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| Osborne should spell out welfare cuts, says IFS | Osborne should spell out welfare cuts, says IFS |
| (about 1 hour later) | |
| Chancellor George Osborne needs to spell out exactly how he plans to cut £12bn from welfare spending, says the independent forecaster the Institute for Fiscal Studies (IFS). | Chancellor George Osborne needs to spell out exactly how he plans to cut £12bn from welfare spending, says the independent forecaster the Institute for Fiscal Studies (IFS). |
| Only £2bn of these £12bn cuts have been outlined so far, said IFS director Paul Johnson, in response to the Budget. | Only £2bn of these £12bn cuts have been outlined so far, said IFS director Paul Johnson, in response to the Budget. |
| Yet all the cuts are supposed to be in place by 2017-18, he said. | Yet all the cuts are supposed to be in place by 2017-18, he said. |
| "It is time we knew more about what they might actually involve," Mr Johnson added. | "It is time we knew more about what they might actually involve," Mr Johnson added. |
| Spending cuts planned for 2016-17 and 2017-18 would be "twice the size of any year's cuts over this parliament", said Mr Johnson, if the £12bn of cuts already announced and the Chancellor's hoped-for £5bn of anti tax avoidance measures failed to materialise. | Spending cuts planned for 2016-17 and 2017-18 would be "twice the size of any year's cuts over this parliament", said Mr Johnson, if the £12bn of cuts already announced and the Chancellor's hoped-for £5bn of anti tax avoidance measures failed to materialise. |
| But the IFS has been left "guessing" how these cuts are going to be achieved, said Mr Johnson, admitting that the lack of detail was "frustrating". | But the IFS has been left "guessing" how these cuts are going to be achieved, said Mr Johnson, admitting that the lack of detail was "frustrating". |
| "You're going to have to do things like further big cuts in child benefit, or really substantial cuts to housing benefit or significant cuts to disability benefits," said Mr Johnson. | "You're going to have to do things like further big cuts in child benefit, or really substantial cuts to housing benefit or significant cuts to disability benefits," said Mr Johnson. |
| "He's announced about £2bn [of cuts] and we know nothing about where the further £10bn are coming from." | "He's announced about £2bn [of cuts] and we know nothing about where the further £10bn are coming from." |
| In his Budget, Mr Osborne said spending cuts could reach £40bn by 2018-19 but then fall to £26bn in 2019-20. | In his Budget, Mr Osborne said spending cuts could reach £40bn by 2018-19 but then fall to £26bn in 2019-20. |
| Help to Buy ISAs | Help to Buy ISAs |
| The IFS warned that the new "Help to Buy" ISA [individual savings account] proposed by the chancellor could result in a temporary fall in first-time buyer activity in the housing market. | |
| This is because would-be buyers may delay property purchases to make the most of government top-ups. | This is because would-be buyers may delay property purchases to make the most of government top-ups. |
| Under the proposed scheme, the government will add £50 for every £200 saved towards a deposit in the ISA. | Under the proposed scheme, the government will add £50 for every £200 saved towards a deposit in the ISA. |
| Mr Johnson also speculated that the scheme could have an inflationary effect on house prices. | Mr Johnson also speculated that the scheme could have an inflationary effect on house prices. |
| Household incomes | Household incomes |
| Commenting on the economic effect of the recession and the government's tax and benefit changes, Mr Johnson said UK households had experienced "the slowest recovery in incomes in modern history". | Commenting on the economic effect of the recession and the government's tax and benefit changes, Mr Johnson said UK households had experienced "the slowest recovery in incomes in modern history". |
| While average household incomes have "just about" regained their pre-recession levels, the recovery had not been felt equally by all sections of society, he said. | While average household incomes have "just about" regained their pre-recession levels, the recovery had not been felt equally by all sections of society, he said. |
| "Average incomes among pensioners have risen, among those of working age they have fallen, with especially big falls for those in their 20s," said Mr Johnson. | "Average incomes among pensioners have risen, among those of working age they have fallen, with especially big falls for those in their 20s," said Mr Johnson. |
| Earnings, taking the effect of inflation into account, have fallen, but should still be above their 2010 levels, he continued. | Earnings, taking the effect of inflation into account, have fallen, but should still be above their 2010 levels, he continued. |
| "We are for sure much worse off on average than we could reasonably have expected to be back in 2007 or indeed back in 2010," he said. | "We are for sure much worse off on average than we could reasonably have expected to be back in 2007 or indeed back in 2010," he said. |
| The IFS concluded that the richest have been "hit hardest" by the government's tax changes over the last parliament. | The IFS concluded that the richest have been "hit hardest" by the government's tax changes over the last parliament. |
| But it said that benefit cuts had "hit low income working age people". | But it said that benefit cuts had "hit low income working age people". |