Press Story

"In our view it needed to be much more progressive than it was to offset the impact of deep cuts in public services that are round the corner.

"ippr set a threshold of fairness to judge this budget. There were some welcome announcements, such as the bankers levy, the increases in Capital Gains Tax (though he should have gone further), the incentives for businesses to grow in hard-hit areas and the rises in child tax credit to protect the poorest. But in other measures the Chancellor risks doing too much too soon to reduce borrowing - increasing the chances of the tentative economic recovery being snuffed out."

ippr also has concerns about some of the specific measures announced in the budget:

The Office for Budget Responsibility set up by George Osborne showed that the existing plans for deficit reduction were credible and would satisfy the markets. In his statement the Chancellor provided no evidence of why deficit reduction needed to be accelerated
This was a budget too narrowly focused on deficit reduction with an assumption that such a reduction will set the private sector free to generate economic growth
ippr is concerned that the 77%/23% ratio of spending cuts to tax increases will disproporationately hit lower income families who rely the most on public services
As ippr has consistently argued, a staged 3p increase in the basic and top rates of income tax (which would raised £15 billion) is a much more progressive way of raising much needed tax revenue than the hike in VAT to 20% - which will hit poorer households disproportionately
ippr welcomes a number of the other tax changes - such as the rise in the tax threshold for poorer households, the bankers levy and the incentives for business to grow jobs in hardhit areas. The increase in capital gains tax is welcome, but in the interests of transparency and fairness it would have made more sense to align it with higher rates of income tax and put it up to 40% and 50% for better off people. The Chancellor made much of making his changes simple and consistent, but the 28% rate for CGT is a political fudge, designed to balance competing views within the Coalition parties
While the Chancellor tried to balance his benefit cuts with measures to protect the very poorest, there is a real danger that cuts on the scale announced will hurt the vulnerable badly if the projected economic recovery does not deliver jobs for those now so reliant on benefits
ippr welcomes the Green Investment Bank, but otherwise there was an almost complete absence of tax measures or new investment to build a low-carbon economy.

Contact:
Tim Finch, Director of Strategic Communications
0207 470 6106 / 07595 920899 / t.finch@ippr.org

Nyta Mann, Media Manager
020 7470 6112 / 07979 602065 / n.mann@ippr.org