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Thursday, March 19, 2015

IFS says coalition tax and benefit changes have hit poorest the most: Politics Live blog

Rolling coverage of all the day’s political developments as they happen, including George Osborne and Ed Balls’ post-budget interviews, and the IFS post-budget briefingOsborne announces new criminal offences to tackle tax evasionLunchtime summaryIFS says coalition’s tax and benefit changes have hit the poorest the mostPaul Johnson’s IFS post-budget briefing - Summary Afternoon summary 3.47pm GMT When I first came here as prime minister five years ago, Britain and Greece were virtually in the same boat. We had similar-sized budget deficits,” he said. The reason we are in a different position is we took long-term difficult decisions and we had all of the hard work and effort of the British people. I am determined we do not go backwards. It’s going to be a very dirty, nasty general election campaign. It’s already getting very personal. Every day we see these volleys being thrown at David Cameron from one side and then the other side throw it back at Ed Miliband. And everyone seems to throw it at me on a daily basis. Our job is to turn the other cheek, to rise above it and to say what we are for. 3.18pm GMT Here are four of the most interesting graphs from the rest of the IFS post-budget briefing.This one shows how George Osborne is only able to say that debt is falling as a percentage of national income in 2015-16 because he has brought forward assets sales. 2.52pm GMT Ed Miliband has put out a statement welcoming what the IFS has said about the budget. Here it is in full. It’s now 24 hours since the Chancellor boasted that his was a budget to make Britain walk tall. Now we know the truth. We now know this is a budget which will bring public services to their knees. Cuts in the coming years twice as deep as any we have seen. These cuts would be devastating for our National Health Service. In the words of the Office of Budget Responsibility, the government watchdog, which the chancellor could not bear to read out: “A much sharper squeeze on real spending... than anything seen over the past five years.” Confirmed today by the independent Institute of Fiscal Studies.This scale of cuts cannot be made without cutting our NHS. The truth is that this will take public spending back to the level of the 1930s. And on living standards, the chancellor tried to tell people they have never had it so good. In fact, he was a chancellor who has never had it so wrong. In the last hour the Institute of Fiscal Studies has confirmed what people all over the country already knew – that pay has fallen under this government.The cuts of more than 5% implied in each of 2016-17 and 2017-18 are twice the size of any year’s cuts over this parliament. 2.24pm GMT Here’s today’s Politics Weekly podcast, with Robert Chote from the Office for Budget Responsibility, Gavin Kelly from the Resolution Foundation, with Tom Clark, Jonathan Freedland and Larry Elliott from the Guardian. 2.12pm GMT And here are the key points from the opening statement by Paul Johnson, the Institute for Fiscal Studies director, at the IFS’s post-budget briefing.As far as tax and benefit changes are concerned, benefit cuts have hit low income working age people. Tax increases have hit those on the highest incomes much the hardest. People on middle and upper middle incomes have been remarkably insulated on average from tax and benefit changes.Average household incomes have just about regained their pre-recession levels. They are finally rising and probably will be higher in 2015 than they were in 2010, and possibly higher than their 2009 peak. But that still represents by far the slowest recovery in incomes in modern history. Mr Osborne is relying on forecasts of income through to the end of 2015. All of the real increase since 2010 is in the forecast. It occurs in the last year, in 2015. There is no actual increase in the data we have so far. It is now almost two years since he announced his intention of cutting welfare spending by £12bn. Since then the main announcement has been the plan not to cut anything from the main pensioner benefits. We have been told about no more than £2bn of the planned cuts to working age benefits. And remember apparently the “plan” is to have those £12bn of cuts in place by 2017-18. It is time we knew more about what they might actually involve ...The chancellor argues that because he is committed to £12bn of welfare cuts and £5bn of anti tax avoidance measures the required cuts to public service spending are much more modest. But if he really wants us to believe that then he needs to be more explicit about how he actually thinks he can cut welfare spending and raise substantial additional sums from clamping down on tax avoidance. With further changes to the taxation of annuities it is in changing the structure of the taxation of savings and pensions that he has been most radical over the past five years. This is possibly the one area of lasting structural change in the tax system for which he will be remembered. Our latest estimates suggest that Labour would be able to meet its fiscal targets with no cuts at all after 2015-16. The budget suggests spending cuts of £40 billion by 2018-19, but “just” £26 billion by 2019-20. Even with a majority Conservative government is that pattern really the most likely outcome? 1.23pm GMT Here is the full text of the opening statement from Paul Johnson, the IFS director at the briefing (pdf). 1.22pm GMT IFS identifies big variation on public spending cuts plans. Estimates Labour could meet its targets without ANY further cuts after 2015/16Labour could make little if any spending cuts if they chose says IFS - cue pressure on Balls from within Labour movement to make it soIFS says 'rollercoaster' pattern of spending identified is unlikely: cuts even in majority Tory govt will not be more dramatic than this gov 1.15pm GMT The Institute for Fiscal Studies’ post-budget briefing has just started.Here are the key points we’ve had so far."It is in changing the structure of taxation of savings & pensions ... for which [Osborne] will be remembered" Johnson of the IFSIFS’ Paul Johnson: however u calculate it “we are for sure much worse off on average than we’d have any reasonable hope of being in 2007”IFS puts paid to the squeezed middle argument: people on middle and upper-middle incomes have been insulated from tax and benefit changes.Looking at changes implemented by the coalition, the poorest have seen biggest proportionate losses.IFS: Poorest hit hardest by tax and spend changes by the coalition 1.07pm GMT The era of ‘Cathy Come Home’ is not my vision for the future of Britain ...So the fiscal plans I am publishing today are based on a further £6bn pounds from tax dodgers, and an additional £6bn of tax rises. Those in high-value properties, the banking sector, and others should pay more, rather than asking those working on low incomes to accept less.I thought statements in the House of Commons were supposed to be from ministers speaking collectively on behalf of the Government. [Alexander] has totally abused that privilege, assembling MPs this morning on a false pretence - I know it’s usual to have several days of budget response, but not several budgets.He’s been saying that for the last two years and has given us almost no details about what that actually looks like. I think it’s rather disappointing that so far in, we still haven’t heard any details about this. 12.43pm GMT Tim Montgomerie in the Times (paywall) is very good today. He describes vividly how Lynton Crosby operates.At a recent Downing Street meeting there was a lively discussion about fine-tuning the Tories’ message on the economy. One participant urged more help for the low-paid. Another worried that further action was needed to quell anger about the banks. One wanted a big emphasis on housebuilding. One suggested that the idea of devolving power to local authorities in the north should be put centre stage in the budget to prove the Conservative commitment to rebalance the economy.Everyone around the table wanted a slightly different tweaking of the Conservative pitch. Lynton Crosby, the party’s election strategist, then lifted his head: “All very fascinating . . .” (my source says he uttered these words in a tone that suggested he might not have been entirely captivated) “ . . . but voters only need to know two things about the economy: it was broken five years ago by the other lot and it’s OK again now under us.” 12.15pm GMT My colleague Michael White has done a write-up of how the budget has been received in the papers. His conclusion?Rarely can I remember such a disparate range of verdicts as to what Osborne’s sixth budget meant, let alone his achievement – or lack of it – since the first of the six was unveiled shortly after the unexpected formation of the Tory/Lib Dem coalition following the indecisive election in May 2010. 12.12pm GMT Danny Alexander has just staged a photocall with his yellow box.Treasury sources refuse to open the alternative budget box, so we are not sure what's in it. pic.twitter.com/XDyYB0acW1Unconvinced parliamentary sketch writers admire Danny's yellow box pic.twitter.com/5tKHSMrvIw 12.06pm GMT Here is today’s Guardian seat projection. 11.36am GMT Judging by Twitter, this unprecedented Lib Dem financial statement does not seem to be working out too well. From the Spectator’s Isabel HardmanLib Dems were v.upbeat about the Danny statement yesterday, saying it was ‘unprecedented’. I suspect it will also be ‘unrepeated'Safe to say,I'm not sure this is how Danny Alexander hoped the Lib Dem alternative Budget would go.Clegg seems to have left half way through@Pwebstertimes IMHO he looks pained and embarrassed. Which would be appropriate in the circs! Where they hell are the rest of them???Last night senior Lib Dem declared themselves happy with whole Budget. Today they r disowning. If I'm confused, what chance have the public?Labour brands the Lib Dems' 'Yellow Budget' a 'farce'. Hard to argue, given they signed up to the real Budget only yesterdayCommons benches strikingly empty behind Danny Alexander and Vince Cable. Could they find *nobody* willing to sit there? #Budget2015 11.24am GMT Here is the “alternative fiscal path” document produced by the Treasury (pdf).And here is the Treasury paper explaining the new measures on tax evasion (pdf). 11.22am GMT Labour’s Chris Bryant says George Osborne announced an orchestra tax relief yesterday. But something only counts as an orchestra if it includes wind instruments, strings, percussion and brass. That excludes many orchestras.Alexander says that is a serious point. He will take it up with HMRC. 11.21am GMT Adam Afriyie, a Conservative, says the Lib Dems have betrayed their voters. This display is the Westminster bubble at its worst. He says voters will make up their own minds.Alexander says Afriyie should welcome what the government has achieved. 11.19am GMT Alexander is replying to Leslie.He says no resources were spent on this, beyond the time of civil servants. 11.17am GMT Chris Leslie, the shadow chief secretary to the Treasury, is responding.He says this is a farce. It is a party political statement, not government business.Doesn’t he realised how two-faced they look? They want to be in government, and out of government. 11.12am GMT Alexander is now listing the three new measures being introduced to toughen the law on tax evasion. (See 8.47am.) Fines will be in proportion to the amount of tax being evaded, he says. 11.08am GMT The heckling is coming from the Labour benches.V heated scenes in the Commons as Danny Alexander tries to give his 'Lib Dem budget'. Labour benches shouting. Danny ploughing on"They don't like to hear it" on Labour benches @DannyAlexander says but given the level of shouting in #HoC I doubt anyone can hear itA joke, an abuse, outrageous...just some of the heckles being hurled at Danny Alexander giving his Lib Dem alternative budget #Budget2015Danny A desperately trying to get heard above Lab barracking in the Commons. Not getting much help from Bercow. #budget2015Vince deems to be enjoy ing Danny's diccomfort. #Budget2015Watching Danny Alexander & 16 LDs attempting to deliver the You Won't Believe It's Not Budget speech. Labour MPs trying to out-chunter him.Gwynne plonks the Red book infront of Danny Alexander "That's your Budget, there" Speaker tells him off. DA ploughing on but it's hard work 11.04am GMT Danny Alexander, the shadow chief secretary to the Treasury, is speaking now.He says there is an alternative to the spending plans set out by the Conservatives. 11.00am GMT John Bercow, the Commons Speaker, says ministerial statements are supposed to be ministerial. They are not meant to be used for party purposes.He hopes Danny Alexander will bear this in mind, he says. 10.56am GMT Excitement builds in the Commons Chamber ahead of Danny Alexander’s alternative Budget pic.twitter.com/hgnL5YyFJE 10.54am GMT In his speech at the Lib Dem spring conference at the weekend Danny Alexander looked ahead to the day when he would be delivering “a Liberal Democrat budget”. He even produced a yellow budget box to illustrate his point.It seemed like a moment of delusional wishful thinking. But, in an unprecedented move, Alexander will be making a Lib Dem finance statement in the Commons in just a few minutes. It is not a full budget, but he will set out Lib Dem spending plans, which are different from Conservative ones, and they will be explained in an official Treasury document. Statements of this kind are normally for government business, not party business, but the Lib Dems insisted on being allowed to deliver this one. Alexander argued that it would be unfair for George Osborne to be allowed to present a Conservative budget in the Commons so close to the election if he did not get the chance to put his alternative too. 10.23am GMT Here are the key points from Nick Clegg’s Call Clegg phone-in.I actually share President Obama’s views much more than David Cameron’s. I think it is extremely worrying. It cannot be more alarming to have seen Binyamin Netanyahu, in the latter stages of the election campaign in Israel, do something that no leading Israeli politician has ever done, which is to rule out the prospect of a two-state solution. The whole push for peace, for decades now, has been premised on the point that at some point the Israeli nation and a Palestinian state can be created to live in peaceful co-existence with each other. It is an astonishing thing that he should have departed from that long, long tradition. I think it is quite right that the White House has expressed serious misgivings about that.And I have to say to you, if Binyamin Netanyahu now unilaterally has decided to rule out the prospect of a Palestinian state, then I think it is inevitable that the British parliament, as it voted to a few months ago, should rule a Palestinian state in. In other words, that we should in response - and it would be in response to extreme provocation from Netanyahu - act to recognise a Palestinian state. It cannot be right, given that this is the crucible of so much violence and division across so many communities, that one man, in what I assume was a desperate attempt to curry some votes, should basically tear up the basic tramlines on which a peace deal is likely to occur ...The Conservatives are departing quite radically [from the coalition’s approach to spending], lurching away from the approach which we’ve taken over the last half a decade. Over the last five years, we have basically taken a mixture of tax increases and spending reductions, welfare reductions, action on tax avoidance, to start balancing the books. That’s allowed us to halve the deficit as a proportion of our nation’s wealth. The Conservatives announced last autumn that they are going to lurch away from that and only nobble the working-age poor and only the working-age poor will make additional sacrifices to balance the books. I don’t think that’s fair, I don’t think it’s right to ask for £1,500 off the 8m poorest families in this country, which is what the Conservatives want to do. 9.42am GMT Q: At your party conference there was a stall with people betting on how many seats you would get. Someone sarcastically said 150, as Clegg promised in 2008. And the party tried to cover it up.Clegg says he does not know anything about that. 9.39am GMT Q: What is happening with the TV debates?Clegg says he thinks David Cameron and Ed Cameron get one-to-one interviews with Jeremy Paxman, followed by a seven-party debate .. 9.36am GMT Q: Is it true that you are spending £500,000 on teaching people to speak Cornish?Clegg says he does not remember the details, but he says it is important to keep the Cornish language alive. 9.34am GMT Clegg says he has given up normal smoking. He is now vaping, he says. 9.32am GMT Q: Do you welcome Binyamin Netanyahu’s election is Israel? David Cameron said he did at an event last night?Clegg says he does not welcome that. Like President Obama, he says he finds it “extremely worrying”. Netanyahu ruled out a two-state solution in a desperate bid to shore up votes. 9.25am GMT Q: Why do you accept claims that unemployment has fallen when most of these jobs are on zero hours contracts?Clegg says that is not true. There around 600,000 zero hours contracts. And there are around 30m people working in Britain. 9.25am GMT We know what George Osborne makes of the Sun’s front page in London. (See 8.47am.) But I wonder what he makes of this.If you thought the Sun's "epic strut" frontpage was bad... here's the Scottish version pic.twitter.com/DwUhFL7Yrl 9.20am GMT Clegg says, in all Ed Balls’s “interminable” interviews this morning, he has not explained how he would balance the books. He says the Lib Dems want to stick to the measured, balanced plan that the coalition has adopted. 9.17am GMT Q: There was nothing in the budget for me?What about the personal allowance, Clegg asks. 9.13am GMT Clegg says the OBR is making a statistical assumption about the future that is not going to happen.They ignore potential future measures on issues like tax avoidance. 9.11am GMT Nick Clegg is hosting his Call Clegg phone-in now.Q: Are you publishing a Lib Dem budget today? 9.05am GMT Ed Balls, the shadow chancellor, has also been giving interviews this morning. Here are the key points he’s been making. I don’t think those cuts are going to be possible for George Osborne. He’s going to end up either cutting our National Health Service or raising VAT. You only solve that by building more affordable housing and getting the house prices more affordable. [Osborne] did nothing on that.We say why don’t you put the top rate of income tax back up to 50p for people earning over £150,000? That will be a fairer way to do it.Sensible spending cuts, some tax rises at the top, more action on wages and tackling the abuse of zero-hours contracts. A more balanced plan which will get the deficit down but not do so at the expense of our National Health Service. 8.47am GMT Here are the key points from George Osborne’s interviews.We’ll be announcing, first of all, a new strict liability criminal offence. What that basically means is you won’t have any excuses any more if you’ve got an offshore bank account. If you’re evading tax, you’re breaking the law, and this will be a new power for the courts and for the prosecutors to go after you.Second, we’re going to look at a new criminal offence that you can’t help someone evade tax. This is for the accountants and the other companies that might help someone evade tax – that’s a brand new criminal offence.I almost spilt my coffee this morning when I read the front page of The Sun. What’s great is that they have always got a way of bringing life to the budget and it’s the geniuses of The Sun who can come up with that front page.Thursday's The Sun front page: George's epic strut #tomorrowspaperstoday #bbcpapers #Budget2015 pic.twitter.com/6I9LkjNmjn 8.27am GMT Osborne admits productivity is weak. It has been for many decades.He is not someone who says there is no role for government; far from it. Government can help build a northern powerhouse. But it needs to sort out the debt. 8.24am GMT Q: In 2003 you talked about financial products helping people avoid tax.Osborne says he was pointing out that, under Labour, there were loopholes. In government he has addressed this. Rich business people used to boast about paying less tax than their cleaners; he stopped that. People used to evade stamp duty; he has stopped that. 8.22am GMT Q: Would your new tax avoidance laws lead to Lord Green being prosecuted?Osborne says he cannot comment on individual cases. But today he is proposing new criminal powers to tackle tax evasion. 8.20am GMT Q: The prime minister says defence spending should rise. How can you square that with the cuts you are planning?Osborne says he is not proposing deeper cuts. He is proposing cuts at the same pace as over the last five years. 8.17am GMT Q: But people have a right to know where the £12bn will come from?Osborne says the government has saved £21bn from welfare in this parliament. People can judge him on his record. 8.14am GMT James Naughtie is interviewing George Osborne. Osborne is in Tilbury, Essex.Q: Your plans involved what the OBR calls a “rollercoaster” of public spending. Will you tell us where the axe will fall? 8.10am GMT And here’s the BBC’s overnight round-up of what’s in today’s papers, including a picture gallery of the front pages. 8.09am GMT Here are today’s YouGov polling figures.Update: Lab lead at 1 - Latest YouGov / The Sun results 18th Mar - Con 33%, Lab 34%, LD 8%, UKIP 14%, GRN 6%; APP -15 http://t.co/wcSPwG5PNt 8.03am GMT Yesterday we had the budget. But often it takes 24 hours for the best analysis to emerge, and that will be the focus of the day.George Osborne, the chancellor, Ed Balls, his Labour shadow, and Danny Alexander, the Lib Dem chief secretary to the Treasury, have all been giving interviews already. I will round them up shortly. Continue reading...


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