Clegg rejects budget criticism

(Reuters) – The deputy prime minister on Thursday rejected a report by an independent and influential think-tank that said the government’s fiscal new measures will hit the poor hardest.

In a guest column for the Financial Times, Nick Clegg said a report published on Wednesday by the Institute for Fiscal Studies adopts a “purely numerical” definition of fairness by taking a snapshot of taxes and benefits at any given time.

“You cannot measure poverty with a snapshot because people’s lives last longer than a single second,” Clegg wrote.

“If you want to measure genuine fairness, the question to ask about government policy is… How does it change the future course of people’s lives? How does it increase their opportunities?”

The IFS said low-income households of working age lose the most from the tax and benefit changes announced in a June budget, while the highest earners without children lose the least.

Chancellor George Osborne produced the harshest budget in a generation a month after the Conservative and Liberal Democrat coalition government took office, promising to cut an 11 percent budget deficit to nearly nothing in five years.

He said in his budget speech the hefty spending cuts and tax increases were “progressive” and would hit the rich more than the poor.

The report by the IFS was expected to make it harder to build public support for planned spending cuts of 24 to 40 percent that unions say will cost hundreds of thousands of jobs.

Clegg, the leader of the Liberal Democrats, said the fiscal changes to the economy will create opportunities that would be destroyed if borrowing continued unchecked.

“There is nothing fair about ducking decisions and burdening the next generation with debt,” he wrote – Reuters