Jeff Salway: Little to ease pain for the hardest hit

IT WASN’T so much a case of laugh or cry as one of laugh and cry when the Chancellor presented his Autumn Statement on Tuesday.

Amid the grim news there was a bizarre light moment when George Osborne offered the staggering revelation that unemployment was high because of a lack of jobs. And his tinkering brought back memories of Gordon Brown at his most infuriating, itself laughable when you recall Osborne’s insistence that he would do it differently.

Aside from the odd nugget of unintentional comedy gold, however, both the delivery and content were woeful. Yes, there was some help for the poorest in society, as Susannah Simpson points out on this page, but overall there was far too little for those hardest hit by the government’s failing austerity measures.

The suspicion that lower income households will bear the brunt of the squeeze was confirmed by the Institute for Fiscal Studies (IFS). Its analysis concluded that the poorest 30 per cent of households will lose more than three times as much as the richest 30 per cent as incomes continue to fall.

The scrapping of January’s fuel duty rise will offer some respite, although a fresh rise in oil prices would render it almost futile. The mortgage guarantee initiative south of the Border may help a few first-time buyers, making it all the stranger that many of those buyers will now face the extra cost of stamp duty, after Osborne declined to extend the holiday on the tax.

Incentives to invest in start-up businesses are welcome, although advisers believe take-up could be low despite the tax perks. And many of those businesses will rely on consumers having both the means and appetite for spending – sorely lacking right now. Confidence has rarely been lower and the latest Bank of England figures show that households are paying debts and cutting their borrowing at a record rate.

Worryingly, however, that could reverse in the new year when the growing pressure on household finances forces many to revert to borrowing to get by. Lowering VAT from January would have been a logical step and more effective than spending money on a fuel duty freeze.

So there was nothing to boost confidence, and fresh warnings of further falls in household incomes add to the desperation. What of the measures to ease the pressures on households then? They were in short supply. Osborne rightly resisted the temptation to reduce the inflation-linked uprating of pension, disability and unemployment benefits, given the sharp rise in living costs that those on fixed incomes have faced. However millions of families will be getting less in child tax credits next year, while working families will be £100 worse off because Working Tax Credit is being frozen.

Judging by the coalition’s first 18 months in power, those hit hardest by the latest package of measures, including public sector workers, have more pain to come, because they have been singled out as the ones who have to pay.