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Budget disasters: When Chancellors get it wrong


By Alan McGuinness, Political Reporter
Budgets are a chance for the chancellor of the day to lay out the state of the nation’s finances and to assure the British public that the coffers are in safe hands.

Or at least that’s the plan.
Some have proved hugely controversial, while others have gone down in history as downright disasters. These are five recent Budgets the chancellors that delivered them would like to forget.

2017 Spreadsheet Phil’s rocky start

Image: Mr Hammond was swiftly accused of breaking a Tory manifesto promise
Incumbent Philip Hammond’s first crack at delivering a Budget didn’t go all that well, with “Spreadsheet Phil” being forced into a U-turn on a controversial tax rise within a week.
The source of ire was his plan to raise the rate of National Insurance for the self-employed, meaning some people would have paid considerably more.
Mr Hammond was accused of breaking a key Conservative manifesto promise – the “tax-lock” pledge made ahead of the 2015 election not to increase income tax, VAT or National Insurance.
The volte face created another problem for the Chancellor as the NI increase was supposed to raise the £2bn he had pledged for social care, leaving Mr Hammond with a blackhole to fill.

2016 Osborne goes out on a low

Image: Mr Osborne’s final Budget led to a Cabinet resignation
What turned out to be George Osborne’s last Budget unravelled within days and sparked a ministerial resignation that was to foreshadow the brutal bloodletting of the EU referendum campaign and its aftermath.
The controversy this time around was over cuts to disability benefits that would raise £4.4bn. Mr Osborne wanted to tighten up the rules on Personal Independence Payments, cash given to people to help with the extra costs caused by long-term ill-health or disability.
He quickly reversed course, but not before Work and Pensions Secretary Iain Duncan Smith sensationally resigned.
In a scathing resignation letter, the former Tory leader said the policy was a cut too far and stuck the knife in, writing: “I hope as the government goes forward you can look again…at the balance of the cuts you have insisted upon and wonder if enough has been done to ensure ‘we are all in this together’.”
Mr Osborne’s poll ratings plummeted and his long-harboured leadership hopes were pronounced “dead in the water”.

2015 Osborne u-turns again

Image: Chancellor George Osborne leaves to deliver his 2015 Budget
Another Budget, another Osborne u-turn. Although the tax credits furore he created bubbled away for months before the Chancellor cut his losses.
Critics said Mr Osborne’s plan to save £4.4bn by cutting the benefit would leave some families as much as £1,300 a year worse off.

After months of opposition pressure, disquiet among Tory backbenchers and two defeats on the plans in the House of Lords, Mr Osborne used his Autumn Statement later that year to scrap the change.
It meant the Chancellor missed his welfare spending target and caused some not inconsiderable political damage to his party.

2012 The ‘Omnishambles’

Image: Hundreds of bakers protest outside Downing Street over the ‘pasty tax’
A gold mine for headline writers, the media had a field day with George Osborne’s 2012 effort. It was so bad it ensured a new term entered the political lexicon: Omnishambles.
Where to begin?
First there was the “granny tax”, the moniker given to Mr Osborne’s decision to phase out a tax break for pensioners that meant they started paying income tax at a higher level than workers.
Then came the “pasty tax”, which would make hot takeaway snacks subject to 20% VAT for the first time.
A new VAT charge on static caravans of 20% was also proposed, becoming known as the “caravan tax”.
Oh, and he also cut the top rate of tax for high earners. All in this together? Many didn’t think so after this botched Budget.
Although the Chancellor eventually rowed back on the “pasty tax” and “caravan tax”, the episode marked the nadir of Mr Osborne’s unpopularity.

2007 The ‘Big Clunking Fist’ hits the low paid

Image: A smiling Tony Blair watches on as Gordon Brown delivers his 2007 Budget
Gordon Brown decided to scrap the 10p rate of tax in his last Budget as Chancellor – and then found he had to deal with a growing backlash when he became Prime Minister.
This was because the decision left millions of low income workers more than £200 a year worse off as they had to pay tax at a higher rate than before.
Mr Brown’s replacement in Number 11, Alistair Darling, attempted to clean up the mess in 2008 by increasing the personal allowance (the amount you earn before paying tax).
But number crunchers pointed out that the change failed to fully compensate those worst hit by the change in the first place.
Source: Sky

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