Press Story

The budget speech came in the context of annual growth figures for 2011 being revised down from 2.6% (last June) to 1.7% and a forecast from the Office of Budget Responsibility that there would be 130,000 more people unemployed by 2012.

The Chancellor's refusal to introduce flexibility into the timing of his deficit reduction measures meant that he had to produce a fiscally neutral budget. To finance his giveaways, he therefore had to resort to stand-bys familiar from the Labour days:

o A tax avoidance clamp-down, aiming to raise £1 billion
o A windfall tax in the form of supplementary charges on oil and gas production, to raise £2 billion
o And a stealth tax, by changing the indexing of tax allowances, to raise £1 billion by 2015/16.

On growth, the measures were an old-style mix of tax cuts, Enterprise Zones and deregulation, together with odds and sods collected from Whitehall departments.

ippr director Nick Pearce said:

'The long list of measures in this Budget fell short of a big vision for growth. The Chancellor had one big structural reform - the long-term integration of tax and National Insurance - but otherwise there was a shopping list of smaller measures that were, in style, curiously reminiscent of Gordon Brown's Budgets, and in substance a mix of old-style deregulation and reheated Whitehall business policies.
'There was nothing to measure up to the scale of the challenge Britain faces to secure growth and distribute its proceeds more fairly. The Chancellor was silent on innovation, the potential for a modern industrial strategy, on significant state investment in infrastructure and business growth, and on bold ways of increasing skills and productivity.'

Notesto editors

Download ippr's briefing, Budget 2011: A case of tunnel vision

Contact

Tim Finch, Director of Communications: 020 7470 6110 / 07595 920 899 / t.finch@ippr.org