The budget and its real impact on your pocket

November 25, 2017 10:27 AM
By Zöe Franklin

As always happens following the budget, some of the top independent minds in the country set to work looking at its real impact. The budget behind the headlines, if you will. This budget is no different and yesterday two reports were published that lay bare the fact that in real terms the financial future for families and individuals is not as rosy as the picture painted by the Chancellor.

CoinsLet us consider a point raised by the Resolution Foundation. According to their report Freshly Squeezed: Autumn Budget 2017 response, Britain is on course for the longest period of falling living standards since records began in the 1950s. In particular they have identified that the poorest third of households are set for an average loss of £715 a year by the end of the Parliament while, disgracefully, the richest third will gain an average of £185.

This is not the 'more money in your pocket' that the Chancellor touted in his budget speech. He enthusiastically stated that the government would be once again increasing the personal allowance (a Lib Dem policy, by the way) to the tune of £1075 per year for a basic rate tax payer. In reality this increase simply raises the personal allowance in line with the inflation, thereby keeping it static in real terms. There will be no 'more money in your pocket'.

The Institute for Fiscal Studies in its post-budget analysis highlighted a further £12 billion of planned welfare cuts. The IFS found that the four-year freeze in welfare is now set to lead to 11 million households losing an average of £400 each by 2019, with the poorest 20% of families hit hardest. They also found that average earnings in 2021 look set to plunge to a level £1,400 lower than was forecast in March 2016. Average earnings will be lower in real terms than at the time of the financial crash in 2008.

This is further proof that the Conservatives are anything but compassionate and have no real consideration for the poorest in our communities, whether those trying to get by on benefits due to illness, or those working on a low income and therefore struggling to make ends meet. The Conservatives are choosing to balance the books at the expense of the poorest in society.

In contrast a Liberal Democrat government would have helped the poorest in society by reversing Conservative tax cuts for the super-rich. It would have provided the large-scale investment in infrastructure, housing and research needed to boost living standards and productivity. We would have reversed the Conservatives' cruel welfare cuts, and bring economic certainty by staying in the Single Market and Customs Union.

The Resolution Foundation report can be found here: http://www.resolutionfoundation.org/publications/freshly-squeezed-autumn-budget-2017-response/


The Institute of Fiscal Studies post-budget analysis can be found here: https://www.ifs.org.uk/tools_and_resources/budget/520