Press Story

Nick Pearce, IPPR Director, said:

"This mini-Budget does not address the main problem facing UK economy in the short-term: the shortage of aggregate demand. Many of the Chancellor's collection of small measures are welcome but it is wrong to squeeze the living standards of lower and middle income families relying on tax credits in order to pay for lower increases in fuel duty.

"What we now know was that the bubble, when it burst, was bigger than we realised. As a result, the Chancellor has had to spread the pain out longer. But the faltering recovery has not helped and the cumulative effect of growth downgrades on unemployment in 2013 show just how bad things are. Last June it was forecast to be 6.8%, in March was 7.6% and now 8.6%. Before the recession began, unemployment was just 5.2%. This is the true cost of a lack of demand in the economy."

A number of measures announced by the Chancellor today are welcome by IPPR as important moves towards boosting growth and dealing with the UK's structural economic weaknesses:

£5bn capital investment
R&D tax credits
Free child care for more disadvantaged 2 year olds
Institutional investment into house building
Youth contract jobs guarantee for young people out of work for a year
Capital Allowances in the north of England
New toll roads, increased transport capital investment
More financial powers for city mayors

Will Straw, IPPR Associate Director, said:

"The small print of the Chancellor's autumn statement shows that the totality of tax, tax credit and benefit measures adopted by the Coalition Government or carried over from the previous Labour government will be regressive for the lowest 80 per cent of earners. The latest analysis will further damage George Osborne's claim that those with the "broadest shoulders should bear the greatest burden".

"Chart 1B of the supplementary document titled 'Impact on households: Distributional analysis to accompany the Autumn Statement 2011' shows that those in the lowest income decile are the second worst hit by the totality of Government measures after the richest 10 per cent who face a 50p income tax charge on earnings above £150,000.

"These measures save £1.2 billion much of which is passed on to motorists who will benefit from a defer the 3.02 pence per litre fuel duty increase that was due to take effect on 1 January 2012 to 1 August 2012, and cancel a further increase planned for

August 2012 at a cost of £975 million in 2012-13. After enduring two years of pay freezes, public sector workers including teachers and nurses will have to endure pay rises of a paltry 1 per cent for two years, saving the Treasury £1 billion by 2014-15.

"George Osborne did not claim today that "We're all in it together". The reason is glaringly obvious."

Will Straw shows how the OBR's growth projections have fallen: http://www.leftfootforward.org/2011/11/how-the-obr%e2%80%99s-growth-projections-have-fallen/

Notes to editors:

IPPR's report - '10 ways to promote growth' - is available to download from http://bit.ly/IPPR8266

IPPR's report - 'State of the UK economy' - is available to download from http://bit.ly/IPPR8255

IPPR's report - 'Deficit Reduction Averaging' - is available from http://bit.ly/dZLfRH

Contact

Richard Darlington, 07525 481 602, r.darlington@ippr.org

Tim Finch, 07595 920899, t.finch@ippr.org