Alan Whitehead MP

Member of Parliament for Southampton Test

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Budget fails to stand up for squeezed city families

Alan Whitehead has criticised the 2013 Budget as failing to stand up for families in Southampton squeezed by the economic downturn, while handing a tax cut to millionaires this April.

Alan Whitehead has criticised the 2013 Budget as failing to stand up for families in Southampton squeezed by the economic downturn, while handing a tax cut to millionaires this April.

Dr Whitehead said:

“The childcare announcement today doesn’t make up for the £1500 the Government has already cut from childcare support, and won’t come in for another 2 years.  But millionaires will get a £100,000 tax cut this April.

"Growth is half of what the Chancellor predicted a year ago and long term youth unemployment in Southampton has more than doubled. Again we’ve seen the Government prioritise the wealthiest and short term headlines over measures to deliver long term, sustainable growth.  And because of this we’ll all be paying the price for their economic failure in the coming years.”

On the day of the budget statement, it was revealed:

  • The independent Office of Budget Responsibility has confirmed that by 2015 people will be worse off than they were in 2010
  • The Government’s promise to balance the books by 2015 will not be met
  • Growth will be lower than previously forecast this year and next year
  • Long term youth unemployment in Southampton has doubled in the last year
  • Unemployment across the country is rising again
  • Prices are rising faster than wages
  • Borrowing is set to be £245 billion more than the Government planned
  • The national debt will not now be falling until 2017/18

Facts on Issues Raised in the Budget

Housing- The overwhelming barrier to the housing market is the 60% cut the budget for affordable housing made in the spending review and the stat of the economy. The Government failed to back Labour’s call to use the money raised from the 4G mobile spectrum auction to build 100,000 affordable homes to stimulate the economy and help tackle the housing crisis.

Employment allowances- Labour supports measures to help firms take on extra workers and have been calling for action from the Government for some time. In our 5 point plan for jobs and growth we called for tax breaks for firms to take on extra workers to help them grow and create jobs.

Childcare- Changes announced for the next Parliament will do nothing to help struggling families now and do not make up for the support George Osborne and David Cameron have already taken from hard-pressed families.

Alcohol duty- The Tory Government's decision to increase VAT has already added around 5p to the price of a pint of beer

Fuel duty- David Cameron and George Osborne’s decision to increase VAT had added around 3p to the price of a litre of petrol.

Personal allowance- The Government is giving with one hand but taking away much, much more with the other.  The real winners here are the 13,000 millionaires set to get an average tax cut of £100,000 in just a few weeks’ time. When the impact of higher VAT and cuts to support like tax credits are also taken into account, House of Commons Library figures show that a family with one earner and two children on £20,000 will be £381 a year worse off in 2013-14 and £600 a year worse off in 2014-15

Capital spending- An increase in capital spending of just £2.5 billion compares to deep cuts of £7.7 billion to infrastructure investment in the last three years on the plans George Osborne inherited.

Social care- Labour supports the principle of a care cap, but £72,000 is far higher than Dilnot recommended and will still leave far too many selling their homes to pay for care. The care system is in crisis because of Tory cuts – with £1.3 billion cut from elderly care so far – yet this cap does nothing for people struggling to get the support they need right now, with many paying spiralling charges for their care.

Budget statistics

Growth

  • Since George Osborne’s spending review in 2010, the UK economy has grown by just 0.7% compared to the 5.3% forecast at the time.
  • Only two other G20 countries have grown more slowly than the UK in that time.
  • Last year the UK went through a double-dip recession and the economy shrank by 0.3% in the last quarter.

 

GDP growth (%)

2011

2012

2013

2014

2015

2016

June 2010 Budget OBR forecast

2.3

2.8

2.9

2.7

2.7

n/a

Latest OBR forecast

0.9

-0.1

1.2

2.0

2.3

2.7

Living standards

  • With the economy flatlining and inflation high, real wages have fallen since this government came to office meaning people are worse off.  

Real wages (%)

2011

2012

2013

2014

2015

2016

June 2010 Budget OBR forecast

-0.5

0.4

1.8

2.4

2.4

n/a

Latest OBR forecast

-2.3

-0.1

-0.3

0.6

1.7

2.0

Debt and the deficit

  • Lack of growth has meant more borrowing to pay for the costs of economic failure – with borrowing forecast to be over £200bn more than planned at the time of the spending review.
  • The government will not “balance the books” by 2015 as David Cameron promised.
  • National debt as a % of GDP is not now forecast to start falling until 2016/17 – breaking one of the government’s fiscal rules.
  • Latest ONS figures show that public sector net borrowing (PSNB), excluding the Royal Mail and Asset Purchase Facility transfers, is over £5 billion higher so far this year than the same period last year.

PSNB (£bn)

11/12

12/13

13/14

14/15

15/16

16/17

Nov 2010 OBR forecast

117

91

60

35

18

n/a

Latest OBR forecast

121.4

119.9

111.6

98.6

81.2

49.0

Debt (% of GDP)

11/12

12/13

13/14

14/15

15/16

16/17

Nov 2010 OBR forecast

66.3

69.1

69.7

68.8

67.2

n/a

Latest OBR forecast

66.4

74.7

76.8

79.0

79.9

79.2

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