A ‘regressive’ review that will impact well beyond benefits and state workers
The word ‘progressive’ was notable through its absence in today’s statement by the Chancellor.
George Osborne famously pronounced at the Emergency Budget: “this is a progressive budget”, before those claims were slowly dismantled by the IFS. There was never any chance that the Chancellor would announce that: “this is a progressive spending review”
The actual impact of today’s spending review measures are undoubtedly and visibly perfectly regressive, according Treasury’s own chart on page 98. Even if you include the tax changes from the Budget (which were principally inherited from Labour plans).
The percentage hit in the Treasury’s own distributional table show the poorest ten per cent are the second worst hit. The Treasury view is that they have got the fiscal consolidation as progressive as would be imagined. Over at the DWP, they say that the impact of the new Universal Credit will also benefit the poorer deciles that are particularly hard hit.
The most shocking number was the monumental mistake that saw the saving from clawing back child benefit from higher rate taxes surge from £1.2 billion to £2.5bn. As we here at Channel 4 News have argued for the past three weeks, the number of households affected is far in excess of the 1.2 million originally claimed. It is more like 1.5 million people with someone earning above £42,500.
Some top numbers:
Current spending by 2015: 25 per cent off Business Department, 23 per cent off Home Office, 23 per cent off Justice, 24 per cent off FCO, 29 per cent off Defra.
£1 billion environmental tax on supermarkets Carbon emissions buried in smallprint∙
CLG (communities) has been absolutely massacred – 74 per cent off capital and 51 per cent off current spending.
∙ Train fares – assuming RPI at the treasury’s modest forecast — the hike in prices for 600 million commuter and peak train journeys will be a remarkable 27 per cent. This arises from the RPI plus 3 per cent settlement announced by the Chancellor. What does transport minister Norman Baker, who was elected on a manifesto of RPI minus 1 per cent think?
∙ Overall deficit reduction plan CUT from £83 billion to £81 billion – even though Osborne said to ‘back down would be the road to ruin’
There are 5 comments on this post
Where have you been for the last three years?
Gordon Brown has blown the lot – now it’s got to be paid back. Guess who’s got to pay… Yeah, us. So. What’s the alternative?
The annual deficit is massive. We can’t keep borrowing forever. Brown thought we could. He borrowed through the boom he said we weren’t having and then he borrowed after the bust. He used our money to bail out the banks with seemingly no pre-conditions and then handed over an empty treasury and a load of contractual obligations for his successors (the aircraft carriers,etc).
I don’t know what’s worse, Brown’s absence from the scene of the crime, Channel 4′s almost overt invitation to riot or labour’s hypocrisy !
Cuts are being made by this government. They would have needed to have been made whoever was in power, unless your name is Ed Balls in which case guess what – his answer is to keep borrowing…
When do they suggest we stop? Of course it’s going to be horrible. Very very painful, and the poorest will lose out more than the rich because, by definition, they have less to insulate them from the cuts. The poor don’t have ISAs and savings. But whose fault is this?
Gordon…
All that and not a word of how the banks scammed the world economy and triggered the whole mess with their phoney pyramid schemes. And who can forget the American banks who sold sam schemes internationally………and then bet against them going under too!
I have no time for Gordon Brown, “New” Labour or the ConDems, but if you are going to blame anybody you might as well get the REAL culprits named……you could start with the dozen or so millionaires in the current cabinet who won’t feel a thing while decent citizens are being pulverised yet again.
As for the so-called deficit: Get it all back from the banks and crooks who stole our money in the first place. Get it all back from individual and corporate tax dodgers. Get it all back from the Gnomes of Zurich who hide the world’s worst criminals in their secret accounts. Get it all back from “defence” contractors who do nothing but profit on the backs of industrialised mass death.
It would make a change from persecuting the most vulnerable and poorest in society cross the world. Which is why of course it will never happen.
I thought Osborne did OK. He’s the right man for the moment.
Despite the cuts, I’m a lot more optimitistic about the future now, just because somebody is grabbing the problem by the scruff of the throat and doing what needs to be done. Labour seemed completely blind to the problem, only interested in getting themselves re-elected, happy to torch and burn the economy and leave the mess for somebody else to sort out. That was a very depressing/pessimistic period and I am pleased it is over…
Naturally if I feel optimisitc I tend to spend more, which helps the economy. Replicate that by 60 million, and surely its problem solved….?
So I think that Britain should be in a much better place in ten years time.
And this might actually prove to be a “paradoxical” budget, rather than “regressive” or “progressive”. If the necessary cuts can inspire a spirit of optimism that aids the economic recovery…
>The poor don’t have ISAs and savings. But whose fault is this?
Absolutely, let them eat cake or deport them!
My God! “post ideological society”
@ Peter Every: Actually I think the jibe was aimed at our previous Premier, if you read to the end of the post you might notice:
“The poor don’t have ISAs and savings. But whose fault is this?
Gordon…”