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George Osborne’s eighth Budget conjured political rabbits from his Treasury hat, with an eye firmly on May’s elections, while tightening austerity in the face of slower economic growth and shaky debt and deficit forecasts, according to Newcastle’s MP Paul Farrelly.
In particular, while announcing further spending cuts of £3.5 billion in three years’ time, the Chancellor is relying on raising billions in a crackdown on tax loopholes to try and balance his books.
Yet, results so far since 2010 have been pitiful in cracking down on corporate tax avoidance by the likes of Apple, Google, Amazon and Facebook, raising far less than expected.
‘I welcome the Chancellor’s firm commitment during the Budget to continued membership of the European Union in June’s referendum as vital for trade, jobs and investment in the UK and, indeed, the North Staffordshire economy’ Mr Farrelly said.
‘But the assault on local government and on public services continues regardless, as do austerity measures, despite warnings by economists that they have gone far enough and are self-defeating.’
‘Of particular concern locally, too, are the potential consequences of the rise in the ‘climate change levy’ on industries that use lots of energy. In a debate this month, we called on the government, with its focus on steel, not to forget our important ceramics industry and we’ll need to discuss urgently any ramifications of today’s change,’ he added.
With local polls looming in May, Osborne sprayed ‘sweeteners’ all around, including a halving of Severn Bridge tolls (Welsh Assembly elections), tax cuts for the oil industry (Scottish parliament), a go-ahead for the capital’s £27 billion Crossrail 2 project (London mayor) and a raft of local government shake-ups, including the South West and Lincolnshire.
While the vast majority of new infrastructure spending is still set to benefit London, fresh commitments – including a go-ahead for the HS3 rail link between Manchester and Leeds, to boost Osborne’s so-called ‘Northern Powerhouse’ – will do nothing for the Midlands.
‘North Staffordshire remains vulnerable because of the HS2 high speed link between London, Birmingham, Manchester, Leeds and Liverpool, with its stop planned at Crewe, not Stoke. What we would like to see from the government are rail and road improvements here, too, but we’ve still had no sign of extra investment to help our local economy,’ Mr Farrelly said.
While raising the tax allowance threshold to £11,500 by next April will prove popular, its effects on the lowest earners will be offset by the government’s ambitions to cut tax credits.
More controversial Budget changes, during austerity, included a huge cut – from 28% to 20% - in capital gains tax, mostly benefitting the wealthiest; further cuts in tax paid by companies; and funding all schools as academies directly from Whitehall, bypassing local councils.
Overall, the Chancellor cut next year’s growth forecasts every year until 2020, underlining the economy’s fragility and importance of not risking ties with the EU after the referendum. With lower growth, he also missed his previous government debt and deficit targets.