George Osborne delivers 2014 budget: live coverage
- Published on Wednesday, 19 March 2014 12:20
- Written by Daniel Mason
Welcome to our live coverage of George Osborne's 2014 budget - refresh the page for the main headlines and reaction throughout the day.
16.12 George Osborne is living in a fantasy economy that exists only in his head - so says the Green party leader Natalia Bennett. "The budget promotes what can only be dead-end smokestack industries, the export loans are likely to benefit most notably the arms industry, and the offerings on ISAs will further expand our already dreadful levels of inequality," she claims.
16.03 The National Association of Pension Funds has described Osborne's reforms giving people more flexibility to manage their money as "perplexing". Its chief executive Joanne Segars says: "Today's announcement is perplexing. Automatic enrolment, one of the largest and most successful reforms of workplace pensions ever seen, was introduced to encourage people to make good financial decisions about their retirement, because experience tells us that people are often ill-informed and make poor decisions about financial planning for old age.
"On the one hand the idea that savers can take their pension as a lump sum, albeit subject to tax, may be an incentive to save. However, this choice brings with it a significant burden of responsibility for individuals to understand the choices they are making. We know this is not always the case as people often underestimate how long they will live and overestimate how long their pot will last. There is a recognised problem with the lack of financial literacy in the UK and there is a distinct lack of detail in today's announcement on how the Government will ensure people have access to good impartial advice so they make the right decisions about their income for retirement."
15.43 More reaction from the IPPR, which has now criticised Osborne's changes to ISAs. "The chancellor is right to try and encourage saving but it would have been far better to focus on low to middle earners, for example through a scheme that matched their savings up to a certain limit, rather than to give further tax relief to the better off," says the thinktank's director, Nick Pearce.
"The new flexibility to transfer funds between cash and stocks ISAs announced today is welcome, particularly if it encourages risk averse savers who might otherwise have stopped saving when they hit their cash ISA limit.
"But increasing the ISA limit to £15,000 is a regressive move. Even if someone is able to save 20% of their disposable income, they would need be earning around £125,000 to make the most of the new £15,000 a year limit. At a time of austerity these earners should not be the priority for additional tax breaks."
15.40 The trend for business groups to be pleased with Osborne's budget continues, with the CBI's director general John Cridland saying the chancellor's announcements "will put wind in the sails of business investment, especially for manufacturers". He adds: "This was a make or break budget coming at a critical time in the recovery and the chancellor has focussed his firepower on areas that have the potential to lock in growth."
15.16 The Institute for Public Policy Research has described the budget as a "missed opportunity for the regions". Ed Cox, the director of IPPR North, says: "The chancellor promised a budget for the regions and for resilience. But this rhetoric is wearing very thin. Whilst growth forecasts may look better one year on, the recovery is looking very different depending on the part of the country you live in with today's unemployment figures showing a 2.3 percentage points gap between the north east and the England average. And in truth there were very few announcements that are likely to narrow that gap and nothing to boost the powers and funding devolved to northern cities."
15.10 The Institute of Economic Affairs has said increasing flexibility for savers is a good thing but Osborne is going about it the wrong way. Director general Mark Littlewood says: "Rather than reducing the 10p starting rate of tax for savings income, the chancellor should have abolished the concept of a special tax rate altogether. Such gimmicks create unnecessary complexity in the system. The creation of pensioners' bonds is bad for taxpayers and bad for businesses who have to compete against governments for capital. The government should not be borrowing at above-market rates of interest."
15.08 Ed Balls, the shadow chancellor, has said Labour will vote in favour of Osborne's overall benefit cap when it comes before parliament.
14.57 UKIP's economics spokesman Steven Woolfe claims the government has "utterly failed" in its main task of cutting the deficit over the course of this parliament. He says: "The legacy of this government is that they will soon be spending more on foreign aid than on the police and more on interest payments on our escalating national debt per annum than on Britain's defence.
"In this budget, they've given the green light to developers to concrete over our green spaces. The government have admitted that they are way off track on the deficit from what they promised in 2010.
"It is clear that this government's economic policies which will take Britain's national debt to £1.4tn by the end of this parliament have not worked and has simply added to the economic damage done by Labour."
14.41 Osborne has not done enough to tackle income equality, Oxfam claims. It adds that the increase in the personal allowance will "actually do little for the working poor, who will see the majority of any gains taken away as benefits are clawed back".
14.38 Much happier with the budget is EEF, the manufacturers' organisation, which says Osborne has "delivered on his word". Terry Scuoler, its chief executive, says: "The government clearly recognises the need to make the competitiveness of the UK a priority. We argued strongly for the need to reduce the rising cost of energy faced by many companies, and he’s acted on that. Taken together with measures to boost investment, exports and skills, the chancellor deserves a pat on the back."
14.32 Len McCluskey of the Unite union calls it "a blue rinse budget for the stockbroker belt who will celebrate their tax reductions and help with their savings. But for real Britain, this is devoid of hope and genuine effort to tackle the crisis in living standards facing ordinary people."
14.28 Sustrans, which campaigns for environmentally friendly transport, says Osborne's decision to freeze fuel duty is a "devastating blow". Head of policy Claire Francis says: "All British families are feeling the crunch but, with oil prices and insurance premiums continuing to soar, fuel duty cuts will not help those locked into poverty by forced car ownership.
"Instead of wasting billions in lost duty revenue, the chancellor should be looking to the future and investing this revenue in alternatives to the car; like walking, cycling and affordable public transport."
14.05 The government has put out a release setting out the impact of the budget on Scotland. Measures include a freeze on duties on spirits to support the Scotch whisky industry, and a package designed to "maximise the benefit" of North Sea oil.
Scottish secretary Alistair Carmichael said: "The budget means the consequences of our referendum decision are becoming clearer. Do we want to gamble our place in a UK that is working well for Scotland in return for a go-it-alone option with no UK pound and falling oil revenues?
"We can decide to remain part of a strong United Kingdom. Scotland would be staying part of a fast growing UK economy. We would be sticking with a UK that is creating more jobs, increasing spending in Scotland and keeping our UK pound in our pocket. A Scotland where we share opportunities and risk with all other parts of the UK.
"Or we could choose to walk away from the UK. We could stop sharing with the rest of the UK and gamble on a Scotland that goes it alone."
13.57 The British Chambers of Commerce is happy. Director general John Longworth says: "Business wanted a budget that was disciplined, focused, and geared toward the creation of wealth and jobs – and that's what the chancellor has delivered.
"With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the chancellor heed our call to help firms take on and train tomorrow's workforce. Overcoming that confidence gap means more investment in young people, more apprenticeships, and more jobs, which are critical with more than 900,000 16-to-24-year-olds still out of work.
"Osborne's focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the chancellor has recognised that successful and confident companies are the key to transforming Britain's growing economic recovery into one that is felt in homes and on high streets.
"As with any budget, there were some populist measures that were not at the top of business's wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation."
13.52 The Chartered Institute of Housing is next to react. Its chief executive Grainia Long welcomes the plan for a garden city at Ebbsfleet and says it hopes it is "the start of things to come and that we will see more major announcements that will contribute to the supply of new homes".
But she adds: "We are disappointed that the chancellor did not choose to use the tax system to incentivise standards in the market rented sector. This sector is the fastest growing of all tenures it is vital that we take steps to ensure more consistent standards."
13.46 The Lib Dem chief secretary to the Treasury, Danny Alexander, has put out a response to the budget, claiming the credit - as you would expect - for the increase in the personal tax allowance to £10,500. He says: "This recovery would not be happening without the Liberal Democrats in government.
"The Liberal Democrats are committed to building a stronger economy and a fairer society. The Liberal Democrats have fought for rises in the amount of money that people can earn before paying income tax right from the start of the coalition. We have already delivered an increase to £10,000 by April this year. That gives millions of tax payers a £700 tax cut.
"We've been campaigning for months to go even further and we've been successful. The personal tax-free allowance will rise to £10,500 in April 2015 which will give millions of taxpayers another £100 tax cut taking the total tax cut in 2015 to £800."
13.43 Now Miliband is mocking Cameron because five of the six people working on the next Tory manifesto went to Eton. Meanwhile Osborne's full speech is now online here.
13.38 Miliband asks Osborne and Cameron to nod their heads to rule out a further tax cuts for the richest.
13.37 You can change the shape of the pound, but if you're £1,600 worse off you're still £1,600 worse off, quips Miliband, referring to the announcement that a new 12-sided pound coin will be introduced in 2017.
13.35 The PCS trade union has responded to the budget. Its general secretary Mark Serwotka says: "This government's obsession with austerity is causing misery for millions of people while the over-hyped economic recovery benefits only a wealthy few. Instead we need free universal childcare so parents can afford to return to work, a living wage and an end to pay cuts, and proper investment to create sustainable jobs and build the homes to tackle the scandal of our housing crisis."
13.34 Miliband contrasts top rate tax cut for city bankers with government decision not to give all nurses a 1% pay rise this year.
13.33 Osborne trumpted the tax allowance but didn't mention 24 tax rises since he became chancellor - gives with one hand, takes away with the other, claims Miliband.
13.30 Miliband starts by saying Osborne spoke for nearly an hour without mentioning that living standards are falling and people are "worse off under the Tories".
13.28 Labour leader Ed Miliband will be responding to Osborne shortly. In the meantime here are more details on Osborne's announcements on pensions and savings.
13.26 Osborne abolishes the 10% rate on savings. Earlier he announced a series of reforms to pensions - sayin he will trust people to manage their own money. And that's the end of his speech.
13.20 Announcing help for savers, Osborne says he's "dramatically increasing simplicity and generosity of ISAs". From July cash and stock/share ISAs merged into single account with higher limit of £15,000. Cap on premium bonds also going up, from £30,000 to £40,000 in June, then £50,000 next year.
13.16 Personal income tax allowance raised to £10,500 from next year. Osborne says he is "incredibly proud of this" - though no doubt the Lib Dems will claim it as their policy.
13.15 Fuel duty rise due in September scrapped, bingo duty halved to 10%. Beer duty will be cut by 1p a pint.
13.12 Osborne calls for a "shale gas revolution" as part of a package of measures aimed at bringing down energy costs.
13.09 A new Alan Turing Institute "to ensure Britain leads the way again in the use of big data", says the chancellor.
13.07 Housebuilding up 23% but more needs to be done, including further reforms to planning laws, says Osborne.
13.02 From next year all long haul flights will carry the same lower rate of air passenger duty that currently applies only to flights to the US, Osborne says. Meanwhile interest rates to exporters will be cut by a third, and the government will double the amount of lending available to exporters to £3bn.
12.58 Osborne announces inheritance tax waived on estates of people who work in the emergency services who die in the course of duty.
12.54 Vince Cable, the business secretary, has reacted to the fall in unemployment and had a subtle dig at Conservative plans, blocked by the Lib Dems, to make it easier to sack workers. He said: "Despite recent tough economic times, our workforce has shown itself to be resilient and flexible. A higher percentage of the adult population is now in work - that is higher even than in the USA. We were right to resist calls by some to make it easier to sack people and our strong employment performance in the downturn and subsequent recovery is testimony to this."
12.51 Welfare cap for all benefits except state pensions and JSA will be set at £119bn in 2015/16 pending a parliamentary vote and will only rise in line with inflation, Osborne says.
12.47 Osborne: in this budget, all decisions are paid for – taxes are lower but so too is spending.
12.41 Before we came to office the deficit was 11%, the OBR says it will be 6.6% this year - lower than forecast - then eliminated by 2018/19, says Osborne.
12.38 Nowhere is the success of the government's economic plan clearer than in job creation, says Osborne.
12.35 The OBR forecasts growth of 2.7% for 2014, up from a previous prediction of 2.4%, says the chancellor.
12.34 Support for savers will be at the centre of the budget, Osborne says.
12.31 Osborne is on his feet. He begins by saying the economy is recovering faster than forecast but the job is not yet done.
12.25 We'll be up and running with the budget as soon as prime minister's questions is over.
10:58 The general secretary of the trade union Unite, Len McCluskey, has welcomed the fall in unemployment but said it "can't disguise the thrust of government policy which is towards a low waged economy where insecure employment is rampant". He added: "Urgent measures are needed in today's budget and in the coming months to tackle the two large pools of persistent unemployment - the young and the long-term jobless - that continue to be a thorn in the side of the chancellor, George Osborne. We can't tolerate an economic landscape that offers precious little hope of real jobs for our young people."
10:40 Osborne's rabbit out the hat today will be a "radical and liberalising" move on personal tax, those in the know have told the Sun's political editor, Tom Newton Dunn. One to watch out for.
10:35 Alex Salmond, the SNP leader and Scotland's first minister, has warned Osborne to avoid offering Scottish voters "short-term promises" as sweeteners ahead of September's independence referendum; instead the budget should focus on "real recovery through capital investment".
10:30 This morning's unemployment figures from the Office for National Statistics will have given George Osborne a timely lift. The number of people out of work fell 63,000 to 2.33 million between November and January, while the overall jobless rate stayed put at 7.2%. According to the ONS the number of people in employment rose to 30.19 million.
10:18 Some pre-budget reading. The Guardian's data blog has 10 key charts showing the state of the economy; George Eaton at the New Statesman summarises the 10 top things to look out for in Osborne's speech; and Sky's Ed Conway cautions against getting too excited - "budgets towards the end of parliamentary terms are rarely big fiscal events".
10:15 It was revealed overnight that Osborne will announce the introduction of a new £1 coin. The 12-sided design is - according to the Royal Mint - supposed to "evoke memories of the pre-decimalisation threepence piece" and will be "the most secure circulating coin in the world to date" when it reaches our pockets in 2017.
10:05 Ahead of every budget the chancellor is bombarded with advice from supporters, opponents, industry bodies, thinktanks and trade unions, all eager to have their say - and this year has been no different. Here's a small selection of the more eye-catching ideas that have surfaced in the many budget submissions published over recent days...
- The Institute of Economic Affairs wants the budget abolished because there's too much "fanfare" and handing out of "goodies for various interest groups". It should be replaced with a short statement setting out tax changes and the state of the public finances, with major policy announcements left to relevant government departments.
- Assuming Osborne doesn't take that suggestion immediately to heart and call the whole thing off, the Centre for Cities has a proposal on the "thorny topic" of immigration. It argues that the Conservative policy of reducing net migration to the UK to tens of thousands will have a negative impact on urban economies and, instead, a system of 'city-visas' should be piloted. The scheme would see London given its own special quota for skilled migrants, with a view to extending to other cities.
- Help to Buy, the mortgage guarantee scheme - which critics claim could be fuelling a housing bubble in London and the south east - should be brought to an early end to help reduce house prices in those areas, in the view of the free marketeers at the Adam Smith Institute. Radical reforms to planning rules would allow more homes to be built and provide construction jobs, they claim.
- Class 2 national insurance contributions - those paid by the self-employed - should be scrapped, says the liberal CentreForum thinktank, which adds that the move would ease living cost pressures for the one in seven UK workers currently running their own business.
- Wealthy people who live alone in large houses ought not to be automatically eligible for a single person discount on their council tax bill, the Local Government Association has suggested, so that the available support can be better targeted at those who need it.
- Finally, the Centre for Policy Studies has taken the ambitious option of presenting 101 potential budget polices for the chancellor to ponder.
One safe prediction - they won't all get what they want. Not long now until we find out.
10:00 Welcome to the live blog. The chancellor, George Osborne, will be delivering his 2014 budget in the House of Commons at 12.30 and we'll be covering all the main headlines and reaction here. Refresh the page for updates.