Four million pensioners will be £83 a year worse off after George Osborne took £3 billion out of income tax allowances for older people in his Budget.
In the Budget, the Chancellor insisted that nobody would lose any money, but inflation means pensioners will see their household budgets squeezed in future years. More than four million people will be £83 worse off by 2014, while 360,000 people aged 65 will lose £285.
Another measure to create a flat rate single-tier pension is likely to redistribute income from around five million of the higher earning pensioners to seven million of the poorest. This could cost between £80 per year for current pensioners and £197 per year for future pensioners. below Budget 2012, instant reaction
Dave Prentis, general secretary of Unison union
“The chancellor’s Budget has given a helping handout to his rich friends in the City and delivered a slap in the face to the unemployed and low-paid families. Osborne should be delivering policies to get the 2.67m unemployed people back into work and economically active. Instead, the government’s cuts agenda is making the situation worse by adding to those numbers month by month.’’
Institute of Directors
“A reduction in corporation tax is a very positive step, but we would still like to see a commitment to move to 15 per cent by 2020. This would make us truly competitive . . . While any tax reduction is welcome, the chancellor has not done enough to free business from the burdens and barriers that are holding economic growth back. Businesses dearly want the opportunity to invest, create and build, but George Osborne must go much further if he wants to fire up the engines of the economy. There was a bold move on corporation tax, but in the bigger picture this is still not far enough or fast enough.”
Brendan Barber, TUC general secretary
“We needed a Budget that looked to the future and made jobs – particularly for young people – the national priority. Instead we have got a Budget for the rich by the rich. One minute the chancellor said he found tax avoidance morally repugnant, the next he rewarded it by cutting income tax for the richest 1 per cent – with precious little relief for hard-pressed families on ordinary incomes. Treasury figures show that those on low and middle incomes will do worse than those higher up the income scale.”
Andrew Ledger, Barclays
“The TV industry has been crying out for tax credits for drama production for years. Hopefully this will be the first step in putting Britain back on the map as a cost-effective destination for drama production. That should tempting more overseas production companies to shoot dramas here in the UK, just as we’ve seen happen in film.”
Bob Crow, RMT general secretary
“The tinkering at the lower end of the tax scale will be swallowed up by increased utility bills and travel costs while the rich will just engage another army of accountants and lawyers to dodge the so-called clampdown on tax avoidance by inventing another barrage of scams.”
British Bankers’ Association
“The change in bank levy was expected once the corporation tax cut had been announced. The change corrects what would otherwise be a shortfall in the bank levy, in order to raise the fovernment’s target of at least 2.5 billion pounds each year.”
Brian Hilliard, economist at Société Générale
“The headline-grabber is the cut in income tax. He said the higher rate didn’t raise any extra money anyway, so economically he can justify it but politically I think it’s a bit of a gamble.
“I’m a little bit surprised to see them lower the claimant count forecast, so they are a little bit more optimistic about employment and unemployment, which needs to be looked at.”
Ross Walker, RBS
“All very much as expected, barely any changes at all to the growth and borrowing numbers. “All very much as expected on the macro side . . . and thus far the micro policy changes are all very much as had been leaked. It looks from a market point of view to be fairly neutral.”
Howard Archer, chief economist for eurozone and the UK at IHS Global Insight
“This is of welcome relief to the chancellor and spares him having to tighten overall fiscal policy further. Indeed, the chancellor has indicated that the Budget is fiscally neutral over the next five years. “Near-term GDP growth forecasts look realistic, but longer-term forecasts may prove hard to achieve.”
Melanie Ward, head of public affairs at ActionAid
“We warmly welcome the government’s continued protection of the aid budget. UK aid saves lives and, despite these difficult economic times, we can all be proud that we are not walking away from our commitment to the world’s poorest people. The government deserves real credit for this.’’
Philip Shaw, chief economist at Investec
“The borrowing numbers, excluding the Royal Mail effect, do actually look slightly better over the next five years, so in terms of numbers there’s been, I guess, a modest improvement in the budgetary situation compared with the OBR forecast at the autumn statement. “The devil is always in the detail rather than the chancellor’s speech.”
George Buckley, chief UK economist at Deutsche Bank
“The changes are fiscally neutral. There’s going to be a lot announced but there’s probably not much in terms of overall differences in the fiscal stance.
“Growth was revised up slightly for 2012 to 0.8 per cent (from 0.7 per cent) – while this is the first upward revision we have seen in quite some time (since 2009) it is clearly very modest.”
Sue Foxley, Cluttons property consultants and estate agents
“A 7 per cent stamp duty level would hit Londoners hard. There is a massive shortage of family homes in London’s villages and given price growth expectation, growing demand will push average three and four bedroom family homes in many areas such as Islington into the top stamp duty tier within a year or two, making it even harder for families to commit to staying in the city.
“London’s global competitiveness relies on attracting the highest-skilled professionals, whether from the UK or elsewhere in the world. The mansion tax would add to the already substantial costs for professionals choosing to work and raise families in London.
“This is bad news for London’s long-term economic prosperity and, therefore, the fortunes of the wider UK.”
Tim Martin, chairman of JD Wetherspoon
“We are disappointed that excise duties on alcohol will increase by 2 per cent beyond the rate of inflation, since the British people are now paying 40 per cent of all the alcohol duties in Europe.
“We are also very disappointed that pubs will continue to pay 20 per cent VAT on food when supermarkets pay nothing, enabling them to cross subsidise their prices for alcoholic drinks.”
James Lowman, Association of Convenience Stores
“Sunday trading relaxation will present artificial growth in large stores and supermarkets paid for by loss of trade in local shops up and down the country.
“The government is undertaking this measure without any consultation after twice rejecting the idea last year. This will cost small businesses more than £480m and wipes out any hopes local shops had for a sales boost from the Olympics.”
Richard Wilson, Tiga (The Independent Game Developers’ Association)
“Tax relief for the video games sector will increase employment, innovation and investment in the UK video games industry.
“Tax breaks for games production will ensure that the UK remains at the forefront of video game development. It will also help to rebalance the UK economy away from an over-reliance on financial services towards a high skill, R&D intensive and export focused industry.”
Russell Quirk, founder of online estate agents Emoov.co.uk
“Few parts of the Budget smacked of such naked tokenism as the new top rate of stamp duty. With such a huge disparity in property prices across the UK, it will inevitably turn into a tax on London and the South East.
“It may be a clever wheeze to mitigate the political fallout from the abolition of the 50p tax rate. But ultimately this ill-thought-out measure is just another tax on aspiration, and a levy on success.”
Simon Denham, CEO of Capital Spreads
“The banker bashing continues. Banks will be in the loser’s camp as they will not benefit from the cut in corporation tax. An extraordinary manoeuvre when it’s precisely them who we need to rely on to help boost credit to business and individuals.”
Chris Cummings, TheCityUK
“The UK continues to act as a global hub for financial services, which contributes annually more than 60 billion pounds in tax to the Exchequer.
“With growth now estimated at 0.8 per cent this year the chancellor must ensure we push ahead to strengthen our economy.”
Colin McLean, SVM Asset Management
“I think the inflation targets for next year look credible, more so than the OBR forecasts for growth.”
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