George Osborne will promise action now to ensure that the country does not “pay later” as he uses his Budget to deliver a grim warning about the global economy.
The Chancellor is expected to say that although the UK’s economy is “strong”, the “storm clouds are gathering again”.
Concerns about economic uncertainty will cast their shadow over Mr Osborne’s eighth Budget, with the Chancellor planning to impose a further £4 billion of spending cuts to allow him to meet his fiscal target of getting the nation’s finances into surplus by the next election.
He is expected to unveil “a Budget where we act now so we don’t pay later” in order to meet the “new challenge” facing the country.
Mr Osborne has just tweeted: “Today’s Budget sets out long term solutions to long term problems. It’s a Budget that puts the next generation first.”
The future prosperity of the oil and gas industry could be at risk if George Osborne fails to act on the challenges the sector is facing, Scotland’s Deputy First Minister has warned.
John Swinney claimed “indecision and inconsistency” from Westminster over energy policy has put investment and jobs at risk.
He has already written to the Chancellor urging him to use his Budget to help the industry, which has been hit hard by plunging oil prices.
Keep an eye on this page for updates as the Budget is unveiled.
- George Osborne will deliver his eighth Budget at 12.30.
- The Chancellor will unveil £1.5bn extra education funding for school sports and arts club to extend the school day by an hour.
- -All schools in England will be academies or in the process of becoming academies by 2020, Osborne will say.
- -The Office for Budget Responsibility will update its borrowing and growth projections.
- -Jeremy Corbyn to respond to the Budget for Labour.
- -Corbyn and Cameron to go head-to-head at PMQs at 12.
- -Unemployment falls by 28,000 in the three months to January, the ONS revealed this morning.
Rachel Reeves MP accussed the Chancellor of using the Budget as a ‘job application’ for next Tory leader.
“It’s time he stopped concentrating on internal Tory Party machinations about who will be the next leader and put the national interest above his own.”
House of Commons rules dictate that Speaker John Bercow steps aside for his deputy, the Chairman of Ways and Means, when Budget statements are made.
Liberal Democrats branded the Budget “Operation Reheat”, pointing out that the HS3 rail link had featured in 34 Government speeches, comments and announcements over the past two years, while options to enhance the A66 and A69 had already been announced in September, a #1.2 billion fund for starter homes in January and plans for a longer school day in 2014.
Economic spokeswoman Baroness Kramer said: “The Conservatives are not the party of the builders, they are the party of the press release. They endlessly re-announce the same projects but with no money to back them up and no shovels going into the ground.
“If he wanted to, George Osborne could really get Britain building again, by borrowing to fund real infrastructure investment. It is only because of his choice to achieve an overall surplus that this isn’t happening. He’d rather reheat old announcements than put a fire under infrastructure investment.”
Labour leader Jeremy Corbyn, who will face the challenge of responding to the Chancellor after he delivers the Budget statement, avoided the subject of the economy during Prime Minister’s Questions, instead challenging Mr Cameron on his failure to tackle air pollution.
The Prime Minister insisted that action was being taken to improve air quality, paid for by the “strong economy” – and rebuked the Labour leader for failing to acknowledge the fall in unemployment.
“No mention of the 31 million people now in work, no mention of the fact that we have got more women in work, more young people in work, that more people are bringing home a salary, bringing home a wage and paying less taxes,” he said.
“Not a word from the party that I thought was meant to be the party of labour. That’s the truth – the party of working people, getting people into work – is on this side of the House.”
According to PA’s data journalist @ian–a–jones Mr Osborne has spent six hours and 41 minutes of his life (so far) delivering Budget speeches.
The Prime Minister told MPs: “We have got an economy that is fundamentally strong, facing a very difficult set of world circumstances.
But here in Britain, when you look at it – unemployment at 5%, inflation at virtually 0%, the unemployment figures today showing unemployment falling again and wages growing at 2% – that is a better record than most other countries in the developed world can boast.”
A “lot of that” was down to the Chancellor’s “very clear plan” followed since 2010, he added.
- Mr Osborne rose to deliver his Budget statement to the House of Commons at 12.33pm.
- First mention of long-term economic plan comes soon after start.
- Chancellor George Osborne said Britain is well-placed to cope with global “headwinds” as long as we “act now so we don’t pay later”, as he outlined his 2016 Budget.
- “In 2015 we were further ahead of everyone but america”
Mr Osborne said the economy was growing faster than in any other major advanced country in the world and was “on course for a budget surplus”.
He warned of a “dangerous cocktail of risks” from global economic instability but said Britain was well-prepared to handle it “if we act now so we don’t have to pay later”.
Mr Osborne said: “Britain has learnt to its cost what happens when you base your economic policy on the assumption you have abolished boom and bust. Britain is not immune to slowdowns and shocks.
“Nor as a nation are we powerless. We have a choice. We can choose to add to the risk and uncertainty, or we can be a force for stability.
“In this Budget we choose to put stability first. Britain can choose, as others are, short-term fixes and more stimulus. Or we can lead the world with long-term solutions to long- term problems.
“In this Budget we choose the long term. We choose to put the next generation first. Sound public finances to deliver security, lower taxes on business and enterprise to create jobs, reform to improve schools, investment to build homes and infrastructure – because we know that’s the only way to deliver real opportunity and social mobility.
“And we know that the best way we can help working people is to help them to save and let them keep more of the money they earn.”
- Britain will be stronger safer and better off inside the EU, says chancellor
- Big downgrades in the OBR’s growth predictions. Brackets show changes since November:2015 2.2%2% (-0.4%) in 20162.2% (-0.3%) in 20172.1% (-0.3%) in 20182.1% (-0.2%) in 20192.1% (-0.2%) in 2020
The OBR made clear that its forecasts were based on the assumption that the UK remains in the European Union following the June 23 referendum, though the body is not taking a side in the debate.
But – in comments which will be seized upon by the Remain camp – the independent financial watchdog warned that “a vote to leave in the forthcoming referendum could usher in an extended period of uncertainty regarding the precise terms of the UK’s future relationship with the EU. This could have negative implications for activity via business and consumer confidence and might result in greater volatility in financial and other asset markets.”
And the OBR added: “There appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated.”
- The Chancellor said the Government would be seeking to save an extra £3.5 billion by 2019/20
- After record employment figures released this morning, the OBR is forecasting one million more jobs over the course of this Parliament.
- Mr Osborne said that, far from predictions that new jobs would be low-skilled and part-time, some 90% are in skilled occupations and three-quarters are full-time.
- The unemployment rate is falling fastest in the North East and employment growing fastest in the North West, while real wages are outstripping inflation, he said.
The OBR forecasts lower inflation, at 0.7% this year and 1.6% next year. - Mr Osborne said he will be introducing additional spending cuts totalling £3.5 billion by 2020 – lower than the £4 billion predicted when he said they would amount to around 50p in every £100 the Government spends.
Mr Osborne said the government was still on course to record an overall surplus by 2019-20 – one of the targets he has set himself. However, he confirmed that he would miss another key aim, for debt to be falling as a proportion of GDP this year.
The Office for Budget Responsibility (OBR) has revised down its growth estimates for this year from 2.4% to 2%, while next year it is expected to be 2.2% instead of 2.4%.
Mr Osborne also said the independent watchdog had cautioned in its forecasts of the “risks” of leaving the European Union.
Setting out his determination to “act now so we don’t pay later”, he said the government would be seeking an extra £3.5bn of savings by 2019-20.
“We will not burden our children and grandchildren,” he added.
Mr Osborne said: “Britain has learnt to its cost what happens when you base your economic policy on the assumption you have abolished boom and bust. Britain is not immune to slowdowns and shocks.
“Nor as a nation are we powerless. We have a choice. We can choose to add to the risk and uncertainty, or we can be a force for stability.
“In this Budget we choose to put stability first. Britain can choose, as others are, short-term fixes and more stimulus. Or we can lead the world with long-term solutions to long-term problems.
“In this Budget we choose the long term. We choose to put the next generation first. Sound public finances to deliver security, lower taxes on business and enterprise to create jobs, reform to improve schools, investment to build homes and infrastructure – because we know that’s the only way to deliver real opportunity and social mobility.
“And we know that the best way we can help working people is to help them to save and let them keep more of the money they earn.”
- Mr Osborne said the UK was set to have a budget surplus of £10.4 billion in 2019/20 and £11 billion in the following year – meeting his fiscal mandate to achieve a surplus by the end of the Parliament and maintain it in subsequent years.
- Mr Osborne says he is publishing a “roadmap” for business tax to increase revenues to the exchequer by £9bn closing loopholes, including tax relief on debt interest payments.
- Corporation tax, “one of the most distortive and unproductive taxes there is”, to be cut to 17% by April 2020.“Britain is blazing a trail; let the rest of the world catch up.”
- Tory MPs loudly welcomed Mr Osborne’s announcement that the richest 1% now contribute 28% of all income tax revenue – a higher proportion than at any point under Labour.
- Stamp duty increase on commercial property doesn’t apply in Scotland will ScotGov follow suit?
- The Chancellor announced a series of actions to tackle tax avoidance and evasion totalling £12 billion, including moves to end the use of “personal service companies” by public sector employees to minimise their tax liabilities.
- A number of TV stars have faced criticism for their use of the tax loophole.
- None of this support would have been remotely affordable if Scotland had broken away.
“Thankfully the Scottish people decided that we are better together in one United Kingdom.”
- Mr Osborne announces he will half the supplementary charge on North Sea oil and gas, “effectively” removing the petrol revenue charge.
Tory MPs are taunting SNP MPs to welcome the news.
“The Oil and Gas sector employs hundreds of thousands of people in Scotland and across our country. In my Budget a year ago, I made major reductions to their taxes. But the oil price has continued to fall. So we need to act now for the long term. I am today cutting in half the Supplementary Charge on oil and gas from 20% to 10%. And I’m effectively abolishing Petroleum Revenue Tax too. Backing this key Scottish industry and supporting jobs right across Britain.
“Both of these major tax cuts will be backdated so they are effective from the 1st of January this year, and my HF the Exchequer Secretary will work with the industry to give them our full support.
“We are only able to provide this kind of support to our oil and gas industry because of the broad shoulders of the United Kingdom.”
- In Scotland, fines from banks caught up in the Libor scandal will pay for community facilities in Helensburgh and for naval personnel at Faslane.
- In Wales, from 2018 the Severn Bridge tolls will be halved and there will be discussions for a devolution deal in Swansea and a growth package for North Wales.
- In Northern Ireland, there will be extended capital allowances for the Coleraine enterprise zone and Libor fines will help set up the first air ambulance service in the country.
- After ministers bore the brunt of public criticism during a winter of floods in Lancashire, Cumbria, Yorkshire and Scotland, Mr Osborne announced a £700 million boost to funding for flood defences and resilience.
- The fund will be paid for by increasing the standard rate of Insurance Premium Tax by half a percentage point.
Mr Osborne said he was giving the go-ahead to the schemes for York, Leeds, Calder Valley, Carlisle and across Cumbria, with a review under way of other possible locations. - Freeze on whisky and spirit duty
- Fuel duty is to be frozen for the sixth year in a row despite falling pump prices, the Chancellor said.
“The former pensions minister Steve Webb said we were going to abolish the lump sum. Instead, we’re going to keep the lump sum and abolish the Liberal Democrats…
“I’m tempted to say it will take effect from midnight.”
- Tobacco duty will rise by 2% above inflation from 6pm, with hand-rolling tobacco up by an additional 3%.
- But beer and cider duty will be frozen as will the levy on whisky and other spirits.
- All other alcohol duties will rise in line with inflation as planned.
- Tory MPs reserved one of the biggest cheers of the day for the announcement that fuel duty will be frozen for the sixth year in a row.
- The move will save the average driver £75 a year and £270 a year for a small business with a van.
- Mr Osborne said: “I know that fuel costs still make up a significant part of household budgets and weigh heavily on small firms.“Families paid the cost when oil prices rocketed; they shouldn’t be penalised when oil prices fall.“So I can announce that fuel duty will be frozen for the sixth year in a row.”He added: “It’s the tax boost that keeps Britain on the move.”
- Mr Osborne announced the abolition of Class 2 National Insurance contributions, which he said would deliver a tax cut of more than £130 for each of Britain’s three million self-employed workers from 2018.
- In a move which he said would “put rocket boosters on the backs of enterprise and productive investment”, he announced a cut in the headline rate of Capital Gains Tax from 28% to 20%, with the level paid by basic-rate taxpayers reduced from 18% to 10%.
- The new rates will come into effect in three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest. And new 10% rate will be applied to long-term investments in unlisted companies.
- The income tax personal allowance will rise to #11,500 from April next year, cutting taxes for 31 million people.
- The 40p rate threshold will rise to £45,000 from April next year as Mr Osborne said he had delivered a “Budget for working people”.
- The ISA limit will be increased to £20,000 a year for all savers, and lifetime ISAs will be introduced for young people.
- From April 2017, under-40s will be able to open lifetime ISAs and save up to £4,000 each year.
- Every £4 saved in these new ISAs will be topped up by £1 from the Government, so if savers put in £4,000, the Government will give them £1,000 every year until they reach the age of 50.
- Mr Osborne said: “You don’t have to choose between saving for your first home or saving for your retirement – with the new lifetime ISA the Government is giving you money to do both.
- “For the basic rate taxpayer, that is the equivalent of tax-free savings into a pension and, unlike a pension, you won’t pay tax when you come to take your money out in retirement.”
