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’