Forecasts and measures of 2008 Budget examined

Summary

This Report, 'The 2008 Budget' (HC 420), examines the forecasts and measures contained in the 2008 Budget.

The Treasury's lower forecasts for economic growth in 2008 and 2009 are above the average of independent forecasters, suggesting that the Treasury may have given insufficient weight to the risks of continued financial market turbulence. It also suggests that some of the UK economy's characteristics that have been beneficial in past crises might prove to be channels through which the current problems in global financial markets are transmitted to the UK real economy.

The Committee's conclusions and recommendations include:

The further weakening of the forecasts for the public finances is noted and it appears premature for the Treasury to state that it is 'on course' to meet the golden rule in the next economic cycle, given the lack of an end date for the previous economic cycle.
Measures on child poverty are welcomed but there is a need for a clear explanation on deployment of resources to ensure that the target to halve child poverty by 2010-11 will be achieved.
The abolition of the 10 pence rate of income tax will most affect those under 65 years of age, living in childless households, and earning under £18,500. The Committee feels this group is an unreasonable target for raising additional tax revenues.
The Treasury should commission research into whether the withdrawal of the 10 pence income tax band and high marginal deduction rates are creating disincentives that could frustrate the Government's welfare to work objectives.
The Committee calls for a national Saving Gateway targeted at low-income households and more consideration of tax changes on the middle and lower income groups of non-domiciled taxpayers.

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Law-Making Explained

This is a House of Commons Paper (HC 430, 2007-08). It is a Report from the House of Commons Treasury Committee.

Find out more about House of Commons Papers.

How does it affect me?

If you are under 65, earning less than £18,500 per year and living in a childless household, or are interested in the UK economic forecasts, this affects you.