The budget is 'grossly unfair', say poverty campaigners

By staff writers
21 Mar 2012

Taxpayers Against Poverty spokesperson the Rev Paul Nicolson has accused chancellor George Osborne's spring statement of being "grossly unfair" overall.

"The very wealthy will not feel a pin prick in their comfort zone of tax free global finance, while some of the poorest citizens of the UK are using food banks," he declared this afternoon (21 March 2012).

Mr Osborne, one of eighteen millionaires or multi-millionaires in Prime Minister David Cameron's Conservative and Liberal Democrat cabinet, announced cuts to the top rate of income tax paid by the very wealthiest people from 50 per cent to 45 per cent. He also announced a £1,100 increase in the amount of money people can earn before they start paying tax, leading to an average of £220 annual savings.

However, nearly 4.5 million pensioners will be worse off in 2013 as a result of age-related tax allowances being frozen and axed. Those on the minimum wage are also being hit by actual or real-terms reductions in income, while people on benefits are being savagely attacked, say critics. A further £10 billion in welfare cuts is planned by 2016.

"The budget cuts in taxes and increases in spending are being paid for by the £18 billion which began to be taken out of social security in the 2010 emergency budget," said the Rev Paul Nicolson in response. "The cuts have been leading to rent arrears, unmanageable debt, forced migration and even hunger in the UK. Why else the ever-increasing number of food banks since 2010?"

He added: "People's spending is being drastically reduced when the shops need their money. The attack on welfare is an attack on the economy. Cutting social security increases the cost to the taxpayer of poverty related illness and educational underachievement in the NHS, the schools and the economy at large. The Treasury never estimates the savings from reducing poverty."

Mr Nicolson points out that 275,000 very rich additional rate taxpayers are charged 50 per cent on their taxable incomes, a total of £41.4 billion in 2009/10, or an average of £151,000, according to HMRC.

"Anyone paying that amount of tax is likely have a disposable income of at least £450,000, or probably millions," he says. "They can get by without a cut in tax or with an increase."

Niall Cooper of Church Action on Poverty has also pointed out that 212,000 low income working families set to lose £3,870 a year each as a result of the rules for Working Tax Credit for couples with children changing.

Delivering his third budget, Mr Osborne also said tobacco tax would rise by five per cent above inflation, adding 37p on 20 cigarettes. The scheduled 3p rise in fuel duty in August will now go ahead.

The threshold at which income tax is paid had been due to rise to £8,105 next month and will now increase to £9,205 in 2013.

But age-related tax allowances will be frozen, and stopped for anyone turning 65 after 5 April 2013. This means that 4.41 million older people will be worse off, by an average of £83, in real terms in 2013-14.

Child benefit for families with one higher-rate earner will now only be withdrawn when someone in a household earns more than £50,000, at a rate of one per cent of the benefit for every £100 up to £60,000, when it will be cut entirely.

Corporation tax will be cut more than expected from April 2012, to 24 per cent rather than 25 per cent as planned, falling to 22 per cent by 2014. Critics say that the very richest firms will, as now, pay little or nothing.

Sunday trading laws on eight Sundays during the Olympics and Paralympics will be 'relaxed' from 22 July, leading to fears from unions and churches that further liberalisation is on the way, with deleterious impacts on families and less mobile, lower paid workers.

Moves are in hand to pursue regional public sector pay, in order to make cuts and levellings down in less prosperous areas of the country.

The government will seek "major savings" in the administrative cost of the Carbon Reduction Commitment, and bring forward an alternative measures this autumn if such savings cannot be made.

Under pressure from the government's recessionary policies, the UK growth forecast for 2012 has been revised down from 2.5 per cent to 0.8 per cent, Mr Osborne was forced to concede. The Eurozone growth forecast for this year has been revised down from 0.5 per cent to -0.3 per cent. The chancellor promised higher growth after 2013.

The Office of Budget Responsibility forecasts that UK unemployment will reach a peak of of 8.7 per cent in 2012, before stabilising at a still-high level of 6.3 per cent by 2016-17.

Labour Leader Ed Miliband labelled the chancellor's statement a "millionaire's budget".

"Tax credits cut, child benefit taken away, fuel duty rising - and what has he chosen to make his priorities? For Britain's millionaires, a massive income tax cut each and every year," he said.

Charities, trade unions, Greens and anti-poverty campaigners are also highly critical of the Mr Osborne's approach.

* The full budget statement can be read here: http://cdn.hm-treasury.gov.uk/budget2012_complete.pdf

[Ekk/3]

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