Osborne’s “progressive” façade

Talk of a “fair and progressive” Budget disguises how cuts will hit the poorest hardest.

The coalition is determined to present today's Budget as "fair and progressive", with tax rises for the richest and tax cuts for the poorest. But does the rhetoric match the reality?

On tax, George Osborne will point to the plan (first mooted by the Lib Dems) to raise the personal tax allowance by £1,000 to £7,475, a move that will take 850,000 of the lowest-paid out of income tax altogether.

But this measure isn't as progressive as it initially appears. For a start, those individuals too poor to pay tax in the first place will gain nothing from the move. In 2009-2010, only 62 per cent of the adult population earned enough to pay income tax. Should the measure be combined with a rise in regressive VAT, the overall effect may be far from progressive.

But it's only once we take account of the likely spending cuts that any claim this Budget will be "progressive" falls apart. The coalition's decision to rely on spending cuts, rather than tax rises, to plug the deficit will have disastrous consequences for the poor.

With spending in non-ring-fenced departments poised to fall by up to 25 per cent, it is the poorest who will be hardest hit. As I noted yesterday, an analysis by the Financial Times showed that cuts would hit large parts of the north twice as hard as the south.

Today's FT contains a succinct explanation:

Spending cuts of such a scale could not be presented as "progressive" because public spending is concentrated in poorer areas and poorer families, suggesting that the Budget will have a sting in the tail.

Will Osborne, a better politician than he is an economist, have the chutzpah to claim that his cuts are "progressive"? If he does, Labour will be presented with an open goal.

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George Eaton is political editor of the New Statesman.

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New Digital Editor: Serena Kutchinsky

The New Statesman appoints Serena Kutchinsky as Digital Editor.

Serena Kutchinsky is to join the New Statesman as digital editor in September. She will lead the expansion of the New Statesman across a variety of digital platforms.

Serena has over a decade of experience working in digital media and is currently the digital editor of Newsweek Europe. Since she joined the title, traffic to the website has increased by almost 250 per cent. Previously, Serena was the digital editor of Prospect magazine and also the assistant digital editor of the Sunday Times - part of the team which launched the Sunday Times website and tablet editions.

Jason Cowley, New Statesman editor, said: “Serena joins us at a great time for the New Statesman, and, building on the excellent work of recent years, she has just the skills and experience we need to help lead the next stage of our expansion as a print-digital hybrid.”

Serena Kutchinsky said: “I am delighted to be joining the New Statesman team and to have the opportunity to drive forward its digital strategy. The website is already established as the home of free-thinking journalism online in the UK and I look forward to leading our expansion and growing the global readership of this historic title.

In June, the New Statesman website recorded record traffic figures when more than four million unique users read more than 27 million pages. The circulation of the weekly magazine is growing steadily and now stands at 33,400, the highest it has been since the early 1980s.