Budget 2016: 9 Stinkers George Osborne Won't Want You To Talk About

More cuts, disability benefit raid, 'stealth' taxes ...

Coverage of George Osborne's Budget will be dominated by his "sugar tax". But his 2016 tax and spending plan revealed much more, and a lot of it grim. Here are 6 stinkers he'd rather you didn't talk about.

£3.5bn more spending cuts

Austerity continues. With economic growth slowing and an unflinching target get Britain "in the black by 2019-20, spending cuts will fill the financial black-hole.

Osborne made clear he would look to "save" a further £3.5 billion in 2019-20, but didn't think that was too much to worry about.

"At less than half a percent of government spending in four years' time, that is more than achievable while maintaining the protections we have set out," he told MPs.

"At the same time we will continue to deliver sensible reforms to keep Britain living within its means."

£4.5bn raid on disability benefit

The Personal independence payments could be cut by £150 a week, seeing 640,000 lose out on money that previously helped them get by.

Osborne claimed, however, that the changes were "within the rising disability budget": "The disability budget will still rise by more than £1bn."

Public service pensions filleted

Osborne wants to swell Treasury coffers by raiding £2bn in 2019-20, and the same again from 2020-21, off the back of public sector pensions. He will use the “discount rate” - which links savings to future inflation and growth forecasts (both low), meaning he pensions will be lower and the Chancellor can balance the books sooner.

'Stealth tax'

Osborne announced he would fund more flood defences after this year's deluge - but it will be paid for by hiking everyone's insurance by 0.5%. Home, car, whatever.

He said: "I am today proposing a further substantial increase in flood defences. That would not be affordable within existing budgets.

"So I am going to increase the standard rate of Insurance Premium Tax by just half a percentage point and commit all the extra money we raise to flood defence spending."

Economic growth scaled-back

In short, the things aren't as good as he thought they would be. The Office for Budget Responsibility has revised down its forecast for 2016 to 2% from 2.4% and it gets worse from there - the next five years are all lower than its previous expectations.

Roll-ups taxed more

He will increase the duty on hand-rolling tobacco that will mean paying an extra 44p on a 30g packet.

At present, hand-rolling tobacco is subject to VAT at 20%, plus an increase in line with the rate of inflation and a further 2%. The Chancellor has now hiked the additional levy to 5%.

Osborne avoided raising most of the "sin" taxes - duty on beer, cider and whiskey was frozen - but his generosity did not extend to cigarettes and wine. Tobacco duty goes up by 2% above inflation from 6pm tonight, and "other spirits" will rise by inflation as planned.

Airbnb tax-break versus the 'bedroom tax'

Some pointed our the inconsistency of handing entrepreneurs an incentive to rent out your spare room or sofa to holidaymakers online, while penalising those on housing benefit for have a vacant room.

£650m less spending on poor foreign countries

The Government is committed to spending 0.7% of national income on development - but reduced growth forecasts mean handing over £650m less in 2019-20.

Councils hit by business rates cut

Osborne abolished business rates on small businesses, so from April next year 600,000 will pay no tax at all. Good news for them, less so for councils that rely on the money to run vital local services.

The Mencap charity warned there will be knock-on effects for the care system is that is "critically under-funded".

Before You Go


What's Hot