ANOTHER NOT TCH TIGHTER; Chancellor George Osborne Last Week Delivered an Autumn Statement Which Signalled Even More Years of Austerity. Political Editor David Williamson Asks Just How Far We Will Have to Tighten Our Belts
Q: This era of austerity is like a cold I can't shake or a mosquito I can't swat. Surely the economy's about to start growing and we get back to the days when chancellors stood on the Treasury steps and threw cash at a grateful public? A: You're out of luck, and so is the country. The economy had been predicted to grow by 0.8% this year but last week the Office for Budget Responsibility now says it will contract by 0.1%. The watchdog predicts that in 2016-17 the economy will be 3.6% smaller than it had earlier calculated.
Q: But I heard a forecast that the UK will be growing by 1.2% in 2013, hitting 2.8% in 2017. Doesn't that mean we swap hair shirts for rhinestone jackets? A: If you're a private sector entrepreneur you might be able to surf the expected ripples of growth to somewhere sunny, but the Government will remain cash-strapped for years to come. George Osborne has extended austerity measures for another year to 2017-18.
Q: Good grief! That would mean we'll have been fighting the deficit for eight years - the equivalent of the lifespan of four hamsters. What's gone wrong with the coalition's economic plans? A: Quite a lot, according to the highly respected Institute for Fiscal Studies (IFS). It states: "Stripping out all the confounding changes, the Government is now expecting to borrow nearly PS40bn more over just the last two years of this parliament than it expected back in March. Debt is due to peak at nigh on 80% of national income in 2015-16. It was supposed to be falling in that year, not peaking."
Q: How is this fiscal winter going to affect people who depend on state welfare and benefits to get by? A: Most working-age benefits will go up by just 1% - less than the rate of inflation. The UK Government aims to save PS3.7bn from the welfare bill in 2015-16. Benefits for the disabled, pensioners and carers will not be affected. But disability charities claim changes to the Employment and Support Allowance mean more than 500,000 people will lose up to PS400 over the coming three years. Gold medal-winner Baroness Grey-Thompson said: "The reality for most disabled people is you are poorer, live in worse accommodation and everything is more expensive."
Q: Was there no good news in the 96 pages of the Autumn Statement? A: You may be able to buy a few more bars of chocolate the next time you stop at a petrol station. The 3p rise in fuel duty expected in January has been scrapped, saving the typical driver PS40 a year. And from April 1, the income tax personal allowance will go up by PS235 to PS9,440 - that's on top of the PS1,100 increase announced in the Budget. As a result, 13,000 people in Wales will stop paying income tax. Lib Dem Cardiff Central MP Jenny Willott says that in the Welsh capital alone 11,250 low-earners have stopped paying income tax since her party and the Conservatives took power in 2010.
Q: How can the Government afford to do this at a time when it's having to squeeze welfare and cut deep into the budgets of many departments? A: That's a question smart minds are asking. Paul Johnson of the IFS said the PS235 rise was "paltry" but expensive: "The total annual cost of the increases in the allowance, which will take just over two million people out of income tax, will exceed PS9bn by 2014."
Q: And meanwhile, I suppose, we'll see no new cash for infrastructure? A: Actually, you'd be wrong to think that. The Welsh Government will get an additional PS227m of capital funding. Savings will have to be made in some areas but the Treasury estimates the Cardiff-based Government will be PS194m better off as a result of the Autumn Statement.
Q: Was there any other good news for Wales? A: Yes. Newport will get a share of a PS50m pot for "ultra-fast" broadband and public wi-fi. And the Ebbw Vale and the Haven Waterway enterprise zones will benefit from enhanced capital allowances for plant and machinery.
Welsh businesses, like those in the rest of the UK, will be helped in 2014 when the main rate of corporation tax falls from 22% to 21%. …