Institute for Fiscal Studies says chancellor's plan will cause 10% drop in family living standards

[ttosca]

George Osborne given stark warning on cuts' impact

Institute for Fiscal Studies says chancellor's plan will cause 10% drop in family living standards

George Osborne's austerity programme will cut the living standards of Britain's families by more than 10% over the next three years as those on the lowest incomes suffer most from the tax increases and spending cuts designed to reduce the budget deficit.

A study from the Institute for Fiscal Studies, the UK's leading experts on the public finances, concludes that the chancellor's strategy will result in greater inequality and rising child poverty, throwing into reverse progress made in the final years of the last Labour government.

The bleak picture painted by the IFS will be used by opponents of the chancellor's austerity measures to call for a plan B to generate faster economic growth. There is likely to be further pressure on Osborne on Monday as the head of his independent commission on banking, Sir John Vickers, outlines measures for banking reform.

The IFS analysis, included in a new international study into the impact of the "Great Recession" of 2008-09 on 21 wealthy countries, says the most severe downturn since the interwar years will "cast a very long shadow in the UK", with the poorest 30% of households especially hard hit.

www.guardian.co.uk/business/2011/sep/12/george-osborne-warning-cuts-impact

aliceliddell
I will fight you...only fair to tell you that

Oh God...he's male
Name your place and choice of weapons,Alice!

Oh ttosca? I,too,want to have your babies!

lol!

niceguy2 Interesting ideas. I also think that the school system has a lot to do with our current jam. We've essentially got education factories turning out kids to fit a graduate mould. Sir Ken Robinson did a really interesting talk about it - look on TED if you are interested - saying we basically crush the imagination and spark out of every kid that doesn't fit this mould. Trouble is, no-one wants the end product at the minute as evidenced by the number of neets and graduates out of work. The jobs just aren't there for that sort of person.
I think we need our politicians to suck it up and be brave. Change the education system radically so it encourages each kid to follow their interests and engages them. Start primary learning at 6-7 like they do in Wales and Finland etc. Get rid of the summer holidays - lighten up on the targets and help teachers follow their kids rather than desperately trying to cram them full of stuff they don't care about. We need to let go of the idea of quantifying success through results tables.

Then, what you said about a £15,000 tax threshold, but we need to reform the tax system so it takes into account family groups rather than just individuals. If you are living together as a couple - it's a joint income, joint tax, joint responsibility.... then you can improve the benefits system because you get a true picture of family situation.

Aldd that to making it attractive to companies to remain onshore so those middle jobs are still there and making it attractive to companies to employ women with families. Tax breaks on company perks like on-site nurseries, extended maternity leave etc.

It might help but I don't think they are brave enough or bright enough, which is sad.

"If you are living together as a couple - it's a joint income, joint tax, joint responsibility...."

Women fought for decades to be treated separately financially and not as a possession of their husband. Your proposal would be a retrograde step

Rather than joint tax, and I totally agree with Cogito, introduce tax allowances for having children, for being married for instance, or allow personal allowances to be transferred between spouses if not used.

I get indignant enough that I have to disclose my financial situation for my dh's security clearance. I don't really want to have to do it for him each year for his tax return. Just because I'm married doesn't mean that I want him to know what I've got stashed where.

OK - unlike most Governments I'm prepared to listen to sense ;) so.....

Individual tax it is - but how do we legislate for child benefit so you don't have two parents earning £39,000 getting it while one parent earning £42,000 does? Do we return it as a universal benefit? Maybe each household should nominate a main childcarer. Then we should base it on the main childcarer's income. If they are earning over £30,000 they get no CB.

All suggestions gratefully welcomed as we know they all read this in a desperate bid to connect!

The education system does need an overhaul but make no mistakes. If we are to attract high quality work from large companies then we do need more graduates. One of the things my company does whenever we look to a new country is investigate the amount of bi-lingual graduates in the job market. Thankfully our native tongue is English so the lingual part matters less.

It does become a bit of a chicken & egg situation though. More graduates means more people expecting graduate level jobs but without graduates, companies will prefer to invest in places where they're being churned out.

For those who are not graduate material, I think there should be a single qualification standard for vocational training. At the moment it's a mishmash of various courses which are 'cough' GCSE equivalent. Very confusing.

Cogito, the reality already is that couples are assessed jointly for things like tax credits. The family income is taken into account for other stuff too and soon if one of you is a higher rate tax payer, the other may well lose child benefit.

Lastly, other countries not only provide tax breaks but also we get deals with the government who will also pay for our staff training, set up transportation (many countries driving is not the norm for staff) and give us grants for computers which is ironic as we're one of the biggest IT companies in the world. Before our last office went live, we were visited by their IT minister & later the prime minister. All in return for the promise of a few hundred jobs.

My point is that competition to get our business is fierce so doing stupid things like putting taxes up to 50%, raising corporation tax and having the attitude of "companies are all tax dodging & exploiting staff" are totally counter-productive.

"....how do we legislate for child benefit so you don't have two parents earning £39,000 getting it ....."

Simple. We dispense with CB all together and enhance CTC instead. Result: one simple payment for the additional cost of raising children based on household income rather than the messy two-pronged approach we currently have.

My personal belief is that this will happen when the 'Universal Benefit' is introduced anyway. There will be no 'Housing Benefit', 'Disability Benefit', 'Child Benefit,'Tax Credits' etc., etc., but one monthly payment that is higher or lower depending on the particular make-up of the household.

I think that the Govt are going to have to tread very carefully here.

My dh is a Higher Rate taxpayer. I earn, by marking GCSEs once a year, about £2k. I get all my tax refunded. We are posted abroad, so we let the house, but make a loss each year so no tax due.

My only other income is CB. It goes into a joint account, but it is paid nominally to me.

How are HMRC going to know if we declare it or not? I am taxed as an individual away from dh's tax office; it is HMRC policy not to send out returns to those HRTs earning under about £100k pa with simple affairs (ie PAYE and not a lot in savings, so are they going to suddenly send out lots of ITRs?), and dh only does one because of the rental income. My tax affairs should not be linked to dh's; neither should my NINO, and my info should be data protected i.e. his tax office should not be able to look at my tax affairs. For all HMRC know there might be a brick wall between us for finances; I might not know if he was Higher rate, he might not know if I got CB or not. If either of us refused to disclose details to the other for the purposes of an ITR, would HMRC prosecute, and whom? The person who completes the form, or the person who refused to give the information?

They should perhaps tax the recipient of the cb; in which case, they wouldn't get huge amounts in, as many like me, have no income. Furthermore, not everyone who gets cb will get tax credits etc, so there will be no record of the household income anywhere for a joined up system to say yes or no to taxing it.

As I understood it, the cb is not being withdrawn, but the Higher Rate payer is being taxed on it. I hope the £422 pa they get from us will help! We are stil almost £600 better off pa with getting it though.

'Cogito, the reality already is that couples are assessed jointly for things like tax credits. The family income is taken into account for other stuff too and soon if one of you is a higher rate tax payer, the other may well lose child benefit.'

There are many families like mine, where CTC have never been claimed, as we've never qualified, nor can I think of anything else that HMRC would have to have a picture of our family income, as we are taxed separately, and there should not therefore be any linking of our accounts.

but is that because you've effectively self assessed and realised you don't qualify because of your joint income?

If you did qualify then your joint income would be assessed.

We have never qualified, right from when CTCs were introduced back in the 90s.

If CB was done away with and all assistance for children, housing, disability or whatever was rowed into one benefit based on household status, then that would mean everyone carried on paying tax on their earnings on an individual basis with no allowances or deductions for children at all. There would be no trying to link up Mr X and Ms Y for tax assessment purposes. If the household didn't want to apply for the universal credit, that would be their perogative. Far simpler

Won't work Cogito as HB and CTB are administered by the LA and the others are central Govt. Data Protection will come into play. Tax law is too arcane to allow non specialists to administer it. HMRC have problems much of the time - don't let's compound this.

Ttosca - You should definitely listen to The Class Ceiling. I'm not a big Toynbee fan - but the program takes a balanced view of the issue of social mobility.

By structural - I mean there are certain skills which both are 'scarce' and on which society place a high value. The number of jobs which require these skills has dramatically increased over the last 10-15 years. Also, because there are a limited number of workers with these skills - the salaries they can ask for have dramatically increased.

When I started work (late 1980's) companies where still very hierarchical. Even middle level managers had secretaries and clerical assistants. Top management were expected to be a bit removed from the day to day.

Now, thanks to technology everyone is expected to have broad 'office' skills. Work places tend to be more democratic and top managers are expected to be leaders rather than dictators.

Oh I know many aren't up to it - but those with a reputation for being good push up salaries as they get head-hunted. Not so good managers benefit from general salary inflation.

The number of jobs in the 'middle' including secretary's, clerical assistants and junior managers have dramatically reduced. The base 'entry level' requirement in some top companies is 'intern experienced', post graduates with excellent IT skills and a second language.

If there aren't enough 'mid-level' jobs to act as stepping stones upwards, then social mobility will stall. It's also difficult to achieve income equality - when there is a structural gulf between the highly skilled, scarce workers and an over supply of low skilled workers.

It would work fine. HMRC should never have been put in a position of handing out benefits (tax credits). HMRC should stick to what they're good at.... getting money in. And some other body should be put in charge of handing the universal benefit out.... as it always was. That other body could be administered locally or nationally, whichever works best. All organisations would share information to avoid too much duplication... voila.

I had no idea I had been challenged to a duel until now! crazy - obviously, I feel your pain, but I have principled objections to fighting over a man. Also, I am tragically (yet appealingly) crippled

A man,Alice,A man! ttosca is no man...he is an enigma.

Maybe we could share him

Cogito; they can't share info; data protection. There is a firewall between HB and CTB depts; so there is an even greater one between HMRC and other depts like the DWP for instance.

What I meant by HMRC having problems, is that they can't even get the tax advice right much of the time. I now ask to speak to a tax specialist every time I call, as opposed to the person answering the phone, as they frequently give incorrect information.

crazy - there is a theory that this 'free lurve' thang was devised by lefty boys. But anyway - back to ttosca - the man behind the myth. The Legend that is ttosca. El Tosc as they call him. An enigma indeed, a mystery wrapped in an enigma, shrouded in questions. Unanswerable questions.

lol. Please stop, guys. You're embarassing me. :)

Aaaah, how sweet! D'you see that, crazy? Isn't he cute? He's shy! Bet you could draw him out of his shell, though.

Ooh I'll embarass you alright,ttosca
Yes alice,the unanswered questions of the leg end ttosca...like is he really Dennis Skinner?
And who the hell is Shell...the caaaaaah!