Budget 2012 as-it-happened
Follow every twist and turn of today's Budget – and PMQs – with politics.co.uk's live blog.
By Ian Dunt Follow @IanDunt
10:46 – It's that time of year again. You can never tell precisely what time of year of course, because all the autumn statements and emergency Budgets and the like have somewhat sucked the importance out of the Budget proper. But it remains that time of the year. The Budget: a sure sign that, if nothing else, spring is here and drinking alcohol is about become expensive. Fortunately those aren't the only certainties we can predict from this afternoon's session. There have been more leaks than ever. It's been like movie trailers giving away all the best bits before you get in the cinema. For those who find such an approach irresponsible, you should try keeping a tight ship under coalition government. That's an excuse Speaker John Bercow is unlikely to be impressed by. He kept chancellor George Osborne on his feet for hours at the autumn statement to punish him for leaking elements of the document, so if that tactic was anything to go by we'll be going home about midnight tonight.
10:58 – Speaking of timing, the timetable goes something like this. Ed Miliband and David Cameron will try to knock ten bells out of each other at PMQs at noon. Then Osborne will shuffle over to the lectern for the Budget. He'll probably spend about an hour on the announcement. The shortest ever, by the way, was Disraeli on 45 minutes. The longest was Gladstone on four and a half hours. Let's hope it's more former than latter. Around half way through, Osborne's voice will start to break. The Office of Budget Responsibility will hold a press conference at 14:30 GMT and we'll brings things to close after that, when we'll have as much analysis and reaction as you can muster.
11:03 – You can get an idea of what we already know about the Budget in our news story but here's the executive summary. The top rate of income tax will drop from 50p to 45p, a move many political analysts consider a minor electoral suicide. To make up for it, Osborne will speed up taking low earners out of income tax altogether. Not only does he want to hit the £10,000 base rate by 2014 – a year earlier than planned – but set an April 2013 date for the personal tax allowance to rise to £9,205. He'll also raise stamp duty from five per cent to seven per cent on properties worth more than £2 million and take aggresive actions against avoidance – probably by stopping people registering it as a corporate transaction.
11:09 – Those last two policies are big Lib Dem wins. The first was pre-election Lib Dem policy and the second is a compromise on their demands for a mansion tax. Lib Dem ministers are actually pretty excited about them, even going to so far as to dub it a Robin Hood Budget. Regardless of the veracity of that claim, they should be more cautious. Politics isn't just about what happens but about what resonates. Dropping the 50p tax rate is a simple, direct idea. Gradual base rate changes and alterations to stamp duty are far less simple and therefore harder to explain to a sceptical public. Regardless of the coverage today, the 50p decision has the potential be totemic in a way the other changes are not. Nevertheless, the political test for Osborne today will be that the lower income changes are given more coverage than the 50p decision. He will probably succeed – simply because newspapers tailor economic coverage to the financial interests of their readers and these moves will affect them directly.
11:18 – It's Miliband answering Osborne today by the way, not Ed Balls. Balls, however, will take on Vince Cable in an unusual clash at the start of tomorrow's Commons debate on the Budget. Friday, it will be Justine Greening speaking for the government, and then Jeremy Hunt on Monday.
11:20 – Labour obviously can't believe its luck. The 50p decision is like NHS reform – it plays directly into its narrative of 'nasty Tories'. Here's Miliband this morning: "It is completely the wrong priority to cut taxes for the richest people in Britain earning over £150,000 a year. The government’s economic plan is failing. What we need today is action to get jobs and growth moving in this country. What the chancellor must do is ensure that every penny he can raise from those at the top is spent on helping millions of ordinary families who are struggling to get by."
11:22 – As ever on Budget day, you'll want to reserve judgement until at least the weekend, while the experts – notably the Institute of Fiscal Studies (IFS) – pore over the details. Remember that some of the worst Budget decisions, such as Gordon Brown's 10p tax rate debacle, were warmly welcomed at the time. Pivotal to this assessment will be whether the sanctions against the wealthy, such as the rise in stamp duty, will compare to the cut in top rate income tax. Of course, we still don't know how much that was bringing in, although it's said to be well below Labour's projected £2.7 billion. However, only about 100 properties over £2 million are sold each month in the UK according to the Land Registry, so it's hard to see the stamp duty move bringing in a staggering amount of money to the exchequer.
11:28 – The backdrop to Osborne's statement could certainly be better. It may be sunny in London, but Game, the video game and console chain, is reported to have just filed for administration.
11:50 – PMQs kick off in ten minutes. There are more bad omens for Osborne though. The latest public sector borrowing figures show net borrowing hit £15.2bn in February, up from £8.9bn a year earlier. That's a record high for a February – and considerably worse than expected. Labour's Rachel Reeves said: "Whatever claims he makes in his Budget speech the chancellor is wildly off track on his borrowing plans. The autumn statement showed George Osborne is set to borrow £158 billion more than planned at the time of his spending review because of the higher unemployment and slow growth his failed policies have delivered. And today’s figures show he borrowed £6 billion more in February than in the same month last year."
11:56 – Back in the Commons, Cabinet Office questions are winding down. Francis Maude (Con, minister for Cabinet Office, Bond villain) is lambasting "bully boy paymasters". Does anyone outside the Commons still say "bully boy".
12:00 – Charlie Elphicke (Con, smell of hay) blabbers something about procurement. And we're off – on time for once.
12:01 – Cameron enjoys mocking Miliband for calling a sickie on attending a health rally and going to watch the football instead. "What was it that first attracted him to the multimillionaire owner of Hull football club?" Miliband ignores it and focuses on Afghanistan. We now know the timetable for withdrawal will change. Instead of the end of 2014, what is our position?
12:03 – The timetable stands in terms of combat. Between now and then there needs to be "sensible profile" in terms of reduction in the three parts of Helmand we're still responsible for. Cameron says he discussed more of a support rather than combat role in that time period too. Miliband thanks him (standard cross party consensus when discussing Afghanistan) and asks him to keep the House informed. He says international troops must be able to fulfil their role despite President Karzai wanting their role to be limited. Cameron says the rogue American soldiers shootings were dreadful and must be prosecuted as a mass murder. But in terms of UK involvement, the key is transitioning to Afghan troops. He's not concerned about the role of British troops on the ground despite Karzai's comments.
12:05 – Miliband: Does the PM think we owe it to our troops to be more focused on securing a political settlement. Cameron thanks him. He says we need a political settlement. He wants reconciliation and reintegration. The US now agrees. "We are committed to handing over to the Afghan government at the end of 2014. We believe that can happen even without a political settlement, but it would be better for everyone concerned if it was accompanied by a political settlement."
12:08 – Miliband splits his questions. An MP asks about the air ambulance service. Beside Cameron, Osborne stares on, totally focussed (nervous?).
12:09 – Gavin Williamson (Con, shouldn't be allowed too much sugar) asks about the Landrover factory but really just takes a few stabs at Labour. Huw Irranca-Davies (Lab, dashing) says he nattered with a bloke on the bus this morning and asks if the journey cost 90p under Ken, how much did it cost under Boris? Cameron, over animated, said Ken twice promised to freeze fares and didn't deliver. He says the real difference between them is that Boris pays his taxes and Ken doesn't. There's more on the accusations of Ken avoiding taxes from a backbench Tory MP. Cameron laughs that Ken said he'd start paying properly if he wins, and advises he should start before the campaign instead. Much mirth.
12:13 – Lots of speculation on the colour of tie people are wearing. Nick Clegg is wearing red (RED!) which obviously means he's about to cross the aisle. Obviously. There's lots of purple on the Labour bench. Which means… well it doesn't mean anything.
12:14 – Miliband is back. He says half the uninsured who suffered in the riots have not received anything. Is that a problem? It is, Cameron says. Miliband says it's been nine months, why isn't action happening quicker? He's discussing an Ealing supermarket, the owner of which has received nothing. Does the PM agree that's not right and it's the government's responsibility? Cameron says he agrees and will look into that specific case. He says he'll put information about what happened with the funds in the Commons library. Good little passage from Miliband. He says he wants proper information on payments made due to the Riots Act. Shouts from Tories who say Cameron basically just said that. Secondly, Miliband wants a Home Office minister nominated to make sure the claims are done. Thirdly, he wants Cameron back in the House to say when 100% of claims are settled.
12:17 – Cameron is highly consensual, says he'll follow up, promises information, more action on that Ealing case, and specifies who in the Home Office is dealing with it. Cameron came out of that fine. Miliband came out well, almost as if he's setting the agenda. We won't even remember it happened once the Budget is going. For what it's worth final scores are Miliband: 2 Cameron: 1.
12:19 – All very quiet and respectable right now. Standard pre-Budget PMQs. Example: Robert Halfon (Con, clothing disarray spectacle) asks the PM to come to Harlow so they can show Britain how to lead the economic recovery. Mary Glindon (Lab, extra in budget soap opera) asks about child tax credits, prompting a robotic defence from the PM. "After this Budget [the very richest] will be paying more in tax," Cameron adds. Simon Hughes tries to ask a question, but there's too much noise, I think from Labour.
12:25 – John McDonnell (Lab, left of Trotsky) said trade unionists have been blacklisted through phone-hacking. He says there's one route for justice for celebrities and another for working people. Cameron instead attacks the right to work group ("that left wing organisation"). Ironically, the last time Cameron mentioned it he called it "Trotskyite". Did I spell that right?
12:28 – Debbie Abrahams (Lab, compelling) asks Cameron to publish the NHS risk register. Huge boos from government benches. Cameron says there have been two votes, both rejected. Nick Boles (Con, amiable) says that taking the low paid out of income tax is a "thoroughly Conservative idea whose time has well and truly arrived". Bit of a dig at the Lib Dems there, who are claiming it as their own. Suddenly, there's quite the act of disrespect to John Bercow. Cameron calls it a "kaleidoscope Budget". That's a reference to Bercow's speech to the Queen yesterday which was very, very badly received by Tory backbenchers.
12:31 – PMQs ends. Budget begins. The deputy Speaker takes over. Some laughter at Bercow as he leaves. That was not a good moment for him. Osborne is up.
12:32 – "This Budget rewards work," Osborne says. "It unashamedly backs business. Because we've already taken difficult decisions this can also be a reforming Budget."
12:33 – "Far reaching tax reform… simpler tax system…a tax system where millions of the lowest paid are lifted out of tax altogether… while the tax revenues we get from the wealthiest increase." It all seems to be going according to the leaks. Cameron looks pensive, sat beside Osborne. Clegg looks up into the air, fatigued. Danny Alexander, looks as if he's on stand by. Osborne says many Eurozone countries are now in recession. The Office of Budget Responsibility (OBR) is downgrading forecast for the eurozone and the world economy.
12:35 -The Eurozone crisis and a potential further spike in oil prices risk the UK economy. That leaves the outlook largely unchanged since last November. But they expect us to avoid a recession with growth in the first quarter of this year. It is slightly revising up its growth forecast to 0.8% – about what we expected. Cheers from the Tory benches. It's hardly the second coming. They forecast two per cent next year, 2.7% in 2014 and three per cent in the two years that follow. They have revised down the claimant count, but not unemployment levels itself. Inflation is expected to fall throughout the period to two per cent by the end of the forecast period.
12:38 – There will be no deficit funded give aways today, but no need to tighten further either, Osborne confirms. Borrowing this year will come in at £126 billion – £30 billion down from its peak in 2009. It will hit £21bn by 2016. Osborne says borrowing will be £11bn less than his last forecast and he'll use that to help reduce deficit.
12:40 – There will be an automatic review of the state pension age to keep it in check with longevity. Spending will be lower than planned in Afghanistan, Osborne tells the Commons. UK forces will cease combat operations in 2014. The cost of operations are expected to be a total of £2.4bn lower over the parliament. (These costs are paid out of reserve, by the way, not the defence budget). There will be another £100m on army accommodation and more money for the family grant. He will double council tax relief for those serving.
12:44 – £36 billion has been saved in debt interest repayments compared to the previous government, Osborne says. Cameron sucks in his breathe. This is a mark of investor confidence, Osborne says. He wants to try to extend that into the future with perpetual gilts. This is the 100 year bond announcement. No-one ever said perpetual though – how on earth would that work?
12:47 – It's hard to drag yourself away from Clegg-watching. He is going through a series of remarkable facial expressions varying between moral pain and emotional darkness. Osborne says Britain is in the top ten most competitive places in the world to do business. But he wants to improve exports and aim at Bric countries. He wants to expand UK export finance. "We must never allow protectionist rhetoric to creep into our political system," he says.
12:50 – Lack of airport capacity in the south-east is mentioned. Interesting. London could be getting another airport. Or is a Heathrow U-turn on the way? He also attacks a lack of transport investment in the north of England.
12:51 – Osborne says how wonderful Boris is and says the government will work with him in improving London's transport infrastructure including a business development fund. There are 25 enterprise zones across England, Osborne says. He wants other parts of the UK to benefit too.
12:53 – It's quite irritating so far – hints and nods about airports and social care etc, but no concrete details at all.
12:55 – Life sciences get a new institute and patents are enjoying tax reductions. This is old news. A new aerodynamics centre will be set up. Not sure if that's old or not. Osborne wants action on digital content – a film tax credit is helping, but he wants it for video games, animation and high end television production. This stops premium British programmes being made abroad and encourages agencies like HBO to film here. "It is the determination of this government that we keep Wallace and Gromit exactly where they are," Osborne says – that's the Tory nickname for Miliband and Balls. The Commons roars with laughter.
12:57 – Ultra-fast broadband will be spread out to more cities, Osborne says. There will be £50 million for smaller cities too. He addresses the planning system, a real bug bear of his. He says big projects were diverted to Europe because of it. Next week we'll see the overhaul of the system, especially with a "presumption in favour of sustainable development".
13:00 – Osborne says the trading laws will be relaxed for eight Sundays only. We really have heard most of this before. Osborne praises Michael Gove, saying his efforts will do more to help the economy than any Budget measure ever will. He wants enterprise loans to allow young people to start their own business. He says he wants public sector pay to be more responsive to local pay rates. Today, he's publishing the evidence the Treasury is giving independent pay review bodies. No more on that contentious issue – for now. Still very little detail.
13:02 – OK, here comes the meat: Tax.
13:03 – Simplification is the first goal, so they are radically changing small firm administration. Tax will be done on basis of cash passing through them, rather than being based on what would happen to a big business. This will apply to three million firms. Income tax and national insurance integration is being consulted on next month. Loopholes on VAT will be addressed – such as sports drinks being charged VAT and sports nutrition drinks not. This is the Jaffa Cake stuff. When is a cake a biscuit? Osborne's voice just started breaking, pretty much exactly when I said it would.
13:05 – The additional age related allowances for people reaching 65 after April 2013 will be scrapped – simplifying it, he says. Not sure abolishing pensioner tax allowances is a simplification. No pensioner will lose in cash terms, Osborne says. The basic state pension is going up, he reminds the Commons. He wants it simplified.
13:06 – Now he's announcing the transparent tax statement showing you where your taxpayer money is going – health, welfare etc. Again, this was pre-announced. It's supposedly for transparency, but also to mess with Labour of course. It's also undeniably fascinating to read, by the way. Now he moves on to having a competitive business tax system.
13:08 – The headline rate of corporation tax has already been cut from 28% to 26%. It was set to fall again in April by one per cent. But next month, he's going a per cent further and dropping it to 24% By 2014, it will be 22%. This is dramatically lower than for our competitors. That's news – we didn't know that before. Finally everyone – we've got some actual news. The bank levy is being raised slightly so the cut doesn't just benefit the banks.
13:11 – Tobacco: Here we go. Duty on all tobacco products rises by five per cent above inflation. That takes effect at 6pm tonight. That's 37p on a pack of fags.
13:12 – There will be no fuel duty cut.
13:14 – Personal and property taxation. Let's see if there are any surprises here. Most wealthy people pay their taxes, Osborne says. Under Labour many high earners could pay less tax than their cleaners. Osborne says that's "morally repugnant". Hmm. He has increased resources and staff at HMRC working on avoidance. He expects another billion as a result. A further agreement with the Swiss should prevent more people evading tax. A general anti-avoidance rule could work in the UK, he says, without damaging competitiveness. He will introduce it, and offer details in next year's finance bill.
13:16 – No stamp duty evasion through corporations. He's increasing stamp duty land tax charge to 15% on properties over £2m. It takes effect today. Those already in corporate envelopes will also be targeted. "If you buy a property that is used for residential purposes we expect stamp duty to be paid," he says. Lots of tough talk from Osborne – he's not afraid to act retrospectively. From midnight tonight a new stamp duty land tax rate of seven per cent will be put on properties over £2m, as reported.
13:18 – On relief: There will be a cap on those reliefs which are still uncapped. "We've capped benefits, now it's right to cap tax relief too." Now he's on income tax. Silence in the Commons. The 50p rate is the highest in the G20. Nervous looks. Clegg's face utterly fascinating. "I've always said it was temporary," Osborne warns. It can only be justified if it raises significant sums. He says he asked HMRC to look at the revenue. He is publishing the report today – it reveals the tax rate has caused massive distortions. Lots of income was shifted into the previous tax year (this is not unusual for first year of a tax, surely?). He says the increase raised just a third of the £3 billion they were told it would raise. Balls mentions the OBR. "I'm coming onto the OBR, don't you worry," Osborne says to him. From April next year the top rate of tax will be 45p. Big cheers. Important moment, this. "No chancellor can justify a tax rate that damages our economy," Osborne says.
13:22 – The government will be getting five times more money from the wealthiest in our society, Osborne says. He had better hope that figure stands up – and even if it does, it may not win the political battle. Osborne says Balls said the OBR should judge the decision, not just HMRC. Osborne says they have. They also said the cashflow consequences were problematic. Balls looks deeply, deeply unhappy. The OBR also say the new measures will bring in five times the 50p rate income.
13:24 – On child benefit, which is being lost to higher rate tax payers, Osborne says this: An extra 750k families will keep some or all of child benefit because withdrawal goes up to a £50K income with complete withdrawal at £60K.
13:26 – Osborne reminds the Commons they want to raise the point at which people pay income tax to £10,000. Today, he says he will go "much further and much faster". The personal allowance will increase by £1,100. People will be able to earn up to £9,205 before paying tax. Lots of Tory cheers. This is what we were expecting. People working full time on minimum wage will have seen their income tax bill cut in half. That's a pretty spectacular statement right there.
13:29 – Osborne is wrapping up now. He has not ducked the difficult questions, he says. "A country where its citizens know the taxes they are paying and what they are paying them for. The country will adapt as the British will adapt. Together, the British people will share in the effort and share the rewards. This country borrowed its way into trouble and now we're going to earn our way out." Huge support for Osborne from the benches behind him. There really was almost nothing new there at all.
13:30 – I think only corporation tax cuts and video game help were the totally new or unexpected developments. Could be wrong. Anyway, stand by for Miliband's response.
13:31 – "The chancellor spoke for an hour but one phrase was missing. Today marks the end of 'we're all in it together'," Miliband starts. Already the deputy speaker has to calm the Commons. "I expect the same respect for the leader of the opposition," he says. Miliband: "Millions will be paying more as millionaires pay less. A year ago the chancellor said now would not be the right time to remove the 50p tax rate." Osborne mouths something. "Is he saying he didn't say it?" Miliband asks. He presses on. "That is exactly what he has done. For Britain's millionaires, a giant income tax cut."
13:34 – Miliband lists the people out of work, the businesses going bust and asks, "what planet are he and the prime minister living on?" He says growth is being forecast down each year. Each time he comes to the House he has a different excuse, but the reality is his plan has failed. "We're into 2012 and unemployment is rising month upon month upon month. His plan has failed. He promised the deficit would be gone by the end of the parliament. Now he says he's borrowing more than he said he would. The driving ambition of this Budget for the chancellor was to deliver a tax cut for people earning over £150,000 a year. How can the priority for our country be an income tax cut for the top one per cent?"
13:37 – "Every time in the future he tries to justify an unfair decision by saying times are tough we'll remind him he chose to spend hundreds of millions of pounds on those who need it least," Miliband says. He's performing well here. Osborne is sunk into his bench. Miliband says there are 40,000 earning over a million in Britain. Each of them get a £40,000 tax cut due to this Budget. "Not just this year but for every year."
13:39 – From this April there £253 a year will be lost to taxpayers earning £20,000, even without VAT etc, Miliband claims. "It's one rule for [bankers] and another for everyone else," he goes on. "It tells you everything you need to know about the values of this chancellor. The poor will only work harder by making them poorer, the rich will only work harder by making them richer." Again, the deputy Speaker tries to calm tempers in the Commons. "Let's have some tax transparency," Miliband says. Uproar in the Commons. "Here's the challenge – nod if you're going to benefit from it and shake if you're not," Miliband says. Absolute uproar. This is Cameron's trick – Miliband is enjoying employing it himself and it's a smart, effective plan of attack. "One more chance. Nod or shake your head. Are you going to benefit. I've got one thing to say to him. Let sunshine win the day." Even Cameron smirks at that one. "Now he's going to be able to buy his own horse," Miliband says. Someone claps. The deputy Speaker loses his temper. "We won't have any clapping in this Chamber!" he shouts.
13:43 – Now he turns his fire on the Lib Dems. "Only the Liberal Democrats could be dumb enough to think a George Osborne Budget could be a Robin Hood Budget. They should be ashamed. For all the talk, all the briefing, the deputy prime minister has done what he's done on every big issue. He's rolled over and said 'yes, prime minister'."
13:45 – There's considerably more politics than economics here, but Miliband is having one of his best moments at the dispatch box. The coalition front bench is downcast and glum. Labour is jubilant. We're on film tax relief now. "It's a great support to British success stories like Downton Abbey. A tale of out-of-touch millionaires who act like they're born to rule but turn out to be not very good at it. We all know it's a costume drama. They think it's a fly-on-the-wall documentary." I'm not much of a Downton man, but I thought the upstairs lot were treated sympathetically.
13:48 – "An unfair Budget built on economic failure. An unfair Budget from the same old Tories." Miliband ends.
13:49 – I'm told Balls just whispered to Miliband: "Very, very, very good."
13:50 – Of course, if they hadn't leaked so much of the Budget, Miliband wouldn't have had to time to come up with all those jokes. But there you go.
13:52 – At the end of all that, it's funny to think that all the talk of the 50p top rate amounts to £500m. Nothing, basically. Osborne says the top rate only brought in £100m. Are we really believing this? It seems… difficult to accept. When he said he would bring in five times as much, that actually amounts to £500m from the rich.
13:59 – Here are all the documents from the Budget, including the Budget itself, on the Treasury website.
14:00 – It's exactly two now. We're going to close down the live blog, so we can bring you reaction, analysis and news. On one level that was a spectacularly uninteresting Budget – mostly pre-announced and dealing with tiny bits of money. But on another, in terms of the narrative, of the story it tells, it could be a pivotal moment. Miliband's response suggests he could have the tone to communicate that, but only the next few days will tell.
