.
If you don’t tomorrow the bosses may well be calling you in and giving you a redundancy notice!
ALP said the challenge is to ensure a good proportion of the extra places go to young people as well as to converting members of the existing adult workforce into apprentices. Well whooppee-doo, but where do they hope to find these jobs, when companies are reluctant to take on new staff. Or are they going to market apprenticeships as an easy way for companies to acquire little more than slave labour?
Whatever their reason, ALP has been pressing ministers since this Tory-led government took office for adequate pre-apprenticeship provision to be in place to help school-leavers who aren’t eligible to start full apprenticeships. Reasonable, except they are setting up young people to fail – at the moment, the jobs aren’t there and with OBR growth forecasts looking bleak there is little reason to assume it will change.
So what are they key areas of the budget that might affect those less well off? Well, he has proposed a rise in the personal allowance for income tax (£3.3bn) and a rise in the child element of the child tax credit (£1.2bn). As for the rest – well Osborne and the Tories would have us believe his measures will help the world know “Britain is back in business”. But let’s look at some of these key proposals that will help industry so much.
First there is the decrease in corporation tax – well as companies are struggling to make profits this will hardly have a profound effect. In case he hasn’t read the news, many sectors are struggling to expand and some are actually in decline. Admittedly he did offer some tokens to the construction industry, but it was hardly a mass house rebuilding programme - which is something this country desperately needs if it is to adequately address housing problems and homelessness.
According to the FT last night, the winners were most companies and motorists, whilst the losers were banks, oil companies, tax avoiders and people in Lear Jets. In other words; no help for the 2.5m unemployed, no support for pensioners as they face nearly 5% inflation and watch their savings become meaningless; no support for the sick and disabled as they struggle to face daily living on a fixed income that is generally regarded as being below the poverty level; no concrete measures to combat global warming and encourage companies to adopt greener machinery and hybrid vehicles.
Noticeably, when Osborne down and listened to Ed Miliband deliver his response he looked singularly at the accusations being made against him. Admittedly Clegg tried to come to his aid by calling on Miliband to calm down – why Nick? Didn’t you like hearing the truth that you are mixing with a crowd that are creaming the wealth out of this country and sharing it amongst their capitalist cronies?
The sooner we can dump this government the better.
This morning, several thousand people working in the welfare to work sector will wake up realizing they are close to their last day in work as their redundancy notices finally expire. Thousands more in the same sector are waiting for the axe to fall on them. Osborne’s budget changes will have done nothing to save them and offer them little hope for finding alternative employment. Yet these are people that have given years of their lives to supporting and helping thousands of people out of joblessness. They never asked for huge salaries – indeed, many earned quite low incomes and nor did they want acclaim and fame. All they wanted was a little job security – but the Tories and the bosses took that away from them.
Some in this sector are in their late fifties and will probably never work again. They had never intended to retire and until recently had hoped for a few more years work to build up a small amount of savings to help them in their later years. They won’t have that now – and the finger of blame lies firmly on the likes of Osborne, Duncan Smith and Cameron.
On Saturday, hundreds of thousands of ordinary people will march against this government to show them we can take their type of politics no longer. We will show the Tories you can’t mess with the working class and get away with it. Some of my readers may not see themselves as political, others are perhaps less left-wing than myself. But I am convinced all of you care about the people in this country.
Whatever you are doing on Saturday, if it can be delayed them join with us – come to London and let your voice be heard. Let Citizen Dave, the people’s toff know we will not sit idly by and watch thousands of good people in the welfare to work sector get pushed aside for the sake of a Tory dream.
If you don’t tomorrow the bosses may well be calling you in and giving you a redundancy notice!
Wednesday, 26 January 2011
GDP and the White Christmas .. or just a whitewash?
The drop in GDP growth was largely due to snow according to Osborne. Huh?
So when we next get results from ONS is he going to tell us the decline was due to the moon not being in alignment with Taurus? Or perhaps we are moving closer to double dip recession because last week David Cameron walked under a ladder just as a black cat crossed his path?
When he took office, Osborne made it quite clear he had a Plan A (although he admitted there was no plan B). Is he now saying the plan didn’t cover certain eventualities? In my language that isn’t a plan – it’s a hodge-podge of ideas cobbled together on the back of a fag packet and made to look like a plan.
The consequence of this ‘plan’ is that, according to the Governor of the Bank of England, workers will now have to tighten their belts and hold back on pay claims. Silly question – does that include bankers?
So we can look forward to inflation at 5%, unemployment hitting 3m, substantially reduced services, higher costs for those wanting to go to university, steeper food and fuel prices, more people facing homelessness and more people being forced to go bankrupt.
Oh yes, life is much better under the Conservatives!
So when we next get results from ONS is he going to tell us the decline was due to the moon not being in alignment with Taurus? Or perhaps we are moving closer to double dip recession because last week David Cameron walked under a ladder just as a black cat crossed his path?
When he took office, Osborne made it quite clear he had a Plan A (although he admitted there was no plan B). Is he now saying the plan didn’t cover certain eventualities? In my language that isn’t a plan – it’s a hodge-podge of ideas cobbled together on the back of a fag packet and made to look like a plan.
The consequence of this ‘plan’ is that, according to the Governor of the Bank of England, workers will now have to tighten their belts and hold back on pay claims. Silly question – does that include bankers?
So we can look forward to inflation at 5%, unemployment hitting 3m, substantially reduced services, higher costs for those wanting to go to university, steeper food and fuel prices, more people facing homelessness and more people being forced to go bankrupt.
Oh yes, life is much better under the Conservatives!
Thursday, 20 January 2011
.. And its goodbye from him
The news tonight that the Shadow Chancellor of the Exchequer, Alan Johnson has resigned from his post must come with deep sadness to anyone with an ounce of moral conscience and caring for their fellow human beings.
Johnson was never destined to be a great chancellor and at a political level, the Labour party will not regret his passing. However, at a personal level it would be hoped that every member, at whatever level, will tonight be wishing him and his family every good wish and prayer. No doubt the media will go out of their way to invade his privacy over the coming days and this writer wishes all his family well as they preapre to face this unfortunate onslaught.
But his departure is good news for the Labour party and his replacement, Ed Balls will undoubtedly give Osborne cause to be quaking in his boots tonight. Until now Cameron and Osborne have been able to rely on clichéd soundbites, deceit and a generally condescending attitude to barge their policies through.
They will not be so fortunate with Balls – he is a political bruiser. Now, Osborne is sufficiently talented to not be too concerned about that – but what will worry him is the fact that Balls has more knowledge and experience in his little finger than Osborne can muster throughout his entire political life.
Couple these two attributes together and you have grounds for the Tories to be worrying. The news this week that inflation could soar well above OBR forecasts, coupled with evidence that VAT is biting harder than the Tories had hoped will be pounced on by Balls.
His appointment as Shadow Chancellor is welcome news to those who have been opposed to Tory austerity measures. Osborne will need to be well-briefed if he is going to be able to have even half a chance of looking credible as a chancellor. Like the hunter he is, Balls already has Gove’s scalp under his belt. Now his eyes will be focused on Osborne.
Let the hunt begin.
Johnson was never destined to be a great chancellor and at a political level, the Labour party will not regret his passing. However, at a personal level it would be hoped that every member, at whatever level, will tonight be wishing him and his family every good wish and prayer. No doubt the media will go out of their way to invade his privacy over the coming days and this writer wishes all his family well as they preapre to face this unfortunate onslaught.
But his departure is good news for the Labour party and his replacement, Ed Balls will undoubtedly give Osborne cause to be quaking in his boots tonight. Until now Cameron and Osborne have been able to rely on clichéd soundbites, deceit and a generally condescending attitude to barge their policies through.
They will not be so fortunate with Balls – he is a political bruiser. Now, Osborne is sufficiently talented to not be too concerned about that – but what will worry him is the fact that Balls has more knowledge and experience in his little finger than Osborne can muster throughout his entire political life.
Couple these two attributes together and you have grounds for the Tories to be worrying. The news this week that inflation could soar well above OBR forecasts, coupled with evidence that VAT is biting harder than the Tories had hoped will be pounced on by Balls.
His appointment as Shadow Chancellor is welcome news to those who have been opposed to Tory austerity measures. Osborne will need to be well-briefed if he is going to be able to have even half a chance of looking credible as a chancellor. Like the hunter he is, Balls already has Gove’s scalp under his belt. Now his eyes will be focused on Osborne.
Let the hunt begin.
Wednesday, 23 June 2010
Post-Budget Blues
The first day since the 'Emergency' Budget and all I have heard today is a constant stream of Tory hype. If this isn't watered (or maybe not so watered) down Thatcherism, then I don't know what is.
The Chancellor tells us it was a progressive Budget, but the Institute for Fiscal Studies say it was regressive. Cameron wants me to be leave it was tough, but fair - and then I read that VAT is up to 20%, long-term unemployed will have their housing benefit cut to 90% after a year, child benefit is to be frozen for three years, and Sure Start maternity grants will only go to the first child. So please, Mr Osborne, tell me where is the fairness?
Where is the fairness in a budget that taxes the lower paid and adds 2.5% to their cost of living. Explain how it is just to cap housing benefit and if their rent is above the limit, they must lose their home or become homeless. Where is it right that benefits will increase in line with the consumer price index, whilst the unemployed, the sick and the low paid, those in most need can barely afford to feed themselves and their families.
Perhaps I should ask the public sector workers who now face a two-year wage freeze and the risk that three-quarters of a million now face the risk of redundancy? Or perhaps I should go and talk to the pensioners, who once again have been trampled on.
No, I think I will find the answers I need if I talk to the bankers, who will still enjoy their obscene bonuses. perhaps I could talk to the private landlords who overcharge and abuse their tenants and then when they sell their houses, only pay 18% tax
You and your Liberal friends tell me you want a fair and just society. Can you wonder why I find it hard to believe you?
The Chancellor tells us it was a progressive Budget, but the Institute for Fiscal Studies say it was regressive. Cameron wants me to be leave it was tough, but fair - and then I read that VAT is up to 20%, long-term unemployed will have their housing benefit cut to 90% after a year, child benefit is to be frozen for three years, and Sure Start maternity grants will only go to the first child. So please, Mr Osborne, tell me where is the fairness?
Where is the fairness in a budget that taxes the lower paid and adds 2.5% to their cost of living. Explain how it is just to cap housing benefit and if their rent is above the limit, they must lose their home or become homeless. Where is it right that benefits will increase in line with the consumer price index, whilst the unemployed, the sick and the low paid, those in most need can barely afford to feed themselves and their families.
Perhaps I should ask the public sector workers who now face a two-year wage freeze and the risk that three-quarters of a million now face the risk of redundancy? Or perhaps I should go and talk to the pensioners, who once again have been trampled on.
No, I think I will find the answers I need if I talk to the bankers, who will still enjoy their obscene bonuses. perhaps I could talk to the private landlords who overcharge and abuse their tenants and then when they sell their houses, only pay 18% tax
You and your Liberal friends tell me you want a fair and just society. Can you wonder why I find it hard to believe you?
Monday, 21 June 2010
How the Tories are trying to fool us.
Each day further evidence becomes available suggesting actions being taken by this government against ordinary working people are based on a desire to reduce the role of the state. These cuts have little or nothing to do with the size of our economic problems, or the national debt.
Central to their argument has been their consistent campaign to “trash” the economic strategy of Alistair Darling and the previous Labour government. What they fail to admit is that figures now emerging clearly show Labour was ‘on target’ to tackle our financial problems – and all whilst keeping everyone in jobs and not reducing frontline services.
The Labour government, in their last Budget, estimated Public Sector Net Borrowing (PSNB) would be £166.5bn in 2009/10 and projected borrowing would fall from £163bn in 2010/11 to £74bn in 2014/15. Subsequent figures, now released by the Tories, have shown borrowing in 2009/10 was actually only £156.1bn - $10.4bn below forecast.
When the Office for Budget Responsibility published their first report earlier this month, they produced lower forecasts for net borrowing in 2010/11 and for every year to 2014/15, though they failed to acknowledge these forecasts were based on the Labour government’s plans and NOT as a result of any Tory cuts.
Admittedly the OBR did forecast the structural (or cyclically adjusted deficit) will be a little higher than expected in the next Budget. In the Labour budget, Alistair Darling predicted the structural deficit would be 7.3% of GDP in 2010/11 and dropping to 2.5% in 2014/15. The OBR estimates suggest this could be closer to 8% of GDP in 2010/11 and 2.8% in 2014/15.
What the Office of Budget Responsibility and the Conservatives lamentably failed to admit is these differences fall well within normal margins of forecasting error and offer no evidence to suggest Labour was mismanaging the finances.
Tomorrow’s Budget
The Tories have already said in their Coalition Agreement “the main burden of deficit reduction [will be] borne by reduced spending rather than increased taxes”. There has yet to be a clear statement from Osborne on what the likely ratio between cuts and taxes will be, but the Institute for Public Policy Research (IPPR) have argued this could be as much as 4:1, compared to the 2:1 ration proposed by the Labour government. This would imply we can expect Osborne will begin his assault on public spending by implementing cuts of up to £60bn and tax increases of approximately £15bn.
The Tories have already said they will protect NHS spending, so cuts will have to be found elsewhere. Clearly they will not be found by efficiency savings alone, and although scrapping ID cards will be welcomed, it will only account for a small part of the total. Despite Tory protestations, frontline services will have to be cut.
Evidence of this comes from the fact that Tory and Liberal deficit hawks regularly cite the Canadian experience, as if it was a model of ‘best practice’. What they don’t make public is how the Canadians savaged healthcare and sacked thousands of nurses, increased the size of classes in their secondary schools and virtually ripped the heart out of their armed services.
If frontline services are cut, as now seems probable, the poor and vulnerable will undoubtedly suffer and if you add to this their intention to increase VAT to 19.5 or 20%, then you effectively raise the weekly bill every worker has to pay out each week. In an analysis of Tory proposals, the IPPR demonstrated how the poorest 10% of the population would have about 2.1% less disposable income each week, compared to only 0.9% per week for the richest 10% of the population. A case of the Tories looking after their own again?
George Osborne has said Britain is on the “road to ruin” unless he implements swingeing cuts tomorrow. What he is really saying is that he will ruin the lives of thousands of ordinary working class people and turn their lives into misery and squalor. As Brendan Barber, general secretary of the TUC said: "Getting the fundamental budget judgment wrong will increase unemployment, particularly among young people – a million of whom are already on the dole – and hit the vital public services on which low and middle income households depend."
There will be few people looking forward to the Chancellor standing up in the House of Commons tomorrow.
Central to their argument has been their consistent campaign to “trash” the economic strategy of Alistair Darling and the previous Labour government. What they fail to admit is that figures now emerging clearly show Labour was ‘on target’ to tackle our financial problems – and all whilst keeping everyone in jobs and not reducing frontline services.
The Labour government, in their last Budget, estimated Public Sector Net Borrowing (PSNB) would be £166.5bn in 2009/10 and projected borrowing would fall from £163bn in 2010/11 to £74bn in 2014/15. Subsequent figures, now released by the Tories, have shown borrowing in 2009/10 was actually only £156.1bn - $10.4bn below forecast.
When the Office for Budget Responsibility published their first report earlier this month, they produced lower forecasts for net borrowing in 2010/11 and for every year to 2014/15, though they failed to acknowledge these forecasts were based on the Labour government’s plans and NOT as a result of any Tory cuts.
Admittedly the OBR did forecast the structural (or cyclically adjusted deficit) will be a little higher than expected in the next Budget. In the Labour budget, Alistair Darling predicted the structural deficit would be 7.3% of GDP in 2010/11 and dropping to 2.5% in 2014/15. The OBR estimates suggest this could be closer to 8% of GDP in 2010/11 and 2.8% in 2014/15.
What the Office of Budget Responsibility and the Conservatives lamentably failed to admit is these differences fall well within normal margins of forecasting error and offer no evidence to suggest Labour was mismanaging the finances.
Tomorrow’s Budget
The Tories have already said in their Coalition Agreement “the main burden of deficit reduction [will be] borne by reduced spending rather than increased taxes”. There has yet to be a clear statement from Osborne on what the likely ratio between cuts and taxes will be, but the Institute for Public Policy Research (IPPR) have argued this could be as much as 4:1, compared to the 2:1 ration proposed by the Labour government. This would imply we can expect Osborne will begin his assault on public spending by implementing cuts of up to £60bn and tax increases of approximately £15bn.
The Tories have already said they will protect NHS spending, so cuts will have to be found elsewhere. Clearly they will not be found by efficiency savings alone, and although scrapping ID cards will be welcomed, it will only account for a small part of the total. Despite Tory protestations, frontline services will have to be cut.
Evidence of this comes from the fact that Tory and Liberal deficit hawks regularly cite the Canadian experience, as if it was a model of ‘best practice’. What they don’t make public is how the Canadians savaged healthcare and sacked thousands of nurses, increased the size of classes in their secondary schools and virtually ripped the heart out of their armed services.
If frontline services are cut, as now seems probable, the poor and vulnerable will undoubtedly suffer and if you add to this their intention to increase VAT to 19.5 or 20%, then you effectively raise the weekly bill every worker has to pay out each week. In an analysis of Tory proposals, the IPPR demonstrated how the poorest 10% of the population would have about 2.1% less disposable income each week, compared to only 0.9% per week for the richest 10% of the population. A case of the Tories looking after their own again?
George Osborne has said Britain is on the “road to ruin” unless he implements swingeing cuts tomorrow. What he is really saying is that he will ruin the lives of thousands of ordinary working class people and turn their lives into misery and squalor. As Brendan Barber, general secretary of the TUC said: "Getting the fundamental budget judgment wrong will increase unemployment, particularly among young people – a million of whom are already on the dole – and hit the vital public services on which low and middle income households depend."
There will be few people looking forward to the Chancellor standing up in the House of Commons tomorrow.
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