Andrew Hood

January 5, 2018 | Author: Anonymous | Category: Social Science, Political Science, Civics
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Response to Andy King, OBR Andrew Hood

© Institute for Fiscal Studies

Further cuts to welfare spending? • Current government has announced cuts intended to reduce welfare spending by £19bn a year relative to no policy change – although not all have been fully implemented/saved what was hoped

• £21bn of tax rises/further welfare cuts needed to keep to borrowing plans without accelerating departmental cuts – could of course choose to borrow more

• Would pensioners be broadly protected again? – in 2010–11, 37p in every £ of welfare spending on state pensions, another 15p on other pensioner benefits – by 2015–16, 42p in every £ of welfare spending on state pensions, another 14p on other pensioner benefits

© Institute for Fiscal Studies

Suggested cuts • Mr Osborne has suggested a future Conservative government would look to reduce welfare spending by a further £12bn a year: – Freeze most working-age benefits for two years (about £2½ bn) – Lower household benefit cap to £23,000 (£200m) – Removing housing benefit for some under-22s (£250m-400m) – Removing tax credits from migrants for the first four years

• Labour party have also suggested a number of future cuts... – 2 years of 1% nominal increases in child benefit (£400m) – Removing winter fuel payment from higher-rate taxpayers (£100m) – Further restrictions on benefit eligibility of migrants

• and a giveaway... – Reverse “bedroom tax”/ “spare room subsidy” (-£400m) © Institute for Fiscal Studies

Universal credit • Has the potential to deliver two major benefits 1. Simplicity and increased take-up –

Could have significant impact on child poverty

Eg. if anyone who takes up a legacy benefit takes up UC, then UC reduces relative child poverty by 400,000 in 2020

2. Reduce the number of people facing the weakest work incentives –

But work allowances have been pre-emptively cut three times

Now 6% lower in real terms than when first finalised

© Institute for Fiscal Studies

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