George Osborne is about to get to his feet to deliver his Budget.
In Parliament Square this morning, Enough Food IF campaigners gathered to remind him to stick to the 0.7% overseas aid pledge.
Join us for our budget live blog.
“It was of course inevitable that debit reduction would impact on growth, but what the independent OBR figures show quite clearly is that other factors – namely the weak international picture and higher-than-expected inflation – have had a much greater impact on economic growth. Given the risks of not setting out a clear path for deficit reduction in 2010, the figures vindicate the coalition’s strategy.” says Nick Thornsby
Borrowing projected to reduce from £114 billion this financial year to £97 billion by 2016 and £42 billion by 2018.
Measures to be announced today will be fiscally neutral.
Nick Thornsby writes:
“And it’s worth pointing out that underlying growth in most of the economy has been much stronger than the overall figures suggest, which have been disproportionately impacted by the big reduction in North Sea oil and weaknesses in the construction sector. That is why the figures for jobs diverge so much from the growth figures: most of the private sector is doing rather well.”
Nick Thornsby points out:
“Osborne confirms the central role of the monetary policy committee to keep inflation stable, but increases its remit to include other economic indicators in its considerations. This is significant.”
0.7% target for overseas aid will continue, but will not increase – Caron
Public sector pay increases limited to 1% in 2015/16. That’s a significant cut over the course of the Parliament. – Caron
Government accepts Armed Services Review Body recommendations – Caron
Nick Thornsby writes:
“Switching more current spending to capital spending on infrastructure makes sense – it has a much higher ‘multiplier’ and therefore a more beneficial impact on growth. This has been a theme of previous statements. Another £2.5bn diverted today.”
Nick continues:
“A free-trade agreement is a priority of our foreign policy”, says Osborne. Good to hear – should be a Lib Dem priority too.’
Caron: Osborne emphasises that jobs are being created across the whole country – very unlike the 1980s. This was always a key Liberal Democrat priority.
Nick: Now comes the implementation of Michael Heseltine’s recommendations to boost our cities – lots of good suggestions.”
Nick: “Sly, but wholly warranted, dig at Tristram Hunt by Osborne, who expresses surprise at an example of him acting in a non-partisan way.”
Caron: Another reduction in Corporation Tax to 20% in 2016. Nick adds: “Osborne cuts corporation tax still further. Reduces to 20% in 2015. Controversial among Lib Dems but important in a globalised world where we are competing to have businesses base themselves here.”
Nick: “Worth highlighting that the scale of job creation in the private sector in the last three years is extraordinary – more net jobs in the private sector in that period than in all of Labour’s time in office.”
I think George meant Steve Webb’s new pension amounted to £144 a week, not a year. Caron
Mark Valladares says: “Move to single rate of corporation tax removes marginal rate relief, a welcome simplification of the tax system.”
At long last Equitable Life policyholders with annuity bought before 1992 get help – but how many is this too late for? Caron
Nick Thornsby sees 3 big Lib Dem achievements: “Child care, single-tier pension and the increase in the personal allowance will be the three big, lasting changes from this budget that impact people’s lives, and all have a very clear Lib Dem stamp on them.”
New mortgage guarantee for people who can’t afford huge deposit – but there will be responsible checks on who can borrow. This will be a 3 year programme, renewable only by Monetary Policy Committee. Caron
Fuel duty increase for September cancelled. Alan Reid, Liberal Democrat MP gets a name check for speaking up for his constituents. Caron
Beer duty escalator scrapped and a penny a pint cut. Liberal Democrat Greg Mulholland will be chuffed. – Caron
Personal Allowance raised to £10,000 in 2014, a year ahead of time – LIBERAL DEMOCRAT PLEDGE DELIVERED IN FULL! Caron
Osborne points out that everyone who paid Labour’s 10p tax will be paying no tax under the Coalition. Caron
£2000 for every business taken of Employers’ NICs. One third of employers will pay no NIC at all. Caron
Caron: Great that £10,000 tax threshold target reached – but what will we have to offer in 2015?
Mark Valladares on tax havens: “Tax agreements with tax havens such as Jersey follow on from agreements with Switzerland and Liechtenstein, which are expected to raise an additional £3 billion by 2016 in the case of Liechtenstein alone.
Given that some of the most significant remaining tax havens are linked to the United Kingdom (British Virgin Islands, Turks and Caicos Islands, Isle of Man and Jersey), increased fiscal transparency will allow better monitoring of tax evasion.”
Secretary of State for Scotland Michael Moore says:
Today’s budget shows the Coalition Government is building a stronger economy and fairer society to equip Scotland and the UK to succeed in the global race.
We face many economic challenges but this Government has shown we can deliver, with one million private sector jobs and increasing personal tax allowances to £10,000 – taking 224,000 people in Scotland out of tax altogether.
We are supporting families, individuals, both small and large businesses, and investing in the future with this Budget. It is good news for Scotland and will help us build on the positive changes we are making to rebalance our economy.
Massive disparity in oil revenues projections for next five years. Most optimistic projection by UK Government £33.9 billion, most optimistic by Scottish Government £57 billion. Even the SNP’s least optimistic projections are £8 billion more over the piece. £8 billion represents about a quarter of the total Scottish budget. Not really sums you want to get wrong – Caron
Mark Valladares: Agreements with the Isle of Man, Guernsey and Jersey consist of an agreement to automatically exchange a wide range of financial information on UK taxpayers with accounts in those places, significantly enhancing HMRC’s ability to crack down on those who do not declare their offshore affairs.A disclosure facility (available from 6 April until September 2016) will allow people to come forward to disclose their previous tax affairs in advance of the automatic exchange of information.
Mark Valladares notices something in the small print: From 1 April, suppliers to central government will have to certify tax compliance when bidding for Government contracts.
Summary from Nick Thornsby:
Some great political victories for the Lib Dems, too, demonstrating the paucity of ideas for helping ordinary people in Tory thinking.”
I hope you have enjoyed our live blog. There will be more comment later, and rumour has it that Stephen Tall may be doing the media rounds again this evening…
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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11 Comments
GOod news about the continued ring fencing of overseas aid.
This is a terrible budget. The coalition was formed to tackle the deficit, not constantly delay a time when it might stop growing. Vince is right, again – Vince should be Chancellor – Lib Dem activists should not be defending the Govt’s failing economic policy.
I agree Paul. Only 3 billion for capital expenditure.
So £2.5bn of extra spending cuts for the next two years in order to pay for extra infrastructure spending from 2015-16. Just what Vince cable was asking for in the New Statesman a couple of weeks ago? Hardly Keynesian I fear.
And could someone please explain where the forecast growth is going to come from – I have got rather sick of waiting for the confidence fairy to arrive.
“Just 26% of Lib Dem members support Osborne’s ‘Plan A’” Unfortunately it appears that they are all LibDem MPs.
The coalition was formed to tackle the deficit, maybe, but not at any cost, surely? Doing it faster means more pain for someone, probably people on low incomes. Is that what LibDems recommend?
The AME cap announcement is worrying and it seems that we won’t have any further details until the Spending Review in June. It will undoubtedly mean that the welfare budget takes another hit.
In terms of tax measures the most significant in this budget is not the small further rise in the personal allowance (welcome though that it is, about half of it is just the usual inflation uprating), but the cut in employers NI.
The circa £1.5 billion revenue cost of this is part of a small overall tax cut in the next 2 years (totalling about £2.7 billion per year). Trivial macroeconomically, but the specific measures look reasonably well targeted, as does the further tweak in the balance of fiscal consolidation away from capital cuts and towards a squeeze on current spending (albeit achieved by Danny Alexander simply locking in departmental under-spends rather than policy changes).
The housing policy is the most interesting, and potentially alarming, measure. Should help the construction industry in the short term but at first glance it has disturbing echoes of US-style state-backed subprime lending…
It’s not good is it?
The government was not formed to cut the deficit. It was formed to ensure stability and growth. with the underpinning belief that deficit reduction would act as driver for that growth. It simply has not worked and shows no sign of working. with every budget and every prediction worse than the last.. The longer it goes on the worse it will get.
Jonathan: AME accounts for roughly half of all public spending. It is crazy to think that all of this lies outside the government’s direct control. Therefore it strikes me as entirely sensible to bring those aspects that can be controlled with a reasonable degree of accuracy within the Spending Review process.
The Treasury used to do this through the so-called ‘Control Total’ until Gordon Brown created the DEL/AME split in 1998 , which in retrospect was part of his mission to turn the Treasury into a spending department.
Failing to include discretionary items of AME within the Spending Review has the effect of hiding the true nature of the choices and trade-offs in spending. It also means that in practice spending cuts will tend to be borne disproportionately by public services rather than transfer payments to households, the EU etc.