Speculation this morning that the government will use welfare cuts to help make its sums add up on 26th March. A thread on why tax options are really the "politically difficult" choice the Chancellor should consider.
Comments
Log in with your Bluesky account to leave a comment
1) The Chancellor is right to adjust overall tax and spending plans to continue to meet her fiscal rules. She only just set them after all, and (much like the German government is doing now) she gave herself more room for public investment when she did so.
2) The problem with focusing on "headroom" to or changes to fiscal rules is these are self-imposed targets that vary through time and between places. It's like judging who won the race based on the gap to their personal target, rather than who ran the fastest.
3) It's not a good time to seek overall savings from welfare. Child poverty is the highest in Europe bar Greece and forecast to rise . Benefits will increase by 1.7% in April while inflation is running at 3% and rising. The labour market is loosening at a rate normally associated with a recession.
4) There are clearly issues in the benefits system that need addressing. The bill for health and disability benefits is due to rise by £32bn in the ten years from 2019.
5) 1/3 is from incapacity benefits, paid to people who are unable to work due to health conditions, and 2/3 from people who receive disability benefits to compensate for the costs of a long-term health condition (whether in work or not). Rates of flowing off these benefits are significantly down.
6) But welfare reform should be done carefully. There is a history of government reforms to welfare not saving the expected amounts, such as when the removal of certain categories of incapacity benefits in 2017 led to an increase in the overall claims made.
Comments