Tag Archives: tax allowance

Osborne’s ‘no gimmicks’ budget: How much can we trust?

What hope would the UK have if THIS man continues as Chancellor of the Exchequer after the general election?

What hope would the UK have if THIS man continues as Chancellor of the Exchequer after the general election?

George Osborne will deliver his final budget of the current Parliament on Wednesday and – if it proves to be the last he ever gives – it won’t be a moment too soon.

Ever since his ’emergency’ budget of 2010, which ended the economic growth created by Labour’s Alistair Darling and ushered in three years of economic flatlining, we have had to endure an unending stream of nonsense from this chancer-among-chancellors, this most mini-among-ministers, this least-treasured Treasurer.

Today we heard that he is again attempting to bribe pensioners into voting Conservative, with a plan that encourages them to take out their defined contribution pension annuities for a lump sum – which, it seems likely, will then be used up in short order, leaving the pensioner to fall on the mercy of the state.

It seems to be more short-termism – getting senior citizens to spend, in order to create a minor boost to economic activity now, while storing up problems for the future.

Osborne says no, and told the BBC that it was “patronising” to suggest people might blow the money on an expensive sports car, then come back for more when they ran out of cash.

This is from the Chancellor who, prior to the financial crash, told Gordon Brown repeatedly that bankers could be trusted to run their businesses unregulated; and who, once in government, based his entire economic strategy on a theory that has since been comprehensively trashed.

The Guardian has listed a few more claims that Osborne might make in his Budget speech, along with the counter-arguments. We shan’t bother with the arguments in support of him here – let’s skip to the good parts. Here are the claims – and their debunkings:

The Government’s plan is working – Deficit reduction has been much slower than Osborne forecast five years ago. In his first budget, in June 2010, the chancellor predicted that he would need to borrow £37bn in 2014-5 and that tax receipts would cover day-to-day government spending. The actual figure will be almost three times that, and, when adjusted for the state of the economy, the 2015 budget deficit is expected to be higher than any other EU country barring Croatia, according to Investec.

Britain has the fastest-growing economy in the G7 – Osborne’s account of his stewardship is partial and misleading. It ignores the first two years, in each of which austerity measures knocked one percentage point off growth, resulting in a flatlining economy. Britain’s recovery from the 2008-09 slump has been the weakest of any in the past 100 years, slower even than the bounce back from the Great Depression of the 1930s. Real wages have at last started to rise as a result of falling inflation, but incomes per head are on average the same now as they were in 2006, before the financial crisis. Business investment has fallen for the past two quarters, and the current account deficit is higher than ever, at 6% of GDP.

We are helping hard- working people by raising tax allowances – Raising the personal allowance is not a well-targeted way of helping the low paid because it helps earners further up the income scale as well. Britain’s low-pay culture means millions of workers don’t earn anything like £10,600 a year. As a result, Osborne is thought to be toying with the idea of raising the threshold for employee national insurance contributions, which is effectively another form of income tax but kicks in at a lower level.

We will ease back on austerity while sticking to our deficit-cutting target – Even after a trim, Osborne’s cuts programme will still look drastic. Labour will argue that he is taking too much of a risk with economic growth and jeopardising essential public services.

We will launch a new crackdown on tax evasion – This is too little, too late, and many of the perks that help the super-rich avoid tax – including non-domiciled tax status – remain in place. Meanwhile, the Conservatives are under fire for appointing former HSBC chairman Stephen Green as a trade minister, apparently without checking his possible involvement.

Feel free to copy out the above and check it against Osborne’s speech on Wednesday.

One thing is certain – it will contain nothing that should persuade you to vote Conservative in May.

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

If you have enjoyed this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!

Vox Political needs your help!
If you want to support this site
(
but don’t want to give your money to advertisers)
you can make a one-off donation here:

Donate Button with Credit Cards

Buy Vox Political books so we can continue
analysing the government’s financial irregularities.

Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:

SWAHTprint SWAHTeBook

The minimum income is 2.5 times what people get on benefits – but still they are labelled scroungers

140630minimumincome

The numbers speak for themselves: Under ‘Adequacy of safety-net benefits’, EVERY SINGLE INCOME GROUP has lost out. While others have suffered a great percentage drop, single working-age people remain the least able to make ends meet.

“How much money do you need for an adequate standard of living?”

That is the question posed every year by the Joseph Rowntree Foundation – and every year the organisation calculates how much people have to earn – taking into account their family circumstances, the changing cost of these essentials and changes to the tax and benefit system – to reach this benchmark.

This year’s research finds:

A lone parent with one child now needs to earn more than £27,100 per year – up from £12,000 in 2008. A couple with two children need to earn more than £20,200 each, compared to £13,900 each in 2008. Single working-age people must now earn more than £16,200, up from £13,500 in 2008;

Despite social and economic change, the list of goods and services different families need to live to an adequate level is very similar to that of the original study in 2008 – but people’s ability to afford them has declined. Overall the cost of a basket of essential items has risen by a massive 28 per cent over six years – much higher than the 19 per cent rise claimed by the official Consumer Price Index – while average wages have increased by just nine per cent and the minimum wage 14 per cent;

Increased tax allowances have eased the pressure somewhat for some households, but the freeze to child benefit and ongoing cuts in tax credits have outweighed this for low-earning families with children.

Out-of-work benefits have fallen further and now provide just 39 per cent of what single, working-age people need to reach a Minimum Income Standard.

On the other hand, pensioner couples who claim all their allowances receive 95 per cent of the amount required.

The bottom line is that the Conservative-led government has been hammering the working poor and people on benefits, while claiming to be helping them. The minimum income necessary for an adequate living standard, according to JRF research, is no less than two-and-a-half-times what people on benefits receive. That is an appalling disparity in the sixth-richest country in the world.

It also creates a danger that more people will look to loan suppliers like the government’s favourite (Wonga) for short-term help – at the cost of going into disastrous long-term debt.

Slow earnings growth and price increases have made all households worse off on average, relative to the MIS, the report has found.

The conclusion is a disaster for the Coalition’s “hardworking” people: “In the past six years the more important determinants of whether low-income households can afford the minimum budget have been the increasing cost of living relative to earnings and benefit cuts for households in and out of work.

“For working families with children, if these cuts continue, the opportunity to reach an acceptable living standard may not improve, even as wages start rising again in real terms.”

And the Conservatives have the cheek to use the slogan “For hardworking people”.

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

Vox Political needs your help!
This independent blog’s only funding comes from readers’ contributions.
Without YOUR help, we cannot keep going.
You can make a one-off donation here:

Donate Button with Credit Cards

Alternatively, you can buy Vox Political books!
The second – Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook
The first, Strong Words and Hard Times
is still available in either print or eBook format here:

SWAHTprint SWAHTeBook