WE NEED A BUDGET FOR JOBS AND GROWTH TODAY

The government’s economic policies have failed. What we need to see today is a Budget for jobs and growth and one which focuses every penny available on helping hard-pressed families on middle and low incomes.

At a time when people on middle and low incomes are being squeezed by rising fuel prices, seeing their tax credits and child benefit cut, when one million young people are out of work and there’s a big deficit to clear, it would be completely the wrong priority to cut taxes for people earning over £150,000. It would show just how out of touch this Conservative-led government is.

We need action on youth jobs and to stop a tax credits bombshell for working parents, not cutting taxes for the very richest.

However much the 50p top rate of tax raises the Chancellor could be using that money now to reverse cuts to tax credits, help small businesses or help pay the down the deficit – but instead he seems set to cut taxes for the richest 1% of earners. That would be the wrong choice.

A year ago the Chancellor said his Budget would ‘put fuel into the tank of the British economy’. But since then our economy has stalled, unemployment has risen month by month and he’s borrowing £158 billion more than he planned.

Of course there have to be tough decisions on tax, spending and pay. But we won’t get the deficit down unless we have a plan for jobs and growth to get our economy moving again and get people off the dole and into work.

Labour’s jobs plan includes a bank bonus tax to fund 100,000 jobs for young people, tax breaks for small firms taking on extra workers and fair tax cuts to jump-start the economy. A temporary VAT cut is the quickest and fairest way to do this, because it will help pensioners and those on lower incomes who won’t gain a penny from an increase in the income tax personal allowance.

Let’s see what the exact details are, but the likelihood is the increase in the personal allowance will be more than outweighed by the big VAT rise, cuts to tax credits and the child benefit freeze. And of course most pensioners and people on low incomes won’t be helped at all by this policy.

At the moment a family with children is set to lose £530 per year from the government’s changes next month. There’s no sign of this Budget doing much to change that. The government is giving with one hand, but taking lots more away with the other hand.


50p tax review

George Osborne’s review of the 50p top rate of tax is a bogus study. It should have been done by the independent Office for Budget Responsibility.

And the review only covers the first year of the new tax, which we always said would raise much less as people could bring their income forward. The question is how much will it raise in the second and third year, but George Osborne didn’t want to wait and find out – he had already made up his mind.

No tax rate should ever be set in stone. Labour will set out our tax and spending commitments at the time of the election once we know how bad the state of the economy is after five years of George Osborne. But let’s be clear, if this was a Labour Budget this week or if there was an election tomorrow we would not be cutting the top rate of tax for people earning over £150,000.

Stamp duty

We will look to support this, but it won’t work unless – as Labour has called for – there is a serious clampdown on stamp duty avoidance on expensive properties. The real question is whether the money raised is just going back to the very wealthiest by cutting the top rate of tax for people earning over £150,000.

Tax avoidance

Every Budget should clamp down on tax avoidance and close loopholes – that’s the Chancellor’s job. But why isn’t all the money raised being used to ease the squeeze on families on middle and low incomes, rather than giving a tax cut to the very richest?

Borrowing figures

Whatever today’s figures show, George Osborne is already billions of pounds off track on his borrowing plans. He is set to borrow over £100 billion more than planned because of the lower growth and higher unemployment his failed policies have delivered.

Child benefit

Let’s see what is announced today, but we have called on the Chancellor needs to address the fundamental unfairness of these changes where a one earner family on £43,000 would lose all their child benefit, while a couple on as much as £84,000 could keep it all.

Annual tax statements

This seems like a sensible idea, but it will be important to keep the costs of sending this out to every taxpayer down. And of course the statement will not show things like higher VAT and that the government is borrowing £158 billion more than they planned.