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Friday, 10th July 2015

UK: IFS Post-Budget Briefing, Summer 2015

Source: Institute for Fiscal Studies (UK)

From Opening remarks:

In the March Budget, and indeed in the Conservative manifesto, we were promised budget balance by 2018-19. That magic moment has now been shifted back to 2019- 20. In part that reflects a gentler than planned path for spending cuts, including welfare spending cuts. The gentler path does not however represent a let up in the overall scale of cuts – other than for defence. Spending in unprotected departments (those other than health, overseas aid, schools and, now, defence) will still have fallen by about a third in real terms between 2010-11 and 2019-20.

The Budget was certainly not short on measures. The scorecard shows net tax increases of £6.5 billion a year by 2020. Whether these are all fully realised remains to be seen. The OBR scores 14 tax raising measures at various levels of uncertainty between medium high and very high in terms of the likelihood that they will actually raise the expected revenues. Meanwhile most of the tax cutting measures are scored as rather more certain in their effects. And while there was plenty of action, it is difficult to discern any clear sense of direction in tax policy.

Of course benefit cuts were at the centre of the budget strategy. The Chancellor did not manage to find the £12 billion of cuts by 2017-18 he has repeatedly promised, announcing just £7 billion worth of cuts by then. But he did announce measures which should reduce spending by £12 billion by 2019-20. The biggest cut to tax credits was the reduction to the work allowances in Universal Credit. This represents an interesting choice: to focus cuts in the tax credit/universal credit system on families in work much more than those out of work.

So this budget will lead to a lower welfare country as the Chancellor promised. The figures are quite clear though – this was a tax raising budget, not quite consistent with the boast that it was aimed at a lower tax country. We told you before the election that post election budgets tend to raise at least £5bn in tax – and this one expects to bring in a little more than that. As for a higher wage country. Well the only sure way of achieving that is to raise productivity. We still await details of how that is to be tackled. Simply forcing wage increases by government fiat by hiking the minimum wage is more of a gamble.

+ Opening remarks (PDF; 110 KB)

+ The Summer Budget: Taxes up, borrowing up, departmental spending up (PDF; 273 KB)

+ Tax measures (PDF; 256 KB)

+ Benefit changes and distributional analysis (PDF; 322 KB)



Having begun his career in academic libraries, Adrian Janes has subsequently worked extensively in public libraries, chiefly in enquiry work as an Information Services librarian. In this role he has had particular responsibility for information from both the UK Government and the European Union. He wrote a detailed report on sources for the latter which was published by FreePint in 2007, and has contributed articles to FreePint and ResourceShelf. He is involved in training in information literacy and the use of online reference resources.

A Contributing Editor to DocuTicker, he also write reviews for Pennyblackmusic.

More articles by Adrian Janes »

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