Living standards will continue to fall, warns Osborne

The Northern Echo: Living standards will continue to fall, warns Osborne Living standards will continue to fall, warns Osborne

LIVING standards will continue to fall through to the general election, George Osborne was warned last night – just hours after his ‘mini-Budget’.

In a gloomy forecast for family finances, the Chancellor’s independent watchdog said inflation will continue to outstrip wage growth, despite the economic recovery.

Robert Chote, head of the Office for Budget Responsibility (OBR), said: “It is only in 2015 you get any serious real income growth in our forecast.”

The warning was seized on by Labour as further evidence that people are suffering a ‘cost-of-living crisis’, despite healthy economic growth figures.

Shadow Chancellor Ed Balls said the OBR’s figures showed real wages would plunge by 5.8 per cent over the five years of this parliament, compared with RPI inflation.

And he told Mr Osborne: “Under you and this prime minister, for most people in this country, living standards aren't rising - they are falling year on year on year.

“Prices will continue to rise faster than wages this year and into next year too and, as a result, people will be worse off in 2015 than they were in 2010?”

The verdict threatened to take the shine off an autumn statement in which the Chancellor announced bumper growth forecasts and falling borrowing.

A jubilant Mr Osborne told MPs: “The plan is working. It’s a serious plan, for a grown up country.

“But the job is not done. By doing the right thing, we’re heading in the right direction. Britain’s moving again - let’s keep going.”

The Chancellor announced: * Higher growth forecasts for this year (up from 0.6 per cent to 1.4 per cent) and next year (from 1.8 per cent to 2.4 per cent).

* Borrowing down to £111bn this year - £9bn less than forecast in March – leading to a “small cash surplus” in 2018-19.

* A £300m increase in local authority borrowing for housebuilding – if councils agree to sell and land and expensive social housing.

* A further freeze in petrol taxes – with a planned 2p rise next year scrapped.

* Rail fares will rise only in line with RPI inflation next month – not RPI plus one per cent.

* A £1,000 cut in business rates for small shops and pubs, for the next two years - and halved rates for new occupants of vacant shops.

* The scrapping of National Insurance (NI) contributions on 1.5m jobs for young people.

* A threat to strip benefits from jobless under-21s who refuse to go on training courses “from day one”.

The Treasury said 14,000 businesses in the North East would enjoy the £1,000 business rates discount, while 52,000 would see their rates capped.

But Mr Osborne also announced that Scotland would – thanks to the Barnett Formula – receive a budget increase, while local council cuts are stepped up in England.

And the OBR analysis sparked fears of a fresh housing bubble, with prices now expected to be higher than five per cent in 2014 and seven per cent in 2015.

Comments (9)

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7:13pm Thu 5 Dec 13

Jonn says...

So a recovery just for the rich then.
So a recovery just for the rich then. Jonn

7:35pm Thu 5 Dec 13

Voice-of-reality says...

That would be 'the rich' who pay far more tax than the underclass. Indeed, the percentage of tax paid by the top 10% has continued to rise whilst the benefits bill has rocketed. So, thank god 'the rich' do still pay the greatest amount of tax. It is also worth remembering that those who earn only just over 30,000 now pay 40% tax. Not exactly a high wage.
That would be 'the rich' who pay far more tax than the underclass. Indeed, the percentage of tax paid by the top 10% has continued to rise whilst the benefits bill has rocketed. So, thank god 'the rich' do still pay the greatest amount of tax. It is also worth remembering that those who earn only just over 30,000 now pay 40% tax. Not exactly a high wage. Voice-of-reality

8:28pm Thu 5 Dec 13

sineater says...

That is iff they are not avoiding tax,iff they coughed up then poorer people would not have to bare the brunt of the banks mistakes.
That is iff they are not avoiding tax,iff they coughed up then poorer people would not have to bare the brunt of the banks mistakes. sineater

12:06am Fri 6 Dec 13

nigel d says...

Voice-of-reality wrote:
That would be 'the rich' who pay far more tax than the underclass. Indeed, the percentage of tax paid by the top 10% has continued to rise whilst the benefits bill has rocketed. So, thank god 'the rich' do still pay the greatest amount of tax. It is also worth remembering that those who earn only just over 30,000 now pay 40% tax. Not exactly a high wage.
If you believe that you really have lost any sense of reality.
[quote][p][bold]Voice-of-reality[/bold] wrote: That would be 'the rich' who pay far more tax than the underclass. Indeed, the percentage of tax paid by the top 10% has continued to rise whilst the benefits bill has rocketed. So, thank god 'the rich' do still pay the greatest amount of tax. It is also worth remembering that those who earn only just over 30,000 now pay 40% tax. Not exactly a high wage.[/p][/quote]If you believe that you really have lost any sense of reality. nigel d

12:27am Fri 6 Dec 13

Voice-of-reality says...

I would further suggest that as a south-east and London pay more incoem tax than the rest of the UK put together there is an argument that more public spending on infrastructural projects should be spent in those areas. - After all, they are the areas that earn it.
I would further suggest that as a south-east and London pay more incoem tax than the rest of the UK put together there is an argument that more public spending on infrastructural projects should be spent in those areas. - After all, they are the areas that earn it. Voice-of-reality

9:36am Fri 6 Dec 13

David Lacey says...

The truth sometimes hurts VOR. And it is the truth you speak.
The truth sometimes hurts VOR. And it is the truth you speak. David Lacey

10:27am Fri 6 Dec 13

Taxpaying Homeowner says...

sineater wrote:
That is iff they are not avoiding tax,iff they coughed up then poorer people would not have to bare the brunt of the banks mistakes.
I've asked before and I'll try again. Please define rich??

Many people pay 40% or even 45% tax, they get on and pay their dues without dodge or disgruntlement.

Your comment is insulting to all of them. Yes, there are a few that will make any attempt to reduce the amount of tax they have to pay, but these options are being reduced.
[quote][p][bold]sineater[/bold] wrote: That is iff they are not avoiding tax,iff they coughed up then poorer people would not have to bare the brunt of the banks mistakes.[/p][/quote]I've asked before and I'll try again. Please define rich?? Many people pay 40% or even 45% tax, they get on and pay their dues without dodge or disgruntlement. Your comment is insulting to all of them. Yes, there are a few that will make any attempt to reduce the amount of tax they have to pay, but these options are being reduced. Taxpaying Homeowner

12:44pm Fri 6 Dec 13

sineater says...

It is meant to be an insult,it is more the big corperations avoiding the largest ammounts of tax but their are individuals who are guilty.VOR taks about the south-east deserving these projects,that area and other tory voting areas have also less reductions in their council budgets.
It is meant to be an insult,it is more the big corperations avoiding the largest ammounts of tax but their are individuals who are guilty.VOR taks about the south-east deserving these projects,that area and other tory voting areas have also less reductions in their council budgets. sineater

7:04pm Fri 6 Dec 13

Taxpaying Homeowner says...

sineater wrote:
It is meant to be an insult,it is more the big corperations avoiding the largest ammounts of tax but their are individuals who are guilty.VOR taks about the south-east deserving these projects,that area and other tory voting areas have also less reductions in their council budgets.
Aimed at who though??

40% and 45% taxpayers who pay their allocation do not deserve comments like that, do they not pay enough already??

I agree that tax evaders should be prosecuted and forced to pay and certain tax planning arrangements are borderline, but this government is doing more to increase the tax coffers. Just yesterday Osbourne closed down some avoidance schemes and increased the Bank levy
[quote][p][bold]sineater[/bold] wrote: It is meant to be an insult,it is more the big corperations avoiding the largest ammounts of tax but their are individuals who are guilty.VOR taks about the south-east deserving these projects,that area and other tory voting areas have also less reductions in their council budgets.[/p][/quote]Aimed at who though?? 40% and 45% taxpayers who pay their allocation do not deserve comments like that, do they not pay enough already?? I agree that tax evaders should be prosecuted and forced to pay and certain tax planning arrangements are borderline, but this government is doing more to increase the tax coffers. Just yesterday Osbourne closed down some avoidance schemes and increased the Bank levy Taxpaying Homeowner

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