13.46: That brings the Budget to a close, check back at the Fabian Review for a round-up and responses. Thanks
13.44: Housing completions now at their lowest levels since the 1920s, the result of a ‘failing economic plan from a failing chancellor’ who has failed on his own tests Miliband argues
13.41: Richest in society only have two weeks to wait for the millionaires tax cut Miliband says as he challenges the government to say whether they will benefit as a result of changes to the top rate of tax
13.39: Miliband argues that ‘John the banker’ will get a tax cut of £42,500…
13.38: The Chancellor is ‘lashed to the mast because of pride…not because of facts, because of ideology’, he argues
13.37: ‘After all the misery, all the harsh medicine…three years, no progress, deal broken…it’s as if they believe their own propaganda’, says Miliband
13.35: ‘You are borrowing more!’ announces Miliband, pointing at the government benches
13.33: Miliband getting personal with Osborne, reminding him that 80,000 people booed at the Olympics. What’s more, no mention of the Triple A downgrade in this Budget, Miliband queries
13.32: Osborne was wrong to predict a steady and sustained recovery. The current recovery has been the slowest on record, some have argued
13.30: Miliband beginning response…
13.28: Lots of talk about the fact that the full details of the Budget were released via twitter prior to the Chancellor’s speech
13.28: ‘Prosperous, solvent and free’ budget recommended to the House to much rowdiness
13.26: We move on to what Osborne calls ‘the largest tax cut in this budget’, the ’employment allowance’, £2,000 off employers’ National Insurance
13.24: Government, as expected, government will raise the personal allowance to £10,000 from 2014, not 2015 as previously planned. This looks good in the battle over living standards. How far this benefits the lowest earners has been questioned though.
13.22: Osborne moving onto the personal income allowance, which next month will rise to £9440
13.21: Government will also scrap the beer duty escalator ‘the freeze people have been campaigning for’
13.20: People have the aspiration to keep more money that they earn, Osborne notes. So, the Chancellor notes, the government froze fuel duty. But now he announces, the government will cancel September’s fuel duty increase
13.17: ‘Help to buy’ scheme now being announced. Comprised of a) £3.5bn of capital spending to shared equity loans for those looking to move up the housing ladder on homes under £600,000; b) using government’s balance sheet to offer mortgage guarantee from 2014 for three years
13.14: Tax free childcare vouchers for working families now being announced, as we knew in advance, as well as the government’s new flat rate pension.
Efforts to reduce the cost of childcare has been a key battle ground between Labour and the Coalition in the politics of living standards. Sounds good, but is it fair? IPPR yesterday raised questions about this announcement, given that those that do not benefit from this policy is relatively large
13.09: Now unveiling measures to being in extra revenues lost to aggressive tax avoidance’ – will name and shame promoters of tax avoidance schemes. To those who make a living on this basis, ‘this government will not let you get away with it’
13.09: …these issues discussed at the Fabians’ Commission on Future Spending Choices
13.06: Osborne announced he will abolish stamp duty on AIM shares
13.05:Whether £3bn is adequate is questionable however. NIESR’s Jonathan Portes has advocated £30bn worth of investment
13.04: As the LSE Growth Commission set out, infrastructure projects are essential to economic growth because of their multiplier effect; the fact that this spending creates an asset; and because there are numerous shovel-ready projects, particularly around housing
13.01: Outlining commitment to capital spending, Osborne endorses Lord Hesiltine’s review ‘No Stone Unturned’
12.58:Moving onto infrastructure projects – Osborne argues Treasury has switched money from current to capital spending, but capital spending due to fall back in 2015/16. As such, by using departmental savings will boost public investment by £3bn
12.56: Osborne will set out detail of a new spending limit in June’s spending round to curb ‘out of control’ AME spending
12.55: Osborne outlines £11bn departmental under-spend…
12.53: TME will be £745bn, with existing protections in place
12.51: Much news has circulated that Osborne would make announcements on the remit of MPC under the incoming governor of the Bank of England, Mark Carney. There was been talk of Carney targeting growth, see his select committee performance for the detail
12.48: Osborne now outlining the ‘active monetary policy’ dimension of the Budget with a new remit for the Bank of England’s MPC which re-affirms the inflation target at 2%, and a new remit for the MPC to use ‘unconventional monetary instruments’ to support the economy
12.47: Osborne says measures announced today will be ‘fiscally neutral overall’, tax cuts not borrowed but paid for
12.46: Interesting that Osborne made international comparison – particularly the crisis in the eurozone and Cyprus. How much this had affected growth is debated, this research paper suggests a good deal
12.43: Osborne arguing that Labour borrowed £159bn in its last year in office but this government will borrow £114bn – so the Coalition is not borrowing more and will meet the primary fiscal rule on the cyclically adjusted current budget
12.41: Osborne has argued that unemployment has been much better than expected and this is indeed true. But explaining the ‘productivity puzzle’ is much more complex and is likely driven by a number of factors. IFS’ preferred explanation, is set out in chapter 3 of their Green Budget
12.39: Osborne outlining OBR data on growth. Argues pessimism about private sector’s ability to ‘take up the slack’ are unfounded, despite weaker GDP
12.31: And we’re off
12.32: Cut the deficit by a quarter, interest-rate at record lows. Osborne says he wants the ‘level’ with the public on the challenge the UK’s faces.
12.35: Monetary activism with fiscal responsibility and supply-side reform – this, Osborne says, is the point of today’s Budget. He’s vigorously attacking Labour and says he will do the opposite to win in the ‘global race’
12.36: A budget for an ‘aspiration nation’ – Speaker now chastising the back bench ‘circus’
12.29: Hello and welcome to the Fabian Society’s Budget 2013 live blog. We will be covering announcements as George Osborne navigates a tricky economic and political course from the dispatch box at 12.30.
But is this predominately a day of Osborne the economist or George the tactician? The economy continues to show signs of deep pathology – at best this looks like the most prolonged recession in a century. How far sluggish GDP can be explained by external factors such as the eurozone crisis is hotly debated, but as the OBR’s missive to David Cameron last week showed austerity has had a negative impact on growth.
Things are never so simple however as the so-called ‘productivity puzzle’ suggests. Better than expected employment figures have provided a rhetorical lifeline for the government but depending on one’s diagnosis may still be cause for concern.
Being seen to address the growth question will be a clear outcome of today’s speech as pre-Budget day announcements on channelling departmental under spend into capital projects or giving the Funding For Lending a dose of ‘steroids’ attest.
But in doing so Osborne must balance Britain’s place in the ‘global race’ with those on the back benches concerned with the squeeze on living standards. We know there will be an announcement on making childcare more affordable, and some speculation on bringing forward plans on the personal tax allowance currently scheduled to come into effect in 2015.
Exciting to social policy wonks perhaps, but for those interested in the grubby business of power the political significance of today’s Budget outweighs any economic consideration. Not only did we learn a great deal of Osborne’s intentions in the ‘mini Budget’ Autumn Statement, but vocal speculation about his tenability as Chancellor has grown in recent weeks. Perhaps not compounding, but certainly not helping Osborne’s cause is the recent polling by Ipsos Mori which shows the Chancellor’s popularity plummeting.
What’s more, from the liberalisers led by former Defence secretary Dr Liam Fox to the stimulus minded quasi-Keynesian Dr Cable a raft of alternatives have emerged recently to challenge the credibility of ‘Plan A’. Underneath of this lies the economically insignificant but politically destructive Moody’s downgrade of Britain’s triple A rating.
In reality the political and economic are inextricably linked. As a number of commentators have written during the last weeks, Osborne’s rhetoric on the diagnosis and cure of our present situation has set the limit of what is economically possible. Even if he was minded to alter the government’s fiscal stance, this would come at the cost of political credibility.
A formidable challenge then – stay with us to see which rabbits come out of the hat in response.