Increase child tax credit by £150 above indexation (whatever that is!)
I like the sound of a medical to qualify for Disabilty Allowance. It may not be much but it can easily be scammed. All too often scroungers get found out:
Hariot Harman has given an excellent reply, saying that what the Chancellor has said is rewriting history, that there is no need for these massive cuts, that what Labour was doing was working and would have reduced the deficit earlier and that this likely will stop our recovery.
Most of the pre budget independent pundits pointed out that Labour didn't rule out exactly the same measures next year to pay back this huge deficit. The only real difference is that the Conservatives said they'd do this now - not wait a year.
I have to say Harriet Harman was good today in her response - where however was her ire when Gordon Brown and Tony Blair were in power? (It's always easy to be open and honest when in opposition)
It is also interesting how 'welfare scroungers' are always top of the news and money being put in to find them, when tax evaders who cost the country far more money, rarely get mentioned and sought.
-- Now as to the rich being hit hardest. The second richest group in society is being hit the hardest but after that it is the poorest --
Couldn#t agree with you more.Tax evaders had a pretty light time under Labour - all parties should clamp down on opportunities to evade tax.
Now is not the time for cuts. The cuts are far more than was said in the election manifesto. VAT hurts the poorest most. I think that is what she believed before and what has changed in the Conservative approach.
Alexa,
It should be noted that the budget plan announced concerns a five-year timeframe. All the cuts and tax hikes will not occur immediately.
Apparently, given its references to Greece, the UK government believed that there was a sense of urgency to preempt market developments that might spark concerns about a debt crisis that, in turn, would require more and more austerity to try to fend it off. Market psychology can be extremely fickle. Markets can go to excess. They can become irrational. The UK's government evidently is worried about contagion associated with developments in some other debt-intolerant (unable to increase debt without significant adverse market reactions) countries.
Establishing and then maintaining market confidence is essential to avoiding such an outcome. The key to doing so is to meet or exceed deficit reduction targets so as to build and sustain the fiscal credibility necessary to insulate one's government against a dramatic turn in market sentiments. The kind of self-reinforcing feedback that the UK government seems to be worried about would entail the markets' reacting badly to the government's current fiscal path, which would push up interest rates making raising debt service costs for newly issued debt. In turn, the government would need to respond with tax hikes/spending reductions. Such a policy would impede growth in aggregate demand/perhaps weaken it. Impeded or reduced aggregate demand would undermine macroeconomic growth. Reduced economic growth (or a recession) would push down tax revenues/raise expenditures (at least the countercyclical portion of the budget). In turn, the deficit would be larger than anticipated and an additional adverse market reaction would result. The cycle would repeat itself over and over. As that happens, the government would begin to run out of programs that it could cut without the risk of grave political repercussions. The overall result would be recession/stagnation, persistently high unemployment, larger debt, reduced access to capital, and increased public pressure on the government to abandon its austerity program.
The UK government is hoping that the magnitude of fiscal sacrifice it announced will provide it with sufficient fiscal credibility in the immediate term. It probably should, unless indications that it cannot implement the policies emerge in coming days and weeks.
Afterward, the next milestone would be for the government to meet or exceed its deficit reduction targets. IMO, the government's estimating economic growth below the IMF forecast is not a bad thing. Often, economic growth is lower than anticipated during fiscal consolidation/austerity programs, so there is a chance that the overall budget numbers might be more accurate than if somewhat greater growth had been assumed. Needless to say, if the government misses its deficit reduction targets, that would be a problematic development.
On a brighter side, unlike Greece and the U.S., a much greater share of Britain's debt is of longer-term maturities. Hence, the risk of a near-term liquidity crisis remains fairly low, even as the magnitude of the overall debt challenge is substantial.
In reality we will just need to wait and see, but given that even you agree the comparison with Greece is not a very credible one,.......
Alexa,
I believe there are substantive differences between the UK's situation and Greece's. Commonalities include large budget deficits. Differences include debt structure, better trade balance for the UK (including a viable export sector), greater debt tolerance for the UK. Greece's long-term fiscal outlook is also much more grim than the UK's, though both face substantial long-term fiscal challenges.
Market psychology, though, is a very fickle thing. One cannot assume that markets will always act rationally (indeed, I believe some of the fear-driven reaction to Greece's woes that fueled a genuine risk of contagion in the wider European Union was not rational). I suspect that the new coalition government in the UK was quite worried about market expectations, not to mention a possible downgrade in the UK's credit rating.
Commenting Ian Mulheirn, Director of the SMF said:
"To cut one pound out of every three from the Department for Business, Innovation and Skills, Home Office and Department for Work and Pensions is a huge ask. These cuts are equivalent to the entire running costs of the prisons and courts; more than half spending the police; and the entire pay bill for Jobcentre Plus. It is very questionable whether cuts of this size can really be found.
To make the deficit reduction plan feasible, it seems likely the Chancellor will be back with more tax rises and cuts to benefits."
-- Ken Clarke has already announced plans to cut around 30% of courts in England and Wales --
You couldn't provide a link to this could you? I'm interested to see what they do to the courts services and legal aid.
It doesn't seem to be dealing with legal aid - of course that will be next.
I was just thinking of questioning whether the Lib Dems would ever get another seat in Parliament when I came upon this article where they may have been thinking the same themselves. Seems a revolt is in the offing already possibly led by Charles Kennedy.
I doubt they will take it away completely - I think the threshold for receiving it will be raised and the threshold of winnings you can have before you have to start paying it back will be lowered.
The problem for Clarke is that not only has the ministry's budget been squeezed in recent years – the 2007 comprehensive spending review cut it and envisaged the MoJ making annual savings of over £1bn by 2010/11 – but it was already being wrung yet further. In March, the MoJ committed itself to delivering £343m of the £11bn annual efficiency savings from 2012/13 announced in the budget, and surprised many by volunteering to save a further £360m as part of the Public Value Programme, through reforms across the criminal justice system and legal aid.
David Cameron worked hard to "detoxify" the Conservative brand in the years leading up to the election - partly by keeping major party players in the background.
But weeks after coming to power Clarke's actions have cast them as the Nasty Party- as Home Secretary Theresa May once dubbed the Conservatives.
Clarke in one of his first moves as Lord Chancellor and Secretary of State for Justice has confirmed legal aid will be paid only after a case is closed - rather than every month. This means people representing complex legal cases could wait months and years for payment for their work.
The move has immediately resulted in the bankruptcy of the Refugee and Migrant Justice charity which in the past year has represented 11,000 people, many of whom are asylum seekers fleeing murder, war, rape and torture - including children.[/quiote]
New Left Project | Blogs | Clarke spark: Demonstrate at Lord Chancellor’s legal aid trick to shut down asylum seeker charity
-- He has changed the way in which it is paid from ongoing to only after the case is closed.
This has already caused the shut down of an Asylum seekers charity. ROP will no doubt be pleased. Killing two birds with one stone --
Raisng taxes is a penny-pinching, wallet-stealing crime!
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