Belfast Telegraph

Friday 11 July 2014

Osborne just can't get past letter A

The Chancellor is sticking with Plan A. When it came to winners and losers, there was the usual mixed picture. Basic earners will receive a small boost next year as the tax free allowance is increased to £9,440, bringing 8,000 people in NI out of income tax payments.

Car owners no longer face a fuel duty rise of 3p in January, saving car owners some £40 per year.

The business sector got positive news, with a promise that corporation tax will be reduced by 1% to 21% by April 2014 as well as a £5bn capital boost to the UK's infrastructure (with Northern Ireland receiving a population share of £132m). Derry/Londonderry will become one of 12 cities across the UK to become 'super-connected' with broadband coverage.

To pay for this however there were of course some losers.

In particular, welfare benefits will see an uplift in payments by only 1% in the next three years, which translates into a cut in benefits. With a higher proportion of Northern Ireland households claiming benefits, the chancellor's welfare reform measures will have a particularly negative impact on the local economy.

Other losers include high earners, who will see their tax free allowance for pensions fall. It was also noted that the richest households escaped a mansion tax.

The Chancellor appears determined to stick to the course, pursue austerity, incentivise work and discourage people from being dependent on benefits. But to wean people off benefits he needs to create jobs. That won't be easy when growth forecasts are weak.

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