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Osborne cuts £950 a year from the poorest families in Britain

This article is over 9 years, 6 months old
Simon Basketter picks apart the Tory chancellor’s autumn statement—and explains how it hands even more money to the very richest in society
Issue 2333
Protesters marched through London after Osborne’s autumn statement last week (Pic: Smallman )
Protesters marched through London after Osborne’s autumn statement last week (Pic: Guy Smallman)

Tory chancellor George Osborne admitted on Wednesday of last week that his economic plan isn’t working—even on its own terms.

His solution, laid out in his somewhat wintery “autumn statement”, was to launch yet more attacks on workers and poor people. Osborne told MPs, “Yes, the deficit is still far too high for comfort. But Britain is heading in the right direction. The road is hard but we’re making progress.”

He increased public sector cuts by a further 1 percent next year and 2 percent the year after. Local councils got a new 2 percent cut.

The Tories have already made £12 billion in “efficiency savings”. Now Osborne plans to make more.

He claimed the money saved would fund infrastructure spending. In practice that will mean throwing money at firms involved in PFI projects such as high speed rail and roads.

Osborne also cut corporation tax—the tax on companies pay on their profits—by 1 percentage point. So when bosses do bother to fork out for their taxes they will pay just 21 percent from April 2014.

This compares to tax rates of 29 percent in Germany, 33 percent in France and 40 percent in the US. Osborne gloated that his 21 percent tax level was “the lowest rate of any major Western economy”.

Osborne also handed bosses £1.5 billion in export grants and pumped an extra £1 billion into the banks for them to hand on to business.

He increased the threshold at which the top rate of tax has to be paid by 1 percentage point. He raised the amount of money the rich can make from shares without having to pay capital gains tax to over £11,000.


The contrast with his treatment of those at the bottom of society could not be greater. Osborne slashed another £14 billion off welfare benefits for the poorest. His cuts mean the poorest fifth of families will lose an average of £950 a year each.

Tax credits will be cut for an estimated 2.5 million people. Statutory maternity pay will be slashed for 230,000 women. All those who receive child benefit will get less.

The Tories had leaked that they would impose a one year limit in rises benefits and tax credits. In fact Osborne announced that the 1 percent cap will last for three years. That alone cuts £3.6 billion from benefits.

The chancellor also plans to cut 1.1 million more public sector jobs.And in another nasty attack, national pay bargaining for teachers will be scrapped.

Osborne backed off from imposing regional pay in the civil service and the NHS—for now. But he threatened to use existing flexibility to bring in yet more changes.

He also confirmed the creation of an alternative gas department to oversee developments in “fracking”. And in case he hasn’t helped the rich enough, Osborne is to consult on giving tax breaks to fracking firms.

False figures behind plan

Britain’s economy is forecast to shrink this year by 0.1 percent—a fall from a previous forecast of 0.8 percent growth. The growth forecast for the next five years has also been cut.

Even George Osborne’s pet statisticians in the Office for Budget Responsibility predict that he will miss his economic targets by a one year.

Osborne now claims that he will meet his targets over the coming five years. The government also insists that unemployment will peak at 8.3 percent, down from an earlier forecast of 8.7 percent.

But most commentators are sticking to gloomy predictions. The British Chambers of Commerce, for instance, revised its forecasts for Britain’s economic growth down last week. The Bank of England slashed its forecasts last month.

Osborne claims his cuts will somehow help kickstart economic growth. But the forecasts and reality show that this is rubbish. The Tories’ real agenda is helping the rich by making ordinary people pay for the crisis.

Tories help bosses avoid tax

Even the government’s own economics watchdog admits that cuts are making it harder to collect taxes from the rich.

The Office for Budget Responsibility said, “There have been, and will continue to be, wider operational changes within HM Revenue & Customs and across government that are likely to affect the public finances.

“For example, reductions in administrative spending in other areas of HMRC could lead to less tax revenue being collected.

“We have not been presented with costings for such changes. Therefore, taken in isolation the costings for the specific operational changes in the Treasury’s policy decision table are potentially unrepresentative of the impact on wider operational changes across government.”

The rich in Britain avoid around £25 billion in tax every year according to figures compiled by the TUC. The enormous anger over tax avoidance has forced even millionaire MPs to condemn it.

George Osborne has claimed to be “shocked” at the levels of tax avoidance in Britain. He pledged that last week’s budget would force the rich to “pay their share”. But his actions speak far louder than MPs’ weasel words.

Budget will hit women harder

Women will be hit four times harder by the Tories’ benefit cuts and tax rises than men. The measures unveiled by Osborne will raise £867 million from women compared to £198 million from men.

Many of the benefits that are capped at a 1 percent rise, such as child benefit, overwhelmingly go to women.

Attacks make children poorer

A family with two working parents and two children on a combined income of £40,000 a year will be £3,000 a year worse off by 2015. A single-earner family with two children on £20,000 a year will be £279 a year worse off.

And around 1.1 million public sector jobs will be axed by 2017-18. But don’t worry—at least Osborne threw £50 million at ultrafast broadband and Wi-Fi.

£1 billion for free schools

A building programme of £1 billion will fund 100 new privately run free schools and academies.

But other departments will face funding cuts to pay for them. This will hit services such as flood defences and social care.


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