Autumn statement: Policies will mean more cuts, Sheffield expert warns

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People-pleasing policies announced in today’s autumm statement will mean severe squeezes elsewhere, a Sheffield university expert has predicted.

Dr Jonathan Perraton, a senior lecturer in economics at The University of Sheffield, spoke after the autumn statement announced the tax-free personal allowance would rise from £10,500 to £10,600 - which The Treasury said was a wage boost for working people of £825 a year.

Dr Perraton told The Star: “The tax allowance is big news for people, paticularly at the lower end - but to pay for that, if you are going to pay for the NHS and schools, you are going to have the tighten the budget more on welfare and other departments.

“This is likely to mean big cuts down the line, for Sheffield Council for example.

“I’m sure they will be expecting this but they won’t be very happy.

“We haven’t got austerity out of the way in this Parliament.”

In 2010 Chancellor George Osborne said he would clear the deficit by 2015-106.

But in the Commons yesterday he admitted borrowing remained high at close to £100 billion.

For the university, a boost was the announcement that post-graduate students will now be able to take out Government approved student loans worth £10,000.

Dr Perraton said it meant post-graduate studies would be seen less of a ‘privilege for the rich’ and be welcomed but students would then face more of a debt burden.

Sheffield is also set to play a part in a new science centre, called the £235m Sir Henry Royce Institute for Materials Science. It will be based in Manchester but have satellite branches elsewhere, including Sheffield.

Academics from Sheffield will collaborate with fellow experts from across the country on pioneering research and work closely with businesses to provide products vital to the country’s advanced manufacturing sector.

Other policies announced included a reform of stamp duty.

From midnight today, different percentage rates will be charged to each portion of the house price rather than the former ‘slab’ system where home buyers charged a percentage of the full purchase price as soon as the value hits thresholds

Only homes that cost over £937,000 will see their bill go up.

The stamp duty paid on the average house price will be £4,500 lower.

Rises in fuel duty were ruled out and air passenger duty will be abolished for under-12s.

Other policies announced included inheritance tax exemptions for aid workers who go to help with the Ebola crisis, a crackdown on tax avoidance including a 25 per cent levy on firms that divert profits overseas, and the abolishment of employer National Insurance Contributions for apprentices aged under 25 on earnings up to the upper earnings limit.

This makes it cheaper for employers to take on an apprentice.

VAT will be refunded for hospice charities – as well as air ambulance and search and rescue charities.

A devolution deal for Sheffield to take more powers from Whitehall was expected to be announced before the statement, and city leaders had worked to that deadline, but is now likely to be in the coming days instead.

It is expected to focus on skills, business and transport.

Chancellor George Osborne also said his door was ‘open’ for councils who wanted an elected mayor, such as Manchester.

The Chancellor said Office for Budget Responsibility forecasts showed Britain would be the fastest-growing advanced economy in the world this year and hundreds of thousands of jobs were being generated.

But growth is expected to slip back below 2.5 per cent in subsequent years. And he confirmed that borrowing was estimated to be £91.3 billion this year - rather than the £86.4 billion previously expected.

“Now Britain faces a choice,” Mr Osborne told MPs.

“Do we squander the economic security we have gained, go back to the disastrous decisions on spending and borrowing and welfare that got us into this mess?

“Or do we finish the job - and go on building the secure economy that works for everyone?

“I say: we stay the course. We stay on course to prosperity.”

Reacting to the statement, shadow Chancellor and Labour MP Ed Balls said Mr Osborne had questions to answer about living standards, wages and tax receipts, adding: “There is a cost of living crisis.”

And taunting the Chancellor’s missed target on the deficit, Mr Balls told MPs in the Commons yesterday: “He is going to carry on missing his deficit targets for year after year.”