Emergency Budget: real spending will be frozen, not cut

 

The treatment of inflation in the budget is reprehensible:a. Not indexing the ‘gains’ for capital gains tax purposes. This is really just fraud. And justifying it on grounds of ’simplicity’ is disingenuous.b. Freezing income tax thresholds in money terms (i.e. stealthily reducing them in real terms). Rooker, Wise, Lawson, who called for automatic indexation, should not be forgotten. c. Shifting from RPI to CPI for benefits, tax credits and public service pensions. By 2014/15 this apparently ’saves’ £5.8 billion (according to Table 2.1). This is the kind of trick a banana republic might play … unworthy of a British government.

The shift to CPI for benefit increments is also noteworthy because this measure bears little relation to the living costs of those on JSA, Income Support etc. Around half their expenditure (ignoring housing costs – typically covered by Housing Benefit) is likely to be on utility bills which make up a relatively small part of the CPI. Perhaps a more representative index could have been introduced.

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