• VAT increase from 17.5% to 20%
• Personal income allowance increased from £6,470 to £7,470 (worth around £180/year)
• A one year council tax freeze, broadband tax (£6 a year) to be abolished
• Capital gains to be increased from £18 to £28, with relief for entrepreneurs
• NO increase on alcohol/tobacco/petrol duty
• Child benefits to be frozen for 3 years
• Limits on house benefit, especially for the unemployed
• Paternity grants to be abolished, DLA to be means tested
• Public sector pay freeze for 2 years, but those under £21,000 will get a £250 annual increase
• Armed service operations allowance doubled to £4,800
• Pensions linked to earnings introduced, with the retirement age increased to 66. Legislation will be introduced to allow people to work beyond 66.
• A small national insurance tax break, but small companies tax will decrease to 20% whilst corporation tax will decrease from 28% to 24% over four years
• Banking levy will be introduced and is expected to raise £2 billion a year
• A number of positive projections where maid, but the only interesting one was that DEBT will peak at 70% of GDP in 2013/14
Last but not least the Chancellor said that there would be “Average real terms budget cuts of 25% over four years – except for health and international aid (0.7% of GDP)” whist projects such as the Tyne & Manchester metro and the North West high speed rail link will be protected.
Comment from Ben Miller (18:48)
Today was confusing. Not because France lost to South Africa or because I momentarily forgot how to tie my shoelaces but because Osborne stood at the dispatch box for an hour or so and spouted out one of the craziest, most illogical and most downright scary budgets of our time (and by our time I mean since the beginning of it). Not since the Peoples Budget of 1909 has a peacetime Chancellors speech had so much riding on it. Boy George was expected to step up to the mark and hit the proverbial ball (represents the deficit!!!) out of the park. What he served up instead was a hotch-potch of wild swings that seemed almost incoherent. As a 9-5er I was spared the live broadcast and I had to rely on updates on sky news so I’d take what I’d say with a pinch of salt but the headline cuts and new taxes are, in a word, scary. Cutting free fruit and vegetables for poor families with an expectant mother harks back to destructive Conservatism and the £1000 tax allowance increase which equates to £200 back in the pocket is clearly a political gimmick to appease the Liberal Democrats as the VAT increase will clearly cost a lot of families more than £200 a year.
The mark of a Government is usually said to be how it supports the most vulnerable in society in the good times and the bad. Cutting DLA, reducing Housing Benefits and freezing child benefits are not a mark of a good Government helping those who need it. I understand that these cuts will hit middle class families but I fear that this will be a first step towards a massive row back of the entire benefits system. I hope I’m proved wrong.
As a Left-Leaning scare monger, the last line in this brief blog attempt will be the BBC headline figure of a 25% cut in Public Services. Finally, the scary Tories are back.
Comment by Dermot Rathbone (19:25)
As we expected there are some things the Tories just can’t help. So whilst we all creak under the weight of the disgraceful VAT increase (don’t be fooled by all that old baloney about it not affecting essentials like food, it does) to an eye popping 20%, the rich still get to hoard their tax fiddling bounty by avoiding income tax (50%) by only paying 28% maximum Capital Gains Tax. At least they learnt from Gordon’s mistake with the 10p band by not dumping on their own voters.
Other things that stick out are the scrapping of tax relief on the video games industry, at which we lead the world. An innovation introduced by Labour to protect a high tech worldwide industry where we punch above our weight, plus the restoration of the earnings link to already wealthy pensioners when if he were serious about poverty he could have extended our targeted tax credits to the poorest, plus introduce an element of scaling for the Winter Fuel Allowance.
This proves what a joke the Lib Dems are and we should target their vote from now on to get rid of this cruel Tory Government as soon as is practical.
Comment by Lydia Taylor (20:48)
My major concern with the budget was how it would effect families – particularly single parent families. Unfortunately, George Osborne’s speech today gave me little cause for hope. Major sore points are increasing VAT to 20%, freezing child benefit for the next 3 years, education cuts and curtailing benefits if lone parents do not return to work once their youngest child goes to school – but still that commitment to giving married couples an extra £150 a year. Ben’s right – ‘the scary Tories are back’ – they may have promised to cushion the blow for 2.5 Middle England, but for lone parents it may be the stuff of nightmares.
Comment by Danny Marten (23:14) This budget is naive, but they have a mandate to do it
Liberal Democrat & Chief Secretary to the Treasury Danny Alexander looked very out of his depth on Newsnight, and hearing the noises coming from the Lib Dem back benches and hearing Alexander struggle to defend Osborne’s bloodbath budget I can’t help but think that the Lib Dems have given democratic legitimacy for the great economic gamble of our times.
This budget had some good things, especially around pensions & banking taxes but the gamble depends on two things, an increase in exports and the replacement of the public sector with the private sector. As Labours Lord Peston said, “the Tories are driven by dogma and purely by the bank balance, they don’t want to see there is a second macroeconomic argument.” For me their approach to the state is so different from the needs of the people that we will see social unrest, before a shrinking of the state and ultimately a failed gamble taken by a number politicians who are naive about economics who are leading people who are naive about politics.