The Chancellor George Osborne has announced an austere budget, cutting expenditure heavily and increasing VAT to 20 percent in 2011, to reduce the deficit in Britain’s economy.
The budget will confirm cuts in public spending, which had been begun earlier, and predicted when the Conservative / Liberal Democrat alliance took office. The BBC reported long-term cuts averaging 25 percent for government departments, which is sure to result in IT projects being canned or postponed.
Public sector workers will have their pay frozen for two years, apart from those who are paid less than £21,000. There were also many cuts to benefits and other expenditure, totalling around £32 billion and around £8 billion raised in higher taxes.
One other minor technology impact is the removal of a tax break for the video games industry which had been promised by the Labour government. The move was described by Osborne as “poorly targetted” and which had been expected to go.
The Leader of the Opposition, Harriet Harman, denounced the budget, which she said was unnecessarily savage and would jeopardise growth. It would put a swathe of public sector workers out of work, equivalent to the population of Coventry, she said. This sort of measure, was “driven by ideology”, from the government’s commitment to a smaller state, rather than any need to reduce the deficit, she said.
Labour would have been able to reduce the budget without this scale of cuts, because its policies were stimulating growth, added Harman.
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