Emergency Budget: Reactions
All the reactions to the emergency Budget, from across the political spectrum.
TUC general secretary Brendan Barber
“This Budget was economically dangerous and socially divisive. The one thing we can now say is that we are very definitely not all in this together. Those on middle and low incomes have done worse than expected, and the rich have been let off much of what they feared. But we will all suffer from an economy that is now likely to be sluggish at best and with a double-dip recession at worst.”
Unite joint general secretary Derek Simpson
“Osborne and Cameron’s talk of financial Armageddon is not because they have the solution to the deficit but to scare the British people into accepting the biggest attack on essential services for a generation. Today the mask slipped to reveal this government for what it is – Tory slashers of services and friends of the rich and powerful.
“Where is the promised fairness in cutting the wages of needy households yet fighting shy of closing the tax loopholes which allow the wealthy to dodge their duty to this country? And increasing VAT is reckless – it will stop people spending, harm UK business and choke off the recovery.
“This Budget is vintage Thatcher. The Lib Dems have been conned into hammering the poor, choking off investment and cuts that risk plunging this country into a longer and deeper recession. If they do not disassociate themselves from this, then the Lib Dems will have to bear the responsibility.”
British Retail Consortium director general Stephen Robertson
“We didn’t want a VAT increase. It’ll hit jobs, consumer spending, the pace of recovery and add to inflation but we accept the Government has no easy options. It’s some consolation that the range of VATable products isn’t being extended. Changing computer systems and shelf prices on tens of thousands of products is a huge, costly exercise for retailers. Planning for catalogues is a particular nightmare. The start date, in the middle of the busy and crucial post-Christmas sales period, will be difficult but retailers would rather have more notice than less. Six months to prepare is better than the rise coming-in this summer. Retailers will work hard to implement the increase smoothly but there must be a light-touch to enforcement at the time of introduction.”
“The government is right to prioritise substantial cuts in public spending over tax rises. It has to cut spending which cannot be fully justified and get more from every pound it raises. The chancellor is right that private sector businesses are the engine that will drive growth. To restore the public finances to health the government must deliver an environment that encourages private sector investment. Tax increases do the opposite.
“Lowering corporation tax will support private sector investment and entrepreneurship. It also sends a positive message to the rest of the world that the UK has a competitive tax system which makes it a good place in which to do business. But reducing capital allowances for plant and machinery will hurt retailers’ cash flow. Like manufacturing, retail is a capital intensive sector. Taking more money from retailers will hit investments. Anything which tips the balance against plans for marginal stores should be avoided. However the delay in introduction until 2012 is welcome. Retailing is key to town centre regeneration. It revitalises communities by creating jobs and promoting economic growth. Protecting incentives for investment in retail-led regeneration brings widespread benefits.”
Director of the Social Market Foundation Ian Mulheirn
“This budget had to pass two tests- are the tax changes fair and is the deficit reduction plan politically viable? The tax rises by and large pass the fairness test, with higher earners paying a higher proportion of their income. But while the tax rises seem big, in the context of what is required, they are not. This poses problems for the credibility of the plan. The tax measures announced today mean cutting over £60 billion from public spending over the next five years. With universal benefits protected, the NHS needlessly ring-fenced and the unaffordable triple lock on pensions, cuts elsewhere will be swingeing which would undo their efforts today to protect the least well off. The state’s creditors want the deficit closed and they don’t much care how it’s done, so long as the plan is viable. The danger for the government is that the country simply won’t swallow this level of cuts to public services – hair-shirts have never flown off the shelves. It’s therefore likely that the chancellor will be back with more taxes before long.”
Unison general secretary Dave Prentis
“This budget signals that the battle for Britain’s public services has begun with the Government declaring war. Public sector workers will be shocked and angry that they are the innocent victims of job cuts and pay freezes. Freezing public sector pay when inflation is running at 5.1% and VAT is going up, will mean a real cut in living standards for millions of ordinary workers and their families – already struggling to pay rising bills. Nurses, social workers, midwives, paramedics, police community support officers, housing and environmental officers who provide vital public services, are amongst those who will be hit hardest by the two year pay freeze. And for local government workers this comes on top of this year’s freeze.
“A 25% cut in departmental public spending will decimate our public services. The budget will do nothing to restore confidence or kick-start the recovery, but will push local economies into the ground, raising the spectre of breadline Britain. They haven’t even bothered to consider any other option but slash and burn. What of the bankers who caused the recession and the super-rich who evade tax? They must be breathing a sigh of relief that they got away so lightly. The bank tax levy is a poor substitute for a serious ‘Robin Hood’ tax on financial transactions. It is a missed opportunity to raise £30bn which would have made a significant dent in the country’s deficit. Throwing tens of thousands of public sector workers on the dole will cost the country billions in lost tax revenue as well as piling billions onto the benefits bill.
“The chancellor dreams of a private sector recovery but how can that be on the back of brutal cuts to public services workers. Local businesses, shops, hairdressers, restaurants will go to the wall as spending dries up. No amount of fiscal stimulus will do any good if they have no customers. Vital services that the poor, the sick and the vulnerable rely on, are in the firing line. There is no compassion in this coalition. Freezing council tax is a useless gesture saving people pennies but cutting tens of millions from council budgets, trhreatening jobs, losing services and undermining the local economy. Raising VAT affects the poor the most as they spend a higher proportion of their meagre incomes on goods and services. Meanwhile major utility companies spend money sponsoring sporting events whilst attacking pay and conditions – that cannot be fair.”
TaxPayers’ Alliance chief executive Matthew Elliott
“This Budget contains a lot of welcome and necessary spending cuts, but there is still plenty of other deadwood to be carved out of government spending. With such a massive deficit, this must only be the start. It’s good news that the chancellor has taken on the sacred cow of welfare spending, but the government are still unwisely protecting the other sacred cows of the NHS bureaucracy, international development and our big contribution to the EU. When it comes to tax policies, the increase in the income tax threshold and the cuts in corporation tax are very good news indeed, but really the Budget gives with one hand and takes away with the other. It is utterly wrong to increase VAT, particularly when there is other low hanging fruit when it comes to spending cuts. The poorest will be made to pay even more tax while the state continues to waste a fortune on bureaucrats and quangos.”
Oxfam director of campaigns and policy Phil Bloomer
“The government has missed an opportunity to raise more money to protect the poorest people in the UK from spending cuts and VAT rises, as well as helping tackle poverty and climate change overseas. The announced £2bn bank tax is well under the £20bn a Robin Hood Tax could generate and none of it has been promised to go towards helping the people who have been hit hardest by the mess the banks made.
“We need to reform the benefits system so that it responds to people’s needs rather than trapping them in poverty. This will take wise judgment alongside up-front investment, rather than painful cuts, but will pay for itself in time and help Britain recover quicker from the recession.
“At a time when the UK faces difficult spending cuts, Oxfam strongly values the government’s continued commitment to development, with its reaffirmation of crucial spending plans on aid. Supporting the world’s poorest people is central to the UK’s role as a progressive global leader.
“Oxfam also welcomes the government’s recent reaffirmation of the UK’s Fast Start climate money which will provide immediate funding to help people who are already suffering the devastating effects of climate change. It is vital this essential finance is not taken from the aid budget. In the long term, new climate funds can be generated through innovative ways like a Robin Hood Tax on banks or levies on aviation.”
Friends of the Earth economy campaigner Simon Bullock
“We need to build a green economy to guarantee a safe and prosperous UK – but the chancellor has failed to take the bold decisions we so urgently need. Increasing VAT is deeply regressive – Robin Hood taxes on banking transactions and increased taxes on aviation pollution would have been a greener and fairer way to cut the deficit. Britain has the skills and natural resources to create a booming green technology sector that would drive the country’s economic recovery – but proper Government support is needed to make it flourish. Business as usual is simply not an option. A strategic shift to a low-carbon economy must be at the centre of all the government’s big decisions – starting now.”
RICS director of external affairs Mark Goodwin
“RICS welcomes the government’s decision not to reduce capital spending beyond the cuts announced in the March budget. The construction industry is a powerful engine of growth, and we had emphasised in our emergency budget submission that any further cuts in capital spending would have undermined the tentative economic recovery.
“This Budget had to address the UK’s structural deficit, and there will undoubtedly be repercussions for the property market. The combination of raising the rate of CGT and VAT may limit growth and cost jobs in the sector. RICS had warned that a significant rise in CGT would threaten the supply of development land and deter new investors from entering the private rented sector. This risk will be tempered by the lower than expected increase.
“We expect that the reduction in corporation tax rates over the next four years will stimulate the commercial occupier market and the wider economy by encouraging greater business investment. Despite expected cuts to the public sector, regional property markets may also get some help from labour market initiatives to reduce the start up costs of hiring employees. This may be especially helpful for smaller enterprises.”
Association of Teachers and Lecturers (ATL) head of pay, conditions and pensions Martin Freedman
“Freezing public sector pay for two years is excessive. It will seriously impede the ability of schools to recruit and retain high quality graduates, particularly if the Conservatives are serious about raising the entry level for teachers. And it will be hard for the economy to grow when 25% of the country’s workforce suffer a cut in their purchasing power. We are particularly worried about a 25% cut in education spending over the next four years. If the government protects capital spending, as it has suggested, this level of funding reduction will inevitably include fairly savage staffing cuts.”
Institute for Public Policy Research (Ippr) co-director Carey Oppenheim
“The chancellor made welcome noises about how ‘progressive’ this budget was – but whether it is progressive or not will only become clear after an assessment of the spending plans which will be published in October. 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.”