Along with just about everyone else with a keyboard and internet connection, we will be live blogging the budget, except we’ll be doing it from a banking/bonus perspective, and without live blogging software. In order to see what we’re saying from 12.30pm, it will therefore be necessary for you to refresh the page (every few minutes).
[As an addendum to what’s below, the main points are as follows: There will be a bank tax; it will be less than expected, and is anticipated to raise only 2bn (the Lib Dems wanted 5bn); it will be levied on balance sheets, not profits, or bonuses.]
12.32 Opening note: George Osborne is not actually 38. He is 39. It’s ok, he is older and wiser than we thought.
12.33 George is there. Wearing a green tie. Tough but fair. 1 in every 4 we spend is borrowed. Questions asked about the solvency of banking systems are being asked about countries these days, I don’t want that for the UK.
12.36: Danny Alexander is wearing a blue tie in a sign of possible confusion. Clegg has gone for gold. Notable, in fact that Clegg and Alexander are sitting directly behind Osborne: the message is that they are clearly implicated in this.
12.37: Everyone will share this commitment. When we say we’re in this together, we mean it. *Cheer.*
12.38 We are set to miss the fiscal rule in this budget by 485bn. *Guffaw*
12.39: Office of Budgetary Responsibility is here to stay [Civil servants working there clearly have no need to fear for their jobs].
12.41 Consumer price inflation expected to reach 2.7% by the end of this year, then drop. Growth should peak at 2.9% in 2013.
12.42: Structural deficit should be balanced in the final year of a five year period, ending in 2015. We are on track to meet these goals, and should meet them one year earlier in 2014.
12.43: Expectations of this week’s budget have already brought about lower interest rates. *Boo, boo*. If we stuck to previous government’s spending plans, interest rates would be higher and growth would be lower. *Boo, boo, boo.*
12.44: 77% of cuts will come from lower spending; 23% from higher taxes.
12.45 By 2014-2015, borrowing will be half that forecast by the March budget. And by 2015, the deficit will be a teeny tiny 1.1% of GDP. Public sector net debt will peak at 70% in 2014, and will fall to 67% in 2015, 2016. Under “plans we inherited,” debt would have increased every year of this parliament.
12.47: “This country will not be joining the euro during this parliament.” Clegg smiles, feels need to chat to Alexander at this point.
12.48: 30bn public spending reductions by 2014-15. But no reductions in capital spending during this budget. Priority will be projects with a significant return to country. Assets which should really be in private ownership already to be sold (student loan book, tote, national air traffic control).
Queen to be put on state pension
12.52: Labour were secretly planning to cut spending at non-ring fenced departments by 20%. Under the current budget, departments will face a cut of 25% over four years.
12.54 Two year pay freeze for the public sector, but not for anyone earning less than 21k (this being 28% of the public sector workforce) – they will all receive a flat 250 a year pay rise in both years.
12.55: New pay reform coming in public sector: people at the top to earn no more than 20X people at the bottom.
12.56: Clegg not looking happy. Alexander close to glowering.
12.57: Welfare spending up 45% in real terms since 1997. Greater proportion of our children grow up in workless households than any other country in Europe.
12.58: Families earning up to 83k are currently eligible for tax credits. Benefits to increase in line with consumer price index, rather than retail price index in future. Loan parents will have to look for work when youngest child go to school, and…..
no more child benefit for anyone earning more than 1 child benefit to be frozen for three years.
13.02 Some people are currently getting more than 100k in housing benefit each year. This is equivalent to taxes paid by 16 people on median incomes. From now on housing benefit will be capped at (a mere) 400 a week [still seems fairly generous].
13.04: Shot of Vince Cable looking greatly pained.
13.05 Cuts in national insurance. Corporation tax to be taken cut to 24% over four years. Small business tax rate to be cut to 20%.
13.07: Vince Cable referred to as ‘right honourable friend’. Shot of him clutching elbow, looking like eaten an unripe gooseberry.
New taxes rules on holiday homes won’t be happening after all.
13.09 A greater contribution is coming from the banking sector, a contribution far greater than any benefits they will get from the measures announced today. Banks were to blame (*Cheers*). We are exploring the costs and benefits of a FAT tax on profits and remuneration, but today we are doing our own thing.
From Jan 2011 we will introduce a bank levy. It will apply to the balance sheets of banks and building societies. There will be reductions for tier one capital. Smaller banks with liabilities below a certain level will be exempt. The levy will generate 2bn of revenues (Lib Dems wanted 5bn, says Edmund Conway at the Telegraph). The French and Germans are going to be doing this too, so please don’t complain too much.
13.12: Green ‘investment bank’ coming still.
13.14: Further tax rises about to be announced. VAT rising in January, from 17.5% to 20%. *Uproar* (Speaker points out that MPs are not setting a good example to the country, which needs to take this budget seriously, thank you very much.) Newspapers, food, still to be VAT free.
No new duties on alcohol and fuel. Won’t be increasing the duty on cider after all.
13.18 Capital gains tax moment….Needs to increase to create a fairer tax system.
(Occasional shots of Cameron who has smeared hair to one side for this occasion).
Low and middle income savers will continue to pay tax on capital gains at 18%. From midnight taxpayers on higher rates will pay 28%. Annual exemption will remain at 10.5k. Dynamic analysis by Treasury meant they reached Laffer-style conclusion that any increase in capital gains tax above 28% would have been totally self-defeating.
13.21: Rather than higher capital gains tax receipts, the increase in capital gains tax is likely to lead to higher income tax receipts. This is right and proper.
13.22 Income tax moment… People need to keep more of their hard earned money, we are asking so much of so many, put fairness first (*Jeers*). People will be able to earn 7.4k before they pay income tax [what happened to the 10k threshold??]. Higher rate taxpayers won’t benefit from this change, and higher rate income tax threshold will stay frozen until 2012-2013. We will be trying very, very hard to increase the threshold to 10k over the rest of this parliament….
13.25: We are a progressive alliance governing in the interest of the country. *Cheer, jeer, cheer, jeer.* From April next year we will link the basic state pension with earnings. There will be no more 75p increases in pensions from now on. The child element of child tax credit will also be increasing in what is a 2.5bn a year spending commitment. “Everyone will pay something, but the people at the bottom will pay proportionately less than the people at the top. It is a progressive budget.” *Cheer, cheer, flap papers.*
13.28: It’s over. David Cameron suddenly pops out from behind Osborne, looking strangely tanned.