Osborne: Hitting Low Earners
It appears that George Osborne has messed up again.
Yet another of his ‘brave and bold’ pledges to reduce the budget deficit seems to be unravelling (‘brave and bold’ pledges that amount to a grand total of £7bn a year in the context of a £175bn deficit). Much like his claims on the savings from pension reform – which turned out to be £3bn wide of the mark.
As the FT Westminster blog reported at the time of his conference speech, Osborne claimed he could save £400mn a year by cutting tax credits to ‘high earners’:
Withdraw tax credits from “high earners”: If Osborne reaches No 11, any household earning more than £50,000 should no longer expect the family element of the child tax credit. This is done by reducing the threshold for means testing to £40,000 — so families with incomes of 40-50K will also receive less. This saves around £400m a year. This is a brazen raid on a middle class perk: a household with two teachers would be affected. But the Tories say the maximum loss will be around £10 a week.
It was obvious then that not all of these ‘high earners’ actually earned that much.
More details have emerged today. This goes well beyond ‘high earners’ and the ‘middle class’:
As Left Foot Forward reports today:
“To reduce total annual Tax Credit expenditure by £400 million, it is estimated that the second income threshold would need to be reduced to around £31,000.”
In other words couples earning as little as £16,000 each would lose out.
As Liam Byrne says:
For the Tories to recoup £400 million from tax credits as they’ve pledged, Osborne had claimed he would only remove tax credits from those earning over £50,000. But figures released to Parliament today show that to raise the £400mn Osborne’s credibility depends on, a couple earning as little as £16,000 each would be hit by his tax plans.
These new Treasury figures expose how George Osborne has misled millions of people over the scale of cuts he would make to their tax credits.
Today we learn that he would hit millions of families on low incomes, while still promising to give £200,000 to the richest estates.
Yesterday it was prisons, today it’s tax credits. Every day, another of George Osborne’s unfair policies unravels.
It’s not clear whether it’s down to his bad judgement, his inexperience or something more sinister.
I’ve long accepted that George Osborne’s macro-economic views are nonsensical. It would be nice though if he could at least add up properly.
No wonder the city is losing confidence in him.