Fears George Osbornes Budget will hit poor hard

Some of the key points from today’s Budget announcement include cuts to fuel duty of 1p per litre from 6pm today and postponement of next month’s planned 4p rise in fuel duty until January 2012.

Personal tax allowance is set to rise by £630 to £8,105 in April 2012 and the Government is planning a consultation on merging National Insurance and Income Tax. Alcohol duty remains unchanged but tobacco tax will rise by 2%, and a £250m fund is to be established to help 10,000 first-time buyers under a shared-equity scheme.

The Chancellor has downgraded the 2011 growth forecast from 2.1% to 1.7%, while inflation is predicted to remain between 4% and 5% in 2011.

Borrowing is expected to reach £146bn this year, before falling to £122bn next year. National debt is forecast to stand at 60% of national income this year, before rising to 71% in 2012 and dropping again to 69% in 2015.

Niall Cooper, coordinator of Church Action on Poverty, expressed disappointment with the Chancellor’s decision to focus on measures benefitting businesses.

He said the Budget ignores the plight of the poorest people likely to be worst hit by the £18bn cuts to welfare and housing benefits that kick in next month.

Mr Cooper said the scale of the spending cuts “dwarf any of the so-called ‘good news’ measures announced in today’s Budget".

Changes in the personal tax allowance would “make no difference at all” to the unemployed or those earning less than £7,000 a year, he said.

While the Chancellor hopes to raise £1bn this year with a clampdown on tax evasion, Mr Cooper said the savings amounted to only a “tiny fraction” of the total amount being lost each year to tax avoidance - around £42bn.

He also criticised the introduction of a 10% tax discount for those leaving 10% of their estate to charity, saying that it would enable millionaires to dodge some of their taxes.

Mr Cooper said: “George Osborne has completely failed to acknowledge the genuine hardship that millions of people in this country are now facing.

“The Budget speech did not make a single mention of people in poverty, or of the huge cuts which are about to affect the benefits system.

“The Government has not kept its promise to protect the poorest and most vulnerable from the impact of its spending cuts.

“There were no measures to protect people in poverty, and no serious commitment to make wealthy individuals or corporations pay a fairer share of the cost of reducing the deficit.”

Family Action was equally scathing in its response to the Budget, saying that the measures would not help families.

The charity’s chief executive Helen Dent said: “George Osborne’s clearly not a family man. We need a fair family stabiliser, not just a fair fuel stabiliser.

“A strong economy doesn’t just start with small businesses but with strong families who can stand on their feet and are work-ready because they get the right support from services and welfare.

“Weakening employee protections in the name of small businesses and cutting services and welfare is no way to support family life.”

Aidan Vaughan, Chair of the Association of Christian Financial Advisers, said some of the measures in the Budget were "very welcome". They include the rise in personal allowances, reduction in fuel duty and help for first time buyers.

He was also positive about the 10% reduction on inheritance tax rates for those giving 10% of their estates to charity, saying it could give a £330 million boost to the charitable sector.

Mr Vaughan added, however, that people needed to learn lessons from excessive borrowing and the banking crisis.

“Our nation has to learn the painful lesson of ‘spending less than we earn’ and to work out the difference between ‘needs and wants’,” he said.

“There is maybe another message to take from a financial squeeze – endeavour to keep your finances straight forward and beware of greed.”