Wednesday, 8 July 2015

A budget to hit the youngest and poorest - a true Tory budget

For all that George Osborne's budget headline is about a new £9 per hour minimum wage by 2020, poorer people, and especially the young, are going to be worse off as a result. And the lack of detail on devolution to Cornwall will have surprised many who were primed for a big (and complex) announcement.

The big surprise of the budget came at the end with the plan to raise minimum wage for over 25s to £9 per hour by 2020. Osborne is going to start very slowly however and is only promising a rise to £7.20 next April. Any rise is welcome, of course. But it should be remembered that the minimum wage was already on course to rise to more than £8 per hour by 2020 under the old plans. And the positive change will be more than off-set for many by changes to tax credits which will see a drop in income for the poorest families.

The chancellor's decision to cap tax credits and other benefits so that families will only get them for the first two children will appeal to many who perceive there to be a problem of large families having more children just to increase their income. He's making an exception for the arrival of twins and triplets, but the bigger problem is likely to be for partners who come together from previous relationships bringing their children with them.

At the same time, the chancellor has slowed the progress of raising the income tax threshold towards the £12,500 goal. Raising the threshold was a Lib Dem idea which David Cameron used to claim was unaffordable. The coalition made it happen though and it has delivered an extra £800 per year into the pockets for workers. That's good. But the Chancellor today announced that the threshold would rise only by £400 next year. Clearly he believes that tax cuts for the rich are a higher priority.

The chancellor has also announced a 1% pay rise cap for public sector workers for the next four years. Which would be made a lot more acceptable if MPs were not about to get a 10% rise.

The minimum wage rise will only benefit those over 25. Younger people will, once again miss out. There is a long standing battle to get equal pay for work of equal value when it comes to gender - and many organisations including local councils have faced large bills to settle claims of discrimination in the past. Surely this should apply to young people as well.

One other fundamental change which will hit the poorest young people is the proposal to abolish the higher education maintenance grant. This enables young people from poorer backgrounds - including many from North Cornwall - to go to university. Now the poorest young people will have to take out additional loans instead - saddling them with more debt than their richer peers if they want to study. It is clear that this will be a barrier to some of the brightest but poorest young people going into higher education.

The biggest surprise to me was the lack of detail on progress towards devolution to Cornwall. We had been primed for a big announcement, setting out the range of powers and responsibilities which Cornwall would be taking on. It didn't come. My understanding is that the Treasury has been changing its mind all the time. It is logical, of course, for the council to agree on the Case for Cornwall - the powers and responsibilities that we would like to have. But that only works if you have a government that is actually listening and will properly consider the case made to it. We will have to wait and see.

If the Tories wanted this budget to showcase the things the Lib Dems stopped them from doing for 5 years, they couldn't have done much more.

UPDATE - North Cornwall Tory MP Scott Mann weighs in with his considered thoughts on the budget:

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