Adam Smith Institute Budget reaction: Osborne fiddles while economy booms

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07584 778207

Commenting on the 2015 Budget Statement, Deputy Director of the Adam Smith Institute, Sam Bowman, said:

The biggest story in today’s budget was not any of the measures announced but the extraordinary strength of the UK economy.

“Employment is now at the highest level and rate in history and, although productivity growth is still depressingly low, the economy appears to be very healthy overall. Those economists who predicted at the start of this Parliament that spending cuts would lead to mass unemployment should take a lesson from this.

Financial markets have been quiet and government borrowing is extremely cheap, a sign that the government still has the confidence of the markets on long-term deficit reduction. Any doomsayers about the UK’s fiscal position are going against the collective judgment of the people who actually have money on the line.

The best policies were ones we already knew about – raising the personal allowance will leave more money in full-time workers’ pockets, and is a good tax cut for people on low and middle incomes. Most of corporation tax falls on workers’ wages so the cut to that should boost wages, with the remainder coming off investment. Raising the upper-rate threshold and cutting alcohol duty are also both welcome moves.

This budget was filled with fiddly splurges on things like the church roof repair fund, and giving Libor fines to military charities is just bizarre, but thankfully most were triflingly small.

The most depressing big announcement was the ‘Help to Buy ISA’, which will subsidise first-time buyers’ savings pots. This will stoke up demand even more in a housing market that is suffering from insufficient supply. Throwing more money at the demand side will not solve the housing crisis – the country needs planning reform so that it is easier to build on Green Belt land. The only thing this policy will Help to Buy is the election.

Overall, this was not the giveaway budget that some had hoped for – or feared. With all of the tiny changes in this, it looks like Osborne is fiddling while the economy booms.

The Adam Smith Institute is an independent free market think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Dr Eamonn Butler’s letter in The Evening Standard: London inequality stats misleading

Director of the Adam Smith Institute Dr Eamonn Butler wrote a letter published by The Evening Standard,  which highlighted the problems with recent inequality figures that suggest the poorest third of households in London only own one per cent of London’s wealth:

Figures purporting to show that the poorest third of households own only one per cent of London’s wealth [March 13] are utterly misleading. They use a “net wealth” calculation in which the “poorest” have more debt than assets. But these include people such as middle-class new graduates with student debts but otherwise excellent life prospects. London also has a large population of immigrants and young people who naturally have not accumulated as much wealth as those who are older and longer established. Tessa Jowell calling the figures “obscene” reveals a shocking ignorance of their true meaning.

Sam Bowman’s comments on the rise in minimum wage for apprentices features in CityAM

Deputy Director of the Adam Smith Institute Sam Bowman was quoted in City AM on the minimum wage rise for apprenticeships.

And Sam Bowman from the Adam Smith Institute said it could do long- term harm to would-be apprentices. “Raising the minimum wage usually hurts people’s job prospects because it makes them costlier to employ,” he said. “The apprentice National Mini­mum Wage is very low to reflect that training apprentices is costly to employers.”

Read the full article here.