For Immediate Release
Wednesday 20 October 2010
In response to the Government’s Spending Review announced today, Kitty Ussher Director of the independent think tank Demos said:
"Cutting so much so quickly has always been a gamble, but the stakes are now rising by the day. The economy has started wobbling because people fear how the Spending Review will impact them.
“Now that the deed is done, it is time to move on, and fast. Osborne’s urgent task is to show not only that he has a vision of where future growth will come from but also that he is prepared to change tack if the economic situation deteriorates further.
“In the last few weeks we have seen drops in consumer confidence, retail sales and renewed uncertainty in the housing market. Business surveys indicate that growth is slowing and overall economic confidence has plummeted, which is a strong indicator that a slowdown is on the horizon. The scale of the welfare and housing cuts announced today, along with half a million public sector job losses, only increases economic uncertainty.
“The public sees the need for cuts but not the speed at which they’re being done. Osborne risks alienating people and slowing the growth that is essential for recovery if he doesn’t now focus all his efforts on rebuilding confidence.”
New research from Demos published this week found that 80 per cent of people aged 16-18 think that the cuts should be slower to give the economy time to recover, compared to 11 per cent who think they should be made as soon as possible. YouGov polling published last week found that 43 per cent of people think that the speed of the cuts is too fast.
Notes to Editors
Demos is shortly to launch a Good Growth project that asks the public what type of economy they would like to see in the future.
Demos has called for greater emphasis on tax rises for the better off to avoid a double-dip recession. Demos says the Chancellor should have committed the Government to reducing the deficit with a balance of 67:33, rather than the 80:20 ratio, between spending cuts and tax rises.
Demos has recommended increased revenue could come from:
- Aligning CGT rates with income tax rates and introducing CGT on sales of primary residences (raising around £6.5bn)
- Raising the basic rate of income tax by 1p to 21p (Raising 4bn)
- Introducing a per tonne carbon tax, with compensatory measures for the less-well off (could raise around £3bn)
- Move from per-passenger air duty to per-plane air duty (Raising £3bn)
- More congestion charging by local government (Saving central government £2bn)
Beatrice Karol Burks, Head of Press