Budget 2015: Our panel’s reaction
Louise Haigh, Labour MP for Sheffield Heeley
This Budget is the final act in a financial crisis which has seen debt move from the financial sector to the public purse and is now piled onto individuals who will be comprehensively unable to foot the bill for the Chancellor’s raid on tax credits, on Housing Benefit for under-25s and other measures.
In contrast to what Conservatives have claimed for the last five years, the deficit was not at record levels because of out of control public spending but in fact was lower between 1997 and 2007 than it was in every year under the Thatcher and Major Governments. Prior to the 2008 financial crash, only two countries were running a Budget surplus – Ireland and Iceland, so to suggest that a slightly smaller deficit in 2007 would have cushioned us from the catastrophic events that were to come ignores the evidence from our closest international neighbour.
The Chancellor may have wanted a rebalanced economy and a recovery built on rising incomes, producing sought-after and high quality products. But that is simply not happening. The Chancellor is repeating the mistakes of the past: high debt, low pay, an economy based on a credit and housing bubble, and a deregulated financial sector. Back to ‘business-as-usual’.
Dr Craig Berry, Deputy Director of the Sheffield Political Economy Research Institute (SPERI)
George Osborne’s budget speech was, as usual, a masterclass in combining the rhetoric of change with reality of continuity. Britain has, according to Osborne, left ‘the age of irresponsibility’ behind. There is very little basis for this claim. It rests upon the proposal that governments should be compelled to run budget surpluses under ‘normal’ economic circumstances. This represents a staggeringly irresponsible agenda, insofar as it constrains government’s ability to borrow to fund very long term investments that will benefit future generations. At the same time, the government will continue to prop up the housing market through several measures, including the extension of Help to Buy and inheritance tax cuts.
There were some minor reforms to the tax relief available to buy-to-let landlords (at the behest of the Bank of England), but Britain clearly remains a buy-to-let paradise. Our economy remains under the threat of a burst of the property bubble – and the threat is a severe one. The rebranding of the National Minimum Wage as the National Living Wage is gimmickry of the highest order, designed only to soften criticism of the continuing downward pressure on wages rather than bring about real pay rises, and it seems likely that any gains for employees will be offset by losses arising from significant tax credit cuts.
Caroline Lucas, Green Party MP for Brighton Pavillion
This is a pivotal moment in the dismantling of the welfare state .The cuts announced today will plunge thousands of people in poverty, and cause families to be evicted from their homes. I'm deeply concerned that my own constituents are set to face needless hardship as this Government continues its economically illiterate and utterly unjust mission to hack away at our welfare state and public services.
This Government's ideological obsession with welfare cuts is gutting our social security system. It's now vital that the Labour Party quickly rises from its post-election slumber and fulfils its job as the official opposition - giving in to the Tories on an issue like the benefits cap cut would be an utter betrayal of the many people in Britain who are struggling to get by.
Professor Prem Sikka, Professor of Accounting, University of Essex
It was a case of smoke and mirrors: tax concession for the well-off and promises of jam tomorrow for the less well-off. The government has announced welfare and tax savings of some £17bn. Public sector pay increase is capped at 1% a year for the next four years. The increase in income tax personal allowance from £10,600 to £11,000 will add about £80 to the take home pay of workers but is hardly a compensation for the real-term cuts. A living wage for the over 25s, not now but by 2020.. But under 25s need everyday essentials too.
Mortgage tax relief available to buy-to-let landlords will be restricted to the basic rate of income tax, but even that is not available to normal people struggling to get on the housing ladder. The bank levy which was expected to generate about £3.5bn a year is to be replaced with an 8% surcharge on profits. That will hardly worry banks which are very adept at shifting profits to low tax jurisdictions.
The government hopes to raise £5 billion from clampdown on tax avoidance though previous efforts have not delivered the promised outcomes. The naming and shaming of serial tax avoiders would hardly worry big corporations. There should be punitive measures.
Liz Hutchins, Friends of the Earth
This was another dirty Budget from Chancellor Osborne. In the final months before global climate talks in Paris in December this year we needed a Budget that would pull a hand break on the UK’s dependency on fossil fuels.
Instead we heard confirmation of huge tax breaks to North Sea gas and oil – delivering on his promise to “drill every last drop” despite the need to keep around 80% of known fossil fuels in the ground to avert runaway climate change.
The Chancellor confirmed bribes, in the form of a sovereign wealth fund, to local communities to accept fracking. This follows a resounding defeat last week of Cuadrilla’s applications to frack in Lancashire. Three quarters of Lancashire people oppose fracking despite Cuadrilla’s generous charm offensive to fund every community centre and sports club in the vicinity.
He also promised to use reformed car tax for a new road fund. Money raised from taxing cars shouldn't be spent on boosting the Government’s super-sized road building scheme – it will simply encourage more traffic and cost more lives with already dangerous air pollution. Instead the Chancellor should invest in public transport and making our cities better for walking and cycling.
Laura Pidcock, Labour Councillor for Cramlington Eastfield
Local authorities have suffered massively as a result of huge and unnecessary budget cuts over the last parliament. According to the IFS, spending per person has been cut by 23.4% in real terms between 2009–10 and 2014–15. Further cuts planned for 2015–16 will generally be focused on the same local authorities that have lost over the last five years. Without a change in policy, any further cuts over the next parliament are also likely to affect the same places again. We simply cannot take any more.
I worry for the people I work with who are recipients of working tax credits, I worry for my residents in rent arrears due to the bedroom tax, I worry that child benefit will be taken from families, so much worry and for what end? A smaller deficit? No thanks. I would prefer a society that can say it is humane.
Kevin Gulliver, Director of the Human City Institute
The key housing announcement in yesterday’s Budget requires that rents on social homes should fall by 1% a year for the next four years with the Chancellor hoping that this will reduce the ballooning housing benefit bill. Working social tenants won’t profit though, since a range of changes to tax credits and tightening of benefit caps will wipe out any potential gains from rent reductions.
This replaces the agreed social housing rental formula of CPI plus 1% and throws into confusion the business plans and already secured loans for housing development of social landlords.
The projected, cumulative housing benefit saving is 4.3bn over five years. However, the OBR predicts that 14,000 fewer affordable homes will be built as a consequence, putting further pressure on social waiting lists and homelessness services.
Meanwhile, the private rented sector, the main generator of housing benefit growth, is again let off the hook, even though the average PRS rent is £21 pw higher than a social rent.