Given the tight position of the public finances and the global economic slowdown this was never going to be a Budget for big giveaways. In this context the fact that the Government was able to find an extra £1 billion to help reduce child poverty over the next three years – through increases in Child Tax Credit and Child Benefit, and changes to Housing and Council Tax Benefit – mean that they are getting back on track. But with half of all poor children living in a working family, the Government still needs to do more to ensure that work not only pays more than benefits but guarantees a decent, poverty free, standard of living.
This was a green-tinged Budget rather than a thoroughbred “Green Budget”. The Chancellor’s environmental ambitions for the future need to be better matched with actions for today. Long-term changes to emissions standards for buildings and cars will have a positive impact. So will the extension of the sliding emissions scale for Vehicle Excise Duty and the new ‘showroom tax’ for gas-guzzlers. But we are no closer to knowing how the Government will achieve a six-fold increase in renewable energy (as required by the EU) or how it will deliver a truly low-carbon transport system. Threatening to tax plastic bags is a drop in the ocean if we are to deliver on the current commitment of a 60 per cent reduction in CO2 emissions by 2050, let alone the 80 per cent cut now being considered.
Finally, the Chancellor stood firm on the reform of the taxation of non-domiciles, Capital Gains Tax and Corporation Tax. These measures should ensure that business taxation in the UK is simpler, fairer and more transparent than some of the alternative proposals from lobby groups would have allowed. It also went some way towards providing the money to tackle child poverty and underlined the Government’s commitment to social justice.
Howard Reed is Chief Economist of ippr