19 February 2015
The government is collecting £33.4bn less in income tax and national insurance than official forecasts indicated.
If earnings had grown as the Office for Budget Responsibility (OBR) had forecast in 2010, income tax and national insurance would now total £308.4bn. Instead, it is expected to reach just £275bn.
The Tories have not just failed on everyone else’s terms, they’ve failed on their own terms too. The OBR now expects the government to have borrowed £91bn in the year to March 2014/15 – £54bn higher than the Chancellor had originally planned.
TUC General Secretary Frances O’Grady said: “The Chancellor has failed to reduce the deficit because of his failure to get wages growing. He spent the last five years shrinking pay packets and as a result he plans to spend the next five shrinking the state to a level not seen since the 1930s – before we had the NHS and welfare state safety net.
“When wages go up, consumers spend more, businesses can grow, more income tax and national insurance rolls in and the deficit shrinks. We need a new plan for the economy that gets wages growing and keeps them growing.
“We can’t cut our way to a strong economy any more than we can dig ourselves out of a hole. More austerity will keep us stuck in a downward spiral. It’s time for a new long-term plan based on fair pay settlements and investment in the skills, infrastructure and innovation that creates decent jobs with decent wages.”
While ministers might be elated by the latest ONS statistics showing falling unemployment and rising wages, the fact of the matter is the increase was heavily skewed by bonuses, which benefit only an elite few.