Wednesday, 5 December 2012
Gloom goes on
The Chancellor is still digging in the hole he has made for himself. Whatever the details announced the truth is that after all the cuts and the hard times inflicted on the country we’re no better now than 2010. The deficit is actually bigger.
Oh, the cuts have certainly been real, £59bn's to be exact. No sooner was the Chancellor on his feet he had to come clean that the economy, according to the Office for Budget Responsibility, would shrink by 0.1%. And because he’s not making progress with the economy he’s had to admit that he’s going to miss his target that debt should start falling as a proportion of GDP by 2015/16 - the year of the next General Election. Instead he said it would take another year. Oh dear, bad news for his election strategy.
But the Chancellor if nothing else is one of nature’s optimists he still thinks that “Britain is heading in the right direction. The road is hard but we're making progress."
His statement was more of the same. Hardship all round. But of course it’s the poor that take the biggest hit.
Most working-age benefits are to rise by less than inflation, 1% for each of next three years. Housing benefits will also continue to take an hit after April for a two year period will be capped at 1%.
Pensioners will see the state pension go up to £110.15. But from 2014-15 lifetime pension relief allowance will fall from £1.5m to £1.25m. Those with kids will also take an hit with child benefit only rising by 1%. All in all the changes will result in saving of £3.7bn by 2015/16
On tax the net result was no change. But he did move the deck chairs around. The tax threshold is to be raised by £235 to £9,440.
The threshold for 40% rate of income tax is to rise by 1% in 2014 and 2015. This will mean it will go up to £41,865 and then £42,285
Corporation tax will go down 21% in April 2014.The threshold for inheritance tax goes up by 1% next year. He also hopes to get cash back from the Swiss Banks from those that have salted their cash there. He reckons the sum will be £5bn
Unlike other government departments HM Revenue and Customs budget will not be cut. The Chancellor expects them to chase more tax dodgers.
For those with savings the ISA contribution limit to be raised to £11,520 from next April.
But much to the distress of the Liberal Democrats he introduced no new tax on property values. So the rich continue to get to live in their mansions without any additional burden.
Civil servants will continue to be pruned. All departments are to suffer cuts, by 1% next year and 2% the following year. These job losses will add to unemplyment which is expected to peak at 8.3%.
The Welsh government will expect to see its budget increases courtesy of old friend the Barnett formula. That’s because the Chancellor announced an extra money for transport, education and other infrastructure schemes in England.
Good news for the motorist with the his promise to scrap the January 3p rise in fuel duty.
To sum it all up. Years more pain mainly for those least able to carry such a burden. At little more investment in the infrastructure which is much needed, but not enough to get the country’s economy moving again.