Liveblog: Reactions to Budget 2016

Good Society

Rapid reactions to George Osborne's budget from charities, think-tanks, trade unions and political parties

 

18.00: And that’s it from our Left Foot Forward reactions blog. Over the next few days we’ll be providing in-depth, evidence-based analysis of the Budget and its implications. But the verdict from toady’s contributors is clear: however Osborne tries to spin it, this makes no economic sense in the context of a growth slowdown and, most importantly, targets cuts at those who can afford it least.

Many thanks for reading.

17.55: Resolution Foundation analysis clearly shows that the biggest winners from today’s budget will be the wealthy.

 17.51: Julia Unwin, chief executive of the independent Joseph Rowntree Foundation said:

“In his Budget the Chancellor said we need to act now so we don’t pay later, but his actions did little to address the risk poverty presents for the economy.

Support for savers to prevent poverty in later life, money to tackle homelessness and the freeze in fuel duty are all welcome in helping those on low incomes.

It is hugely welcome that employment has reached record levels and that we have the lowest proportion of people claiming out-of-work benefits since 1974, but what we needed was a Budget building on these foundations and supporting the Prime Minister’s all-out assault on poverty.

But the extra support he offered – tax cuts and savings help for better-off workers and extra support for business – will bypass those in work but living in poverty.

With the economy recovering, this was the ideal time to set out a long-term plan to help those on the lowest incomes and ensure they share in on the UK’s prosperity. Instead, lack of security and risk of poverty remains the reality for millions of people on low incomes.”

 

17.35: Molly Scott Cato, the Green Party’s MEP for the South-West and Finance Spokesperson, has called for a Basic Income:

“These cuts are avoidable. The Green Party would cancel two of the costliest white elephants in British history – the grotesquely expensive HS2 and the Hinkley Point nuclear power station – thereby freeing up resources to tackle inequality, to build a fairer economy.

Unlike Osborne, a Green Chancellor would also take real steps to end profit-shifting scams that facilitate grand scale tax avoidance. Only when the government takes genuine measures to end corporate tax avoidance will big business begin to contribute properly to the public purse.

A Green Chancellor would be bolder on fuel duty – while oil prices remain low – using a 10p/litre increase to ring-fence up to £5bn a year to be used to reverse devastating cuts to bus services, particularly in rural areas,  and to invest in sustainable transport solutions.

Finally we would follow the example of the Finnish government and commit to funding a full investigation of the benefits and feasibility of replacing our outdated welfare system with a Basic Income.

There is now growing consensus, across the political spectrum, that only Basic Income has the potential to solve the intractable problems associated with our outdated social security system and an increasingly precarious labour market.”

17.25: Meanwhile, CND General Secretary Kate Hudson has made a statement:

“This budget is a total disaster for some of the most vulnerable people in the UK. The government has announced cuts to welfare for disabled people, cuts to pensions for nurses and teachers, and cuts to local government. Yet it remains committed to replacing Trident at a cost of over £100 billion.

It is time for a major rethink. We call on the government to cancel Trident replacement and invest the money instead in things that are useful for our society. Trident makes us less safe, and as this budget shows, directs resources away from things we desperately need.”

17.17: And that there’s a very real risk that it will trigger an independence second independence referendum…

 

17.09: We may have undersold how happy Jamie Oliver is with this budget…

 

16:50: Labour’s criticism has focused on the Budget’s unfairness.

 

16.45: Dr Eva Neitzert, a member of the Women’s Budget Group, has criticises budget for failing women and children:

“The Chancellor claims this is a budget for the next generation. Yet his policies will condemn many more children, and the women who care for them, to poverty and risks placing our health, education and care services in crisis.

This social infrastructure is fundamental to our economic future. Our research shows that investing two per cent of GDP in care will create twice as many jobs as the same investment in construction, and has greater economic benefits. Yet the Chancellor continues to see investment only in terms of roads and railways.

Once more we saw the Chancellor announce a series of tax cuts, which will mainly benefit men. These will be paid for by further cuts to essential services and to benefits that many disabled people rely on. A further two billion will come from public sector pensions, again disproportionately impacting women who are the majority of public sector employees.

The Chancellor says he wants to encourage saving but undermines the incomes of the poorest, many of them women, through universal credit. At a time when evictions are going up because people cannot pay their rent, these measures show just how out of the touch he is.

We are disappointed that the government has again failed to carry out an adequate impact assessment of the Budget. Our analysis of announcements up to the Autumn Financial Statement shows that the lowest income households and women would be hardest hit. Female lone parents and female single pensioners could see living standards drop by an average of 20 per cent every year by 2020.

The long term economic plan has failed on its own terms, as well as for women. This Budget is a missed opportunity to shore up Britain’s economic future and make a real difference to those who have paid a disproportionate price for austerity.”

16.39: Unite General Secretary, Len McCluskey, has accused the Chancellor of ‘banging the nation’s head against the austerity brick wall’:

“This is a one-trick chancellor – and his one trick is to cut because he refuses to act to grow our economy.

He has had to revise down his own growth targets because his so-called jobs ‘miracle’ is actually a jobs fraud. Real, shared prosperity is impossible in an economy built on low pay and where zero hours jobs have risen by 15 per cent in recent months.

Every reputable economic body on the planet has urged him to abandon his clearly counterproductive austerity, decrying his approach as ‘bad economics.’ Yet still he ploughs on banging the national head against the austerity brick wall, imposing billions more in cuts to services that are already down to the bone.

Working people are still £40 a week poorer because of his policies. His senseless drive to run a surplus by 2020 will be paid for out of the wage packets of people who deserve far better than broken services and a personal debt burden that is the heaviest in the western world.”

 

16.25: Faiza Shaheen, Director of the think-tank Class, writes:

It isn’t only figures on the left who have been urging the Chancellor to abandon his policy of spending cuts. It’s also the OECD, IMF and Nobel Prize winning economists.

But today’s budget is proof, if proof were needed, that Osborne has no intention of heeding that advice. In fact, his rhetoric today around a “long term economic plan” is a continuation of his wider project to re-write the rule book completely, arguing that stripping the economy to the bone is good for growth. This despite the fact that growth is down and borrowing is up.

The issues in the economy are not the result of storm clouds brewing over emerging markets, as Osborne has claimed in the past. They are the result of British economic policy. Many leading voices are now calling for that policy to be changed, but it is a call that is falling on deaf ears.


16.15: Torsten Bell, Director of the Resolution Foundation, has responded to the Chancellor’s report:

“The OBR has today given the Chancellor a £55bn fiscal black hole, taking away from the Chancellor twice the windfall they gave him in the Autumn Statement.

Given the worrying global economic outlook he is right to delay dealing with the bigger deficit until the end of the parliament. But the result is £38bn extra borrowing and a considerable challenge in delivering a large consolidation in 2019/20, a pre-election year.”

Today’s Budget is a reminder for all Chancellors dealing with economic volatility and fiscal forecasts – the sofa can go from being a cashpoint to a pickpocket overnight.”

changes in borrowing

 

16:00: Carl Packman, writer, researcher and contibutor to Left Foot Forward:

To sum up in brief: today was a budget of themes not figures, and truly the work of a chancellor trying to own the way the history books recall him.

But the themes he chose were interesting. George Osborne started and ended by saying that ‘this is a budget for the next generation’ and one that ‘puts the next generation first’.

His need to say this so explicitly tells us a story about who really benefits from this budget: not young people, but businesses that will pay less in corporation tax now.

Under 40s will now have the option of accessing a lifetime ISA, which hopes to ensure them against pitiful pensions and savings pots for retirement or housing. But how do we motivate people who feel, by virtue of low incomes, they cannot save? How long does a young person really need to save for before they even stand a chance of getting on the housing ladder?

Osborne frontloaded the bad news: the Office for Budget Responsibility are forecasting growth drops every year until 2020. But he never came clear on wages and/or inequality.

As the Resolution Foundation pointed out last year, if productivity stays pretty flat and inflation grows faster than forecast then real wages could drop by 0.9 per cent, which may result in a situation where a typical worker’s pay does not return to pre-crisis levels for a decade or more.

Lastly, I obviously had my telly on mute when the Chancellor dealt with income inequality: as the Institute for Fiscal Studies revealed earlier in the month, incomes for the UK’s poorest households are likely to stagnate over the next five years.

Thanks for the mood music, but these are the cold facts.

 

15.47: Kevin Gulliver, director of the Human City Institute and Left Foot Forward contributor, made the following comment on the homelessness plan outlined in the Budget:

In today’s Budget, the Chancellor announced a £115m fund to confront rapidly rising homelessness in England. No mention, however, of the fact that homelessness has increased by 23 per cent since 2010/11, after inheriting a thirty year low from the last Labour government. Or that rough sleeping has doubled on his watch.

Last year, more than 54,000 households were accepted as homeless by local authorities – almost 211,000, or 810 each week for the last five years. And it is highly likely that official figures under-estimate the real homelessness crisis since the UK Statistics Authority criticised the way homelessness figures are calculated by the Department of Communities and Local Government.

Clearly, any extra funding to prevent homelessness is welcome. But there is not an extra penny in this Budget to produce a single new social home, which is the real solution to the country’s housing crisis.

Instead, concentration is on promoting home ownership, through massive taxpayer subsidies, for the few who can afford it, while it is expected that the social housing sector will decline by around 300,000 homes by 2020 thanks to more generous Right to Buy discounts to council tenants and the extension of the scheme to housing association tenants.

 

15.41: But at least Jamie Oliver is happy…

 

15.35: Shares in Irn Bru have fallen by five per cent following the announcement of the sugar tax. We’re hearing that there’s panic north of the border.

 

15.23: Prem Sikka, Professor of accounting at the University of Essex, offers the following analysis:

“The government is now caught in the web of its class politics. Austerity isn’t delivering the promised economic growth and government can’t think of anything else.

There are some giveaways for the government’s core constituency. Corporation tax is to decline from the present 20 per cent to 17 per cent by 2020. Capital gains tax is to decline from 28 per cent to 20 per cent. Money is to taken away from people with disabilities.

Economic growth is now forecast to decline from 2.4 per cent in 2015 to 2.2 per cent in 2016, and to two per cent next year.  Public debt currently stands at 82.6 per cent of GDP, but is expected to hit 86.2 per cent next year and then somehow decline. Another dose of £3.5 billion in public expenditure cuts is to be administered. The £520 million levy on sugary drinks will fill government coffers and will surely to be passed to consumers.

Support for small businesses by taking 600,000 of them out of business rates is welcome, but the Chancellor was silent on its implications for local government finances. The government has promised to tackle tax avoidance and raise £9 billion. But how? HMRC have lost around 40,000 jobs in the last decade, and more job cuts are on the way.

Tax free personal allowance is to rise next year from £11,000 to £11,500, but that is of little comfort to 800,000 people on zero contract hours with no security of income. Wage growth has been stagnant.  The official statistics show that in 1976 workers’ share of GDP in the form of wages and salaries came to 65.1 per cent. Now it is 49.3 per cent, the lowest ever recorded. There is nothing in the budget to boost the purchasing power of normal people”

15.14: Responding to Chancellor George Osborne’s eighth budget, Natalie Bennett, Green Party Leader, said:

“The Chancellor’s repeated claim that the Tories have a long-term economic plan that is delivering a stronger economy is looking more absurd by the day.

Let’s not forget that this latest round of savage cuts is partly driven by the fact that that economy is £18bn smaller than the Office for Budget Responsibility (OBR) expected only four months ago.

Sadly, our faltering economy is not the only driver behind this latest toxic dose of austerity. Osborne, the most ideologically rigid Chancellor this country has ever seen, has proved time and again that he is hell-bent on ignoring the needs of the majority in our society, and the urgency of climate change, so as to deliver a greater share of our wealth to the richest and vested interests like the fossil fuel industries.

The sweeping cuts to disability benefits, that could see 500,000 people lose up to £150 a week, are particularly troubling. Far too many times we have seen this government make the poor and vulnerable pay for the greed and fraud of the bankers.”

15.05: The most controversial aspect of Osborne’s budget is the £1bn cut to disability benefits known as Personal Independence Payments (PIP), which will likely affect 640,000 people. People are particularly furious at the chancellor’s claim to have increased disability spending overall, with ‘changes that will ensure within the rising disability budget, support is better targeted at those who need it most.’

 

14:51: Another budget, another year of cuts, another year of failure

Dave Prentis, General Secretary of UNISON, The Public Services Union, says:

We’re six years into the Osborne experiment, and he’s still forcing the British people to swallow the same medicine – even when it’s clear it’s not working.

The Chancellor’s economic policies have wreaked untold damage on essential community services. Local councils have already cut back so much that there’s little else that can go. Their cupboards are already bare, but still the Chancellor demands more.

By the Chancellor’s own admission, growth is down for this year – and subsequent years – even on projections released barely 100 days ago in the Autumn Statement.

Osborne blames the global climate, but it’s his own policies that are to blame. This is Chancellor getting his excuses in early.

A Budget for the next generation would ensure that libraries and children’s centres weren’t being closed. And that councils were building new houses for hard-pressed families, not selling the best properties to fund right to buy sales.

The Chancellor’s willingness to ‘act now so we don’t pay later’ will jar with the thousands of public servants keeping our hospitals and local councils going – despite working under intolerable pressures. Squeezed budgets and job cuts mean fewer public servants are left to cope with ever increasing demands on services.

If George Osborne was serious about boosting the UK’s flagging economy, he should have reversed the public sector pay cap. Giving NHS, local authority, schools and police staff a much deserved pay rise would ease the squeeze on family budgets and give local economies a long overdue boost.

But instead we’re facing at least four more years of painful cuts, cuts that will continue to hit the most deprived areas of the country the hardest.

And public servants will be left to pick up the tab.

 

14.40: Susan Kramer, Economics Spokesperson for the Liberal Democrats has issued a statement in response to the Budget:

“This is George Osborne’s sweet and sour budget.  His sugar tax may seem sweet, but his hidden cuts are sour. This is not a long term economic plan, it is a short term economic scam. He has missed his targets and is making ordinary people pick up the pieces. Once again his words simply don’t match his actions.

He said he wouldn’t fix the figures to fit the plan, but he has cut vital spending to fit his own arbitrary and unnecessary spending surplus. He said his budget would act now so we don’t pay later.  But he has pencilled in £3.5 billion of cuts to vital services for future years, without the decency to say where it will come from.

He said he would help young people, but he is passing huge additional spending on to schools meaning less money to spend on teachers. He is giving welcome help to small businesses, but lifting the money directly from the public services of the communities in which they trade.  That’s not pro-growth, that is pro-decline.”

14.31: Responding to the Budget Statement, Frances O’ Grady, TUC General Secretary said:

“The Chancellor’s speech shows his gamble isn’t paying off. Far from increasing growth, he’s had to downgrade his forecasts and accept that his plan is failing on productivity and pay.

“Real earnings next year are set to grow even more slowly than he’d previously announced. And he’s had to admit that overall government debt is up too

“The next generation needs a strong economy with more decent jobs. But instead they are faced with more than a decade of lost wages, hundreds of children’s centres and libraries closing, and the prospect of further cuts hitting public services into the future.

“A fair budget for the next generation would have delivered far more investment in infrastructure, jobs and homes and fewer eye-catching gimmicks.”

14.23: Meanwhile, the residents of the Westminster bubble are focusing on the really important questions.

 

14.15: Claire McCarthy, General Secretary of The Co-Operative Party says:

“Its always difficult to make a snap judgement on a Budget because so much of the devil can be in the Red Book detail.  But it is hard to see that today’s Budget will do anything to create an economy where the gains from the hard work of hard working people are more evenly shared; or that the Chancellor is has a real plan to increase productivity.

We needed a budget which set out a plan for a prosperous Britain shared by all.  A budget for a new, shared economy should have included measures to drive up productivity through greater employee ownership and employee engagement coupled with profit sharing.  It would have ensured real diversity in the ownership of financial services and new measures to ensure banks fairly serve families and businesses in all communities.  And it would have made it easier for successful companies, particularly SMEs, to raise the money they need to flourish and create more jobs.  It doesn’t appear that the Budget will lead to meaningful progress in these areas.

It is good to hear reference to Community Housing Trusts, as too often the potential of co-owned and co-operative housing models are overlooked.  There are good lessons to be learned from community land trusts, particularly in the South West, and it is positive that the Chancellor has recognised this.

Finally, we wait to see the detail of the education announcement later in the week but the Co-operative Party will ensure that the voice of more than 800 locally accountable Co-operative trust schools are heard if the mass academisation of English schools is to take place as proposed.”

 

14.05: Sian Berry, Green Party candidate for Mayor of London said:

“I welcome the Chancellor’s commitment to Crossrail 2. With the government covering only half the cost, it’s vital the next Mayor of London has plans to raise the rest. I will cut fares for outer Londoners and flatten the fare zones by 2025 and invest in new infrastructure by raising funds from people driving in our city. Other candidates are either leaving a gaping hole in the finances that threatens public transport and cycling investment, or have no plans to make fares fairer.

“The early retention of business rates is welcome, but the government should give London more options to raise money through property taxes with even more fiscal devolution, so we don’t have to go to the Exchequer with a begging bowl for major projects.

“On housing, I’m very disappointed that the Chancellor isn’t cutting the huge mortgage tax subsidy the Government currently gives to landlords. I have urged him to do this repeatedly, and wrote to him in November to demonstrate that the savings could be used by the Mayor of London to provide 16,000 additional truly affordable homes in London over the period of the next Mayoralty.

“This is the kind of measure he ought to be considering given the scale of our housing crisis, and I’m sorry he has again decided to rule it out.”

war on want

 

13.56: Responding to the budget, Vicki Hird, Campaigns and Policy Director at War on Want, said:

“Billed as a budget that ‘puts the next generation first’, it is anything but. This budget puts the interests of big business over and above everyone else, and is a real kick in the teeth for both present and future generations. This is another budget built on zero hour contracts and exploitation, and will hit the poorest hardest.  As the rich get richer, the chancellor sells the rest of us down the river; cutting services and welfare and ploughing on with his failed austerity experiment.

On tax avoidance, Vicki Hird continued:

“For too long, George Osborne’s action has failed to match his rhetoric when it comes to taking on the corporate tax dodgers. The tax measures are derisory: a tax policy based on illogical cuts to tax inspectors and sweetheart tax deals with the likes of Google is a failure in anyone’s book. The chancellor has done nothing to tackle the armies of corporate tax advisers and lobbyists scuttling around the City of London intent on undermining tax rules and fuelling his austerity agenda. The fact that the UK government has the power to end the tax haven status of its overseas territories, but chooses not to, exposes its true agenda on tax.”

13:50: Kevin Courtney, Deputy General Secretary of the National Union of Teachers has issued a response to George Osborne’s education announcements.

“These are entirely the wrong proposals and priorities for education. The Chancellor seems to be oblivious to the pressing issues that are facing education in England. We have a serious teacher recruitment and retention crisis, a severe school place crisis, and a chronic lack of funding for schools which is leading to subjects being cut, school trips being cut and a reduction in resources.

“Teachers are in total dismay about the chaotic implementation of the curriculum and the inappropriate nature of much of its content. Workload is through the roof and pay has fallen behind many other graduate jobs. Nothing that has been said today will make the slightest difference to any of these serious problems.

“The proposals to force all schools to become academies will result in the dismantling of state education and will end democratic accountability in our schools. This is being done despite clear evidence that academies do not perform better than other schools and, in the case of many large chains, badly let down their most disadvantaged children.

“The Chancellor’s proposals will leave parents, pupils, teachers and communities without a voice or a choice in their schools. This is a backward and irresponsible step which must be reversed.”

13.42: Osborne has finished, and Jeremy Corbyn is delivering his response. We’ll be posting immediate reactions from a range of stakeholders.

13.35: Under new lifelong ISA scheme, people can save £4,000 per year and the Government will give £1,000 every year up to age 50. That money can be used for a new home or into a pension, and will not be taxed when removed.

The idea is that ‘you don’t have to choose between saving for your first home, or saving for your retirement’, but few young people will be comforted.

13.25: Another rabbit: Osborne will impose a sugar levy of the soft drinks industry to improve children’s health and wellbeing. The income will be used to fund sport in primary schools.

Strangely, this was the first time Osborne showed anything resembling normal human emotion:

“I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.”

Try explaining to them that yours was the government that decimated the NHS.

13.20: Here it is on education:

‘We will set schools free from local education bureaucracy. I am today providing extra funding so that by 2020 every primary and secondary school in England will be, or be in the process of becoming, an academy.’

This policy was well-briefed, and this morning we covered the backlash.

13.10: The rabbits came out in the Chancellor’s business section. Changes to stamp duty will see 90 per cent pay less, while the wealthiest nine per cent pay more, corporation tax will drop to 17 per cent by 2020, he is raising the threshold for business tax relief to £15,000 so that 600,000 small businesses pay nothing in business rates.

13:00: The chancellor has repeated and repeated that this is ‘a budget that puts the next generation first’.

A “budget for the next generation”: 3.7 million children (which is 28%) live in poverty #Budget2016

12.50:  Osborne promises £3.5bn of efficiency savings by 2018/19. ‘Efficiency savings’ are better known as cuts. He approaches disability budget, emphasising that disability benefit has increased, but that changes have been made.

12.45: Ten minutes in and Osborne has yet to make any announcements. Has started by celebrating the fact that the British economy is growing more quickly than any other major economy. Which in the context of extremely sluggish global growth, doesn’t  necessarily mean much. He also pitched in to defend the importance of EU membership to the UK economy, and was almost drowned out by his own colleagues.

12.25: In Prime Minister’s Questions, David Cameron made hay out of the falling unemployment figures released by the ONS this morning. Although Jeremy Corbyn didn’t respond, Frances O’ Grady has pointed out that more jobs have not been converted into higher wages.

“Despite continued jobs growth, a full recovery in the value of wages is still years away. Average weekly earnings are still worth £40 a week less than before the crash and pay growth remains too slow.

Kevin Gulliver has written for Left Foot Forward this week on why work doesn’t pay in Osborne’s Britain.

11.55: Welcome to our Budget 2016 liveblog. We’ll be posting rapid reactions, right after the Chancellor George Osborne sits down, from charities, think-tanks, trade unions and political parties.

George Osborne has already tweeted his traditional budget image and tedious ‘long term solutions’ promise. He will stand up to deliver the Budget at 12.30, and is expected to speaking for about an hour before Jeremy Corbyn delivers his response.

Of course, the major parties have already responded to the budget based on the trailed announcements.

Shadow Chancellor John McDonnell is emphasising that Osborne has failed to create the robust economy he promised — and claimed a few months ago to have achieved. 

Liberal Democrat economic spokesperson called on Osborne to abandon his surplus target.

“If he wanted to, George Osborne could really get Britain building again, by borrowing to fund real infrastructure investment.  It is only because of his choice to achieve an overall surplus that this isn’t happening.  He’d rather reheat old announcements than put a fire under infrastructure investment.”

As well as calling for the ‘boldest budget ever on climate change’ by ‘stamping out fossil fuel subsidies, Green MP Caroline Lucas attacked the proposed cuts to disability benefits.

“The iron grip of austerity has taken its toll on this country, and people are struggling to get by already. In that context it would be a gratuitous act of cruelty to slash help for disabled people. Doing so while cutting tax for high earners would be particularly vicious.”

No related posts.

2 Responses to “Liveblog: Reactions to Budget 2016”

  1. Jimmy Glesga

    When it is claimed disability benefits are being cut it would be helpful to have the exact figures of the pre and post figures for the individual benefit. If that is possible! Then we would know the facts.

  2. Joe Bloggs

    The last I heard, a “Curate” is a minister of the church!
    Perhaps collate is a more appropriate word to use?

Comments are closed.