Today, George Osborne stood in the House of Commons and announced the emergency Budget for 2015. Osborne said several times during his speech that the Conservatives are “a party for the working people”. Harriet Harman responded to this claim by saying: “How can he [Osborne] make that claim when he is making working people worse off by cutting tax credits and scrapping grants for students?”
Here are some of the key points from the Budget:
Growth – The expected growth in GDP has dropped from 2.5% to 2.4%. Although the forecast is expected to grow by 2.3% the following year and continue to grow after that.
Debt – Osborne is expecting to lower the debt from 80.3%, as a proportion of GDP, this year, to 68.5% in 2020. But how will he do this?
NHS – Osborne claimed that “the NHS is only truly safe in the Conservative’s hands” and promised to spend an extra £8bn a year on the NHS. Certainly an important place to spend people’s taxes, but where are the cuts going to be made?
Tax avoidance – Osborne has promised to abolish non-dom tax statuses, a policy first promised by Ed Miliband before the General Election, for anyone who has been a resident in the UK for fifteen of the last twenty years. This will hopefully draw in more money from wealthy residents of the UK who have been avoiding tax through a flawed system. Although, an extra £750m will be paid to the taxman to tackle avoidance.
Banks – Also similar to a previous Labour policy, the current Levy is to be reduced over six years with a new 8% surcharge on profits. This policy should hopefully raise more money from the banks, which will be well needed after the selling off of RBS.
Indirect taxes – Fuel duty will be frozen and a reformed vehicle excise duty will be introduced to fund new roads. Although the new excise duty is expected to discourage people from taking advantage of the cheaper fuel, there is no guarantee that it will not be damaging to the environment – which will really anger eco-warriors across the country.
Higher Education – possibly the most controversial policy of the speech, Osborne has decided to scrap maintenance grants and replace them with loans. Maintenance grants are important for students whose parents cannot afford to pay for them to go through university. This policy will create an unfair wealth divide, where students from poorer backgrounds will be paying back more money than those from richer backgrounds. Osborne boasted a record high number of working class students joining university under the previous government; but without the support of a maintenance grant, students from poorer backgrounds or mature students could be discouraged from attending university out of fear of being in perpetual debt.
Northern powerhouse – Osborne has vowed to devolve more power to the North; although how it is going to be spread out is not clear yet. This is a policy which is pleasing to left-wing voters as it gives more power to areas with a large number of Labour constituencies, such as Manchester, Liverpool and Sheffield.
Inheritance Tax – As of 2017, people can inherit up to £1m tax free. This is a policy that, according to Osborne, the left “wouldn’t understand”. But what is easy to understand is that this will not help lower the debt and that it is a policy that will predominantly benefit the rich.
Corporation tax – Osborne has promised to cut corporation tax from 20% to 19% in 2017 and then to 18% in 2020. With already the lowest rate of corporation tax in the G7, the Chancellor is continuing to support the rich whilst making cuts in welfare during a time of austerity. The USA currently has the highest corporation tax rate in the G7, at 40% – twice as high as our current rate.
BBC – Osborne has bullied the BBC into picking up the cost of the TV licence for over 75s by promising no more cuts to their funding. In return, the billpayer must now pay for a TV licence if they watch BBC on-demand programmes.
Welfare cuts – The part of the speech most people had been waiting for: the cuts to welfare. The notorious benefit cap was confirmed, with a maximum of £23,000 to be claimed in London and £20,000 in the rest of the country. This policy will further increase poverty and does not guarantee the financial protection of the disabled. Osborne has also pledged to give no automatic housing benefits to 18 to 21 year olds and to restrict the number of child tax credits to only two children. Although it may seem a fair policy, to the right-wing, to enforce on those who are represented as “scroungers” in right-wing media, it is the children who will ultimately be punished. These policies will further increase the already disturbingly high level of child poverty.
Personal tax allowance – Osborne has pledged to raise the personal tax allowance to £11,000 by next year. This will benefit those on the threshold of each tax bracket, but will not decrease the debt.
National living wage – Osborne finished up with a pleasing policy for low earners when he announced that a national living wage would be introduced forcing businesses to pay their employees, over the age of 25, £7.20 an hour and £9 an hour by 2020. This policy should help workers who are on minimum wage and struggling to make ends meet, but, like the rest of his policies, will not help those under 25.
By Jonathan Pickles