Budget 2013 – ‘little or nothing’ for poorest families

Poverty campaigners and think tanks have voiced disappointment over the 2013 Budget statement, accusing the Chancellor of doing little or nothing to help those on the lowest incomes. Against a backdrop of sluggish economic growth and high borrowing, the Budget used savings from deeper public spending cuts to give tax breaks to businesses and those on middle and higher incomes.

The Joseph Rowntree Foundation said the Chancellor had failed to deliver an anti-poverty Budget that would boost living standards and ease the strain on poor families. The Resolution Foundation think-tank pointed out that most of the benefit of income tax cuts went to higher-income households, at the same time as families on lower incomes faced cuts in tax credits. The Child Poverty Action Group accused the government of 'abandoning' low-income families on the frontline of austerity.

To accompany the Budget, the Treasury released an updated statement showing the cumulative impact on households of changes since 2010 in tax, tax credits and benefits. It confirmed that the group given greatest protection from austerity measures were those on upper-middle incomes (the fourth quintile).

Key points from Budget statement

  • Public sector borrowing was expected to fall marginally in 2013-14: but forecasts of public debt were revised sharply upwards, with a peak of 85.6 per cent of national income reached in 2016-17, a year later than previously expected.
  • Departmental spending would be cut by a further £1.1 billion in 2013-14 and £1.2 billion in 2014-15 - equivalent to a 1 per cent cut for most departments. Public sector pay increases would be capped at 1 per cent for a further year.
  • The annual personal income tax allowance would rise to £10,000 from 2014-15, a year earlier than previously proposed. This was real-terms increase of £240 on the 2013-14 level of £9,440, costing £1.1 billion.
  • The main rate of corporation tax would be cut by a further 1 percentage point in April 2015, to 20 per cent, at a cost of £865 million per year by 2017-18.
  • All businesses and charities would be entitled to a £2,000 reduction in employer's national insurance from April 2014, costing £1.7 billion per year by 2017-18.
  • The Budget also confirmed plans, announced in advance, for a new system of tax-free childcare vouchers.

SourceBudget 2013, HC 1033, HM Treasury, TSO | Impact on Households: Distributional Analysis to Accompany Budget 2013, HM Treasury
LinksReport | Household impact statement | Hansard | OBR report | HOC research brief | Barnardos press release | Childrens Society press release | Citizens Advice press release | CPAG press release | ECP press release | Family Action press release | Fawcett Society press release | Gingerbread press release | LITRG press release | JRF press release | Resolution Foundation press release | Shelter press release | TUC press release | WBG press release | BBC report (1) | BBC report (2) | Community Care report | Daily Mail report | Guardian report (1) | Guardian report (2) | Inside Housing report | Public Finance report

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