Contesting a budget for working people
Announcing Wednesday 8 July as the date of his second Budget of the year, George Osborne told the Sun that it would be a budget “for working people”. When the Prime Minister called the Queen’s Speech a “programme for working people”, it was clear that this was no throwaway line but rather how the government intended to present itself.
If one reaction to this is that no Chancellor would ever, if pushed, claim anything else for their budget, the prominence which is being given to this idea suggests that it should be taken seriously, and used not just to judge this budget but much of the economic programme of the government over its full term. The purpose of this note is to make a start in mapping the terrain on which the claim might be tested. It does this by providing evidence in five areas of importance to working people, namely employment, earnings, tax, benefits and housing. It also suggests areas where the government would have to act to deliver a real budget for working people.
Five tests of a budget for working people
What is the government proposing to do make sure that:
1. There are enough jobs for the growing population of working-age, expected to rise by 1.5m over the next five years?
2. Real wages rise during this parliament and that low earners, including those working part-time and in the local public sector, enjoy rises at least equal to the average?
3. Low and middle earners get their fair share of any tax cuts – given that the 6m lowest earners already pay no income tax and that increasing the threshold for higher rate tax hands a big chunk of the money back to the 4m paying higher rate tax?
4. Working-people getting tax credits who pay no tax (and so are not on the Prime Minister’s merry-go-round) don’t just get served up cuts?
5. Home ownership – which the government sees as the answer to the problems working people face with housing – back to where it was a decade ago, something which would require an extra half a million households becoming home owners each year?