Afzal Amin – The Chancellor spells out his competence
Today’s Autumn Statement is a 108-page presentation of the nation’s finances. It is exactly what we would expect from a Chancellor who is in control of his mandate and not afraid to show off his work. Several features spring to mind as I read through the appealing mix of election-focused pledges and hard data backed up with independent verification.
The first is that this is a “tiger statement”: in the same vein as a “tiger mom”, the Chancellor is laying out the dismal situation inherited in 2010, the challenges he and his team have had to understand, the very unpopular decisions he had to make, and then how he exercise an iron will to stay the course.
The second is telling us that just because this first phase of the recovery has gone so well doesn’t mean that the hard work is over, nor does it mean that the fruits of economic competence are already harvested. He lays out the case that it is in our national and individual interest for this work to be reinforced and seen through to its end, which is a nation balancing its books with a £20 billion surplus before the end of the next Parliament.
The third thing I found striking is that he and his team have so very competently “red-teamed” (a military term to assess what the enemy is likely to do and to thus plan against all contingencies) this Statement exceptionally well. Every one of Labour’s potential attacks has been pre-emptively defended against (the NHS, Stamp Duty and support to small businesses being some of the more noticeable changes).
I know that my constituents in Dudley North will welcome this Autumn Statement, they have experienced Labour’s failings nationally and certainly locally, they can see the dire straits in which Miliband’s hero Hollande finds himself, and they know that UKIP have only rhetoric to offer. Without a healthy economy there can be no thriving of anything else The Chancellor has again shown his competence.
Afzal Amin is the Conservatives’ prospective parliamentary candidate for Dudley North.
Ryan Bourne – The failure of Osborne’s deficit reduction plan
Today confirmed what we all knew already: deficit reduction is further off track than was even acknowledged in the Budget. Though the deficit is forecast not to be as high by the end of this financial year as last (as some predicted), it is still likely to be around £91 billion – higher than was forecast in March (£84 billion) and much higher than the £37 billion forecast in the heady days of 2010. The structural current deficit – the part Osborne said he’d entirely eliminate by the election – is this year 2.7 per cent of GDP. In other words, any government after the election will have a £50 billion black hole to fill in just to eliminate it, let alone deliver tax cuts.
This will be the story of the next Parliament: where to cut when the low-hanging fruit has been plucked? Today we heard vague commitments on Whitehall spending, public sector pay and further cuts to working age welfare. But the Government is also becoming dependent on a range of revenues it expects from things that are inherently uncertain. Have clampdowns in tax avoidance ever delivered relative to promises of what they’d raise? How on earth will the new “Google Tax” work in practice? And is another retrospective tax on the banks really wise?
Overall, the Statement had a £1 billion-plus giveaway for next year. This was mainly due to the broadly welcome reforms to stamp duty. Taxes on transactions are generally bad news. In an ideal world, stamp duty wouldn’t exist. However, the overhaul of the slab structure is to be celebrated – it was a tax which severely distorted the housing market. The trade-off is that to avoid incurring a huge fiscal cost requires confiscatory rates of 10 and 12 per cent on relatively expensive properties. In time these should be reduced.
Finally, the Autumn Statement has surely outgrown itself. It should be a simple statement of forward looking spending and borrowing plans. Instead, it is an orgy of announcements which creates huge uncertainty. Let’s end the gimmicks and abolish this annual farce.
Ryan Bourne is Head of Public Policy at the Institute of Economic Affairs.
Cllr Sir Merrick Cockell – A missed opportunity for English devolution
For local public services, the expectations and risks have never been higher. Many policy proposals have been pitched to Government in the hope of the Chancellor’s support today. But the scale of the predicted budget deficit could have meant further cuts to local government when the sector is only halfway through delivering the current reductions.
Instead, the Chancellor announced falling borrowing; the deficit at half the level he inherited in 2010; the fastest growth of any major economy; and rising satisfaction with local government services, whilst hinting at further public spending cuts after the next election.
The announced full review of the structure of business rates is welcome, but with full rate devolution promised to Wales, the future English model must look at all growth staying in local areas and the level being set there and not nationally.
There was plenty of good news for the “Northern Powerhouse,” with new rolling stock and a Sovereign Wealth fund. But Conservative County leaders will be dismayed to that the “door is open to other cities,” but seemingly not to them to agree the devolution of functions from Whitehall.
The headlines will be dominated by George Osborne’s consummate destruction of Labour’s Mansion Tax. Increasing tax on high value property sales, rather than introducing a yearly tax on what for many is a freak of geography, will seem fair and not force many elderly to sell up. It exposes Labour’s policy as vacuous and vindictive.
But the glaring gap in the Autumn Statement, that could have greater implications beyond the General Election, is the English Question. Corporation Tax is going to Northern Ireland, Business Rates to Wales and Income Tax to Scotland, but there was no mention of any tax-raising powers being shifted closer to the 53 million people of England.
The Chancellor’s confirmation of English votes for English laws is no answer to the growing sense of unfairness felt by the English both in spending and centralised power. If local government is the most efficient, has the highest satisfaction, is the most innovative, why is it not trusted with devolution that is as fair to the people of Plymouth, Stoke and London as it is to those in Cardiff, Perth or Londonderry?
Sir Merrick Cockell is a councillor in Kensington and Chelsea, and executive chairman of Cratus.
Andrew Lilico – Osborne is making progress
In this Statement we’ve discovered Osborne’s version of “It hurt, but it worked.” In his words, in the face of a crisis, we set a course, we’ve stayed the course and so Britain is now on course for prosperity. He had a good story to tell on growth, with output up 8 per cent over the Parliament, and the latest growth much faster than in our major comparators, such as France, where a different economic policy course was taken. He had a very strong story to tell on employment, which has confounded the forecasts even of his sympathisers (like me) let alone his critics. Unemployment of below 5-and-a-half per cent by the end of this Parliament would have seemed almost inconceivable at its start.
The big change was, of course, the Coalition’s version of a Mansion Tax — but in the form of a one-off levy via Stamp Duty rather than an annual fee, but with a large cut to stamp duty for those buying cheaper houses.
Yet, in political terms, what I found most interesting was the focus on the North of England and the non-English Nations. Osborne seems to be pressing through with his “Northern Powerhouse” concept of a group of cities focused on Manchester, probably with additional financial devolution within England to complement the extra financial devolution he announced for Northern Ireland, Wales and Scotland. If the Northern Powerhouse were to work, could that mean a new tranche of Conservative-sympathising North-Western constituencies?
There is now finally some modest progress on the deficit. The rise relative to the Budget appears to come from redefinition rather than regression and we do now seem to have escaped decisively from the years when the deficit was always £120 billion.
The only really bad decision was raising NHS spending – “sharing the proceeds of growth…with the NHS”. Even Osborne, for all his merits, prefers to boast of how much the government raises spending than how much it has cut it. Ah, well…
Andrew Lilico is Executive Director of Europe Economics.
Harriet Maltby – A statement of prosperity
The Chancellor’s talk of Britain’s “path to prosperity” is unsurprising, coming just a month after the Prosperity Index showed the UK moving up three ranks to 13th, with the highest level of prosperity we have ever recorded.
The narrative spoke strongly of a job unfinished and cemented the foundations of the Conservatives’ election platform. Air Passenger Duty changes will be popular and Stamp Duty reform is long overdue, yet the Statement’s detail showed that “prosperity” was not just a sound-bite. It showed that the Chancellor is the one who understands that the path to prosperity is an investment.
The UK is a world leader for Entrepreneurship & Opportunity, posting the 4th highest royalty receipts in the world and the 3rd lowest start-up costs. Further tax-breaks for creative industries and a commitment to examine the structure of business rates can only cement this position whilst the tax-break for R&D drives innovation forward. This is an investment in our future prosperity.
Where the UK lags, we see investment too. Student loans for postgraduate study addresses our low tertiary education per worker when compared with nations like Australia, Ireland, or the US. Education, where we rank 20th, is one source of greater prosperity. So too is health, if the additional £2 billion focuses on improving our resilience to long-term health challenges.
The Chancellor also recognises that prosperity cannot be confined to the South East. The sovereign wealth fund for the north of England is bold, looking to Index leader Norway’s similar sustained investment in its future. We could go even further, with the Index pointing to the legacy of policies that have made allies like New Zealand, Canada, and Australia such free and prosperous nations.
The Chancellor pitched that he is the man to see this investment in our future prosperity deliver its return. In setting out Britain’s path to prosperity, he has the potential to cement the Conservatives’ path back into Downing Street.
Harriet Maltby is a Government and Economics Researcher at the Legatum Institute.
Cllr Binita Mehta – A good Statement for me and my family!
I am really pleased to hear of the strong progress we have made on our economy whilst in government, and to hear an energetic and authoritative Autumn Statement from our Chancellor – followed by a less than lacklustre reply from Ed Balls.
As a 24 year old, the £10,000 student loans for post-grad master’s degrees, which will beat commercial rates for those under the age of 30, are particularly welcome. I am proud that our party is ensuring that access to finance is not a barrier to those wanting to further their education.
The Stamp Duty Land Tax reform is powerful. The fact that we are cutting it for 98 per cent of people, and restructuring it to work more like income tax, is a bold, fair and sensible move. This will make owning a house more affordable for young people wanting to get on the housing ladder.
As part of the government’s strong record on employment, having created a thousand jobs each day that that we have been in government since 2010, the abolition of employer National Insurance contributions (NICs) on apprentices under 25, encourages firms to employ young people, is a welcome development to the announcement made at Autumn Statement last year that employers won’t have to pay NICs on under 21s from April 2015.
Business rates being cut and capped to support small businesses in local communities, is a welcome announcement for businesses owners like my parents. The ‘high street discount’ for around 300,000 shops, pubs, cafes and restaurants will go up from £1,000 to £1,500, from April 2015 to March 2016, in in addition to doubling Small Business Rate Relief for a further year, meaning 380,000 of the smallest businesses will pay no rates at all.
Science students, like my sister at Manchester University, should be pleased to hear of the £5.9 billion investment in science, ensuring that the UK remains the best place in the world for science and research. The £95 million to take the lead in the next European mission to Mars is also good news for future astrophysicists such as my youngest sister!
Binita Mehta is a councillor in Watford and Chair of Hertfordshire Conservative Future.
Andrew Mitchell MP – A testament to Osborne and his plan
Today’s Autumn Statement is an extraordinary contrast to that delivered four years ago when Britain had its economic back to the wall. The Statement today shows that a rising economic tide is lifting all parts of our country and all parts of our economy. It is a tribute to the Chancellor of the Exchequer, who devised his long-term plan and has stuck to it through thick and thin, refusing to be blown off course by politicians, pundits and commentators who urged him to waver and change.
Above all we see the clear benefits for all our fellow citizens from falling unemployment, falling inflation and a falling deficit. Success in a global economic battle is underlined by Britain’s economy growing faster than any of its major competitors.
Few people would have expected projected economic growth this year to be 3 per cent, with manufacturing growing at its fastest rate for years. Not only is unemployment falling fast, but employment is at its highest level ever and the Chancellor’s determination to abolish youth unemployment is particularly welcome, as are the measures he has taken to advantage young people in getting into the world of work.
It is of course true that the deficit remains worryingly high, and further steps must be taken to bring it down. But the achievement of reducing the deficit by a half during this Parliament is extraordinarily important and will give international markets confidence that Britain is on the right track economically as we seek to continue to borrow very significant sums of money.
As a West Midlands Member of Parliament, the creation of a Northern Powerhouse sets an important example for those of us who want to see economic regeneration intensify in Birmingham and the surrounding areas, which have faced such difficulty as a result of the last economic recession.
Andrew Mitchell is MP for Sutton Coldfield.
Simon Richards – Santa Osborne’s giveaways come at the taxpayers’ expense
Given its timing, perhaps the Autumn Statement should be renamed the Christmas Statement. While the Chancellor is happy to play Santa Claus, pulling presents from his sack, I’m afraid I must take the role of The Grinch and point out that Santa Osborne’s largesse is funded by the taxpayer. It’s rather like taking a child to Santa’s Grotto: the parent pays through the nose for the child to receive a cheap toy from the chap in the fake beard.
Chancellor Osborne undoubtedly has cause to be satisfied with relatively impressive figures on growth and unemployment. These have come about largely because our overregulated and overtaxed economy is slightly less regulated and taxed than those of our neighbours and competitors such as socialistrun France, which demonstrates what the UK would be like were Miliband and Balls to triumph next year. Two Eds they may be, but two brains they are not. We should permit George a good Ho! Ho! at their expense, and even join in the merriment, but it should be two cheers, not three.
The failure to reduce the enormous budget deficit, let alone make any inroads into the gigantic national debt, shows just how false the BBC’s war against ‘the cuts’ has been. In 1931, the Government cut the pay of every public sector employee at a stroke by 10 per cent. That’s a cut; that’s austerity. What’s more, it worked: Britain’s economy fared better than its rivals in the 1930s.
When George Osborne became Chancellor in 2010, the public was braced for necessary cuts in our bloated public sector, and opinion polls showed that there was support for them, but the political class is every bit as addicted to state spending as White Dee. Now he will need a Miracle on 34th Street to get public spending under control.
Simon Richards is Chief Executive of the Freedom Association.
Joe Storey – What about the debt, George?
Osborne began his statement by pledging to tighten the public finances and not to offer a “net giveaway”. Unfortunately for the British people, the next hour consisted of clever politics and some long overdue announcements but no real, concerted measures to grapple with our ballooning national debt. Road-building packages in marginal constituencies and further spending on the already ring-fenced NHS (which received real-terms increases in spending of 6.3 per cent per annum between 1997 and 2008) is good politics, but frivolous given the state of our finances. Alongside these commitments, Osborne pledged to cut tax on flights and to freeze fuel duty (despite fuel falling in price) in the same speech in which he announced that government borrowing would be £91 billion this year and there would be no genuine effort to rectify the parlous state of the nation’s finances.
In other ways, the announcements were typically Conservative. Osborne confirmed that UK’s net payments to the EU would decline in real terms over the next 5 years, with the long overdue reforms to stamp duty aiding both aspiring and current homeowners. Ending unemployment benefits for migrants with no prospect of work and freezing working age benefit for two years confirms that the Tories are the party of working people. Plans to give Northern Ireland control of corporation tax is smart politics as it looks increasingly likely the DUP could be important come a hung Parliament next May.
With this Autumn Statement, Osborne has broadly abandoned any pretence at austerity. It is a bleak time in British politics, with the options confined to Osborne’s diluted austerity or a Shadow Chancellor firmly committed to outdated Keynesian principles. Depressingly for the fiscal hawks, but comforting for Downing Street, the Conservative’s economic credibility will remain far superior to Labour’s regardless of what Osborne announced today.
Joe Storey is an A-Level student who is researching Margaret Thatcher’s influence on the current Conservative party’s economic policies.