1343, PH: Harman has sat down now, so we’ll draw the live blog to a close. I’ll write a summary post shortly.
1342, FN: I wish I could trash Harman’s response, but it’s actually quite good. Many a Tory would be secretly cheering her trashing of the LibDems. “The LibDems denounced early cuts, now they’re backing them – how could they support everything they fought against, how could they let down everyone who voted for them?” Again, a fair point. “The LibDems used to stand up for people’s jobs, now they only stand up for their own.” Her main point – that forecasts for unemployment have risen – is a fairly strong one if true. Osborne did indeed shy away from admitting to VAT rise plans in the election campaign. Her other attack lines are flaky, but delivered fluently and with brio. A good deal better than many of Labour’s leadership candidates could manage.
1339, PH: And there’s more invective for the Lib Dems. Harman says that Cable has transformed from “national treasure to Treasury poodle.” Quite good, that.
1337, PH: Harman’s getting stuck into the VAT rise now, pointing and glaring at the Lib Dems who attacked a “VAT bombshell” before the election. She claims it will hit the poor hardest: an argument that has a great deal of support across the political spectrum.
1335, PH: Harman suggests that the OBR has downgraded its jobs figures in the wake of the Budget. I’ll have to check the figures, but it’s quite a strong claim, if true.
1333, PH: It may be a bit rich to hear Labour lecture on the economy, but this is quite punchy stuff from Harman so far. Her central claim is that the Tories measures will hit growth, which will make it harder to cut the deficit.
1331, PH: There we go: “same old Tories”.
1330, PH: Harman’s up now, and she leads by saying that this is a “Tory Budget”. She’s clearly going to paint the cuts as ideological.
1328, FN: One of the best things about the coalition is the way the LibDems have advanced the argument for raising the tax thhreshold – raising threshold to lift 1m people out of tax one of the highlights of this budget.
“The richest pay more than the poorest” Osborne says. Dennis Healey, perhaps watching this, would be proud. “We are a progressive alliance governing in the national interest” he says. “Everyone will pay something. But the people at the bottom of the income scale will pay proportionally less… prosperity for all.”
1327, PH: The p-word is coming think and fast now, as Osborne claims that “this is a progressive Budget”. He emphasis that the tough choices have been made because of “past irresponsibility”. And that’s that.
1326, PH: The Chancellor is winding up now, with two final measures: the pensions earning link will be restored and the child element of child tax credits will be raised.
1325, PH: Osborne drops the p-word for the first time, claiming that the coalition is a “progressive alliance”. Groans from the opposition benches.
1324, PH: And there’s the big measure on income tax threshholds: the personal allowance for lower income earners will be increased by £1,000 from April. Osborne claims this will take £880,000 people out of tax.
1322, FN: “From midnight, higher rate taxpayers will pay 28% on their capital gains.” Or they will find ways around it and revenues will fall – as Art Laffer explained in The Spectator a few weeks ago. To Osborne’s credit, he did reject a higher CGT rate on the grounds that it would mean less revenue and intriguingly he said HMT had conducted a dynamic tax scoring test on it. I’d like to see the working – HMT was programmed by Brown to use an artificially low elasticity rate.
1320, PH: So capital gains tax will rise. The details are coming think and fast but, basically, Osborne seems to have pitched between the positions for the Tory and Lib Dem backbenchers. Higher rate taxpayers will pay CGT at 28 percent, with various exemptions for lower income earners.
1319, FN: Magazines saved from the 20% VAT rate: the printed word remains exempt. I say this utterly selfishly, but our bombed-out industry might not have survived that. I had expected him to widen VAT to food, etc. Would have raised a hell of a lot more than £13bn. If he doesn’t do it now, he won’t do it later. Osborne tried the cider joke too soon after the VAT announcement – the 20% rate will hit people. Hit everyone. This is Brown’s tax, Brown’s legacy – Osborne could have done more to make that point.
1318, JF: No rise in alcohol, tobaco and fuel duties. Cider tax to be scrapped as well.
1317, PH: First World Cup gag from Osborne. No rise in alcohol duty will help us “celebrate” or “drown our sorrows”.
1315, PH: There’s the big one. VAT is to rise from 17.5 percent to 20 percent. The Labour benches are in uproar. The deputy speaker has to call order.
Osborne manages to make his follow-up heard above the din: “the years of debt and borrowing have made this unavoidable”.
1312, FN: Ha! Osborne does go on to deliver a tax break for companies set up outside London. A relatively small tax break, but this is precisely the right direction. What a refreshing difference from these Regional Development Authority dead-ends.
1310, PH: As if to nullify the bank levy bit, Osborne is now flowing through a passage on “enterprise” – broadband, that kind of thing.
1308, PH: Here’s the expected bank levy, which will be introduced in January 2011. Osborne says it will raise £2 billion a year.
1306, PH: And the rate for small companies will be cut to 20 percent right away.
1305, PH: And sure enough … corporation tax will be cut by one percent annually for four years – bringing it to 24 percent, “the lowest of any major western economy.”
This is a confident passage from Osborne – sunny uplands and all that.
1304, PH: Statement of intent from Osborne: “growth will come from the private sector.” Expect some corporations tax cuts shortly.
1303, FN: Looking at these two camera angles, it’s really striking how Cameron has disappeared. Perhaps it’s deliberate, so Clegg and Alexander are caught nodding when the worst cuts are
announced and DC is nowhere to be seen.
Housing benefit “in dire need of reform” – he is right. It should be abolished and put into part of a Universal Benefit as IDS suggested before he entered government. IDS will reveal his plan in time for the spending review, he says.
1302, FN: Excellent. Osborne will abolish “health in pregnancy” grant – quite right. My wife was offered money to buy fruit when she was pregnant with our youngest. I
accepted the tax rebate gratefully, but remember thinking what a poor use of taxpayers’ money it was – giving wonga to people like me so they can buy organic blueberries from Waitrose.
1302, JF: David Laws in the Chamber today, sitting on the second row on the Lib Dem side.
1301, FN: Welfare: “It is simply not possible to deal with a deficit this size without lasting reform of welfare”…. the no1 task is to match British growth to British jobs so the economy does not suck up immigrants when it grows. I do fear that this isn’t quite in focus as it should be.
“A greater proportion of our children grow up in workless households than any other country in Europe” – a scandal, but I think Labour also inherited this situation.
1300, PH: Child benefit will be frozen for three years. Osborne says that this will restrict costs, while making sure that people don’t lose out. A similar argument to the
“pay, not jobs” line on public sector pay cuts.
1259, PH: A meaty section of Osborne’s speech, as he describes how the government will limit tax credits and other welfare payments. His overall point is that they should be
targetted more towards “those who need them most”. This has the potential to be one of the most controversial aspects of today, with plenty of Labour figures keen to serve up a
“universal benefits” dividing line.
1258, JF: Surprise of the Budget so far, no mention of the infamous Byrne letter.
1258, PH: As expected, public sector pensions to be linked to CPI inflation, not RPI. The former tends to be around 1 percentage point lower.
1257, JF: Extending the pay freeze by a year enables Osborne to expand the exemption to more low paid public sector workers, clever politics.
1256, PH: Osborne namechecks Will Hutton (who will review public sector pay) and John Hutton, highlighting the cross-party efforts of the coalition. Jeers from the Labour benches.
1255, FN: Hmmm. A balanced budget by 2014, which Osborne has just promised, means an eliminated deficit. I fear that Osborne is using some smoke and mirrors here. I think a new definition of balanced budget is emerging.
1254, PH: Public spending review to be released on 20th October.
1252, PH: This speech is quite heavy-going – but in a good way, as Osborne sets out most of the main public finance projections. He lambasts Labour for concealing cuts, and claims
that the Tories will cut spending by about £30bn a year over the Parliment. Departmental spending will go down by £17 billion.
1249, FN: Debt interest payments £3bn lower by end of parliament – a real credit, which he should translate into schools, etc…
1247, JF: Danny Alexander, alumnis of Britain in Europe and the European Movement, is in the Treasury as its Euro preparations unit is shut down.
1246, PH: Laughs as Osborne says that he has terminated the Treasury’s “euro preparation unit”. “Yes,” he adds, “there was one.”
1246, FN: Osborne says 77% of consolidation by will come from cuts and 23% from tax rises. So it’s three-quarters rather than four-fifths, but still ambitious.
1245, FN: Osborne faces an awkward moment here as he explains why, after all that hullabaloo, he will reject the OBR’s growth forecasts and come up with some more pessimistic ones. The OBR used interest rates which factored in expectations of Osborne’s cuts – that’s his rationale.
1245, PH: Osborne sounding bold on the public finances. He foresees that borrowing will fall to £20bn by 2015.
1243, FN: Target is debt “falling as percentage share of GDP by 2015/16” – this could mean debt will RISE but by less than the amount of economic growth. No the same as having “debt falling” by the end of the parliament, as Osborne said later. We’ll have to wait for the red book to see which one he means…
1242, JF: Balanced Budget by 2014. That would set up a pre election Budget.
1241, PH: Growth forecasts: 1.2 percent htis year, 2.3 percent next…
1241, PH: A key prediciton: Osborne says that debt (not the deficit) should be falling as a share of GDP around 2015-16. That implies quicker action on the deficit than we’ve
been hearing.
1240, FN: “I’m not going to hide hard choices from the public or hide them in the small print of the budget” – I do hope so. I will miss hunting those Brownies, though….
Brilliant line about missing the Golden Rule by £485bn “We know the intrinsic weakness in backwards-looking fiscal rules”. He could have left our “backwards-looking” – lesson of Brown years is the danger of the false sense of security offerd by rules-based economics.
1239, PH: Osborne really is going all out to separate the coalition from the Brown years: he’s just ditched the ‘Golden Rule’.
1239, FN: Another error? Cameron is obscured by Osborne, so it looks like he is flaked by two libdems (Clegg and Alexander). Key part to budget drama is seeing the expressions on the Prime
Minister’s face.
1236, PH: Unsurpisingly, Osborne is doing all he can to pin blame on Labour: how £1 in every £4 is borrowed. The rhetoric is direct and forceful, as he claims that he wants to save the country from “insolvency”.
1235, FN: “This budget deals decisively with our country’s record debt” – his first sentence, and with an error. It may deal with the deficit, but not the debt. It will jack up the debt by at least 20%.
1234, PH: Osborne kicks off my saying that the Budget will encourage growth while protecting the poor. He gets to what I expect will be a key line today: “Yes it is
tough, but it is also fair.”
1232, JF: The front bench is, from right to left, Clegg, Osborne, Cameron, Alexander, Cable, IDS.
1231, PH: While we’re waiting for Osborne to start, here’s a picture of him with the red box outside of No.11:
Stay tuned for live coverage from 1230.
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