Heidi Allen – A return to localism
I don’t suppose any of us were expecting huge news in a budget so close to the General Election – but what struck me was the breadth of small “giveaways”. Small in the grand scheme of things, but huge to those organisations and individuals they were directed at. We heard the church roof restoration fund will be trebled; more money for air ambulances and veterans; Severn crossing toll reductions; tax breaks for the arts, racing and gaming industries to name a few. Our farmers were not forgotten either, with news that they would now be able to smooth out food price volatility with five-year average tax returns. Sensible stuff.
This is a Government proclaiming that they are the Government, or (dare I suggest it) the Party, for everyone.
Bigger headlines were also directed at every corner of the country. Transport infrastructure investment for London and the South West; £60 million for an Energy Research Accelerator in the Midlands; 8 Enterprise Zones, including Plymouth and Blackpool, were announced
I was pleased to see localism resuscitated with the welcome news that 100 per cent of business rate growth will be kept locally in Manchester and my part of the world, Greater Cambridge (hoorah!) The clear message from George: you want control, “talk to me.” City Deals for Cardiff, Glasgow, Aberdeen and Inverness will build on the ambition to spread the economic recovery. And with support for the oil industry with a 15 per cent tax reduction… Scotland, aren’t you glad you stayed?
Tax-wise, there was the pleasing news that Corporation tax will fall to 20 per cent in 2 weeks, with beer, cider and spirit duty all down, and fuel duty frozen for the 3rd year in a row.
And the thing that put the biggest smile on my face? Death to Class 2 National Insurance contributions and the self-assessment tax return. I can hear the millions of self-employed people like me whoop with joy up and down the land. Go, George!
Heidi Allen is the Conservative candidate for South Cambridgeshire.
Mohammed Amin – A difficult balance, mostly struck
George Osborne swaggered through today’s Budget speech. He was entitled to. In 2010 he inherited an economy in meltdown. In 2012 his “omnishambles” budget was widely derided. Every year the borrowing targets seemed to be missed. Today he was effectively able to say that he had achieved what he set out to do.
In a selection of his words, “Britain is walking tall again”, “London is the global capital of the world” and “Britain the comeback country.” In the past, the IMF warned that Osborne was following a dangerous plan; in his speech Osborne relished quoting the Secretary General of the OECD “Britain has a long term economic plan, but it needs to stick with it.” The trade deficit is the best for 15 years, and “Britain has the highest rate of employment in its history.”
The ratio of national debt to GDP, which soared as a result of the global financial crisis and the related bank bailouts will fall for the first time under this government, from the debt being 80.4 per cent of GDP in 2014-15 to 80.2 per cent of GDP in 2015-16.
There was something in the Budget for every part of the country; savers, pensioners, annuity holders, the rich, the less well off, first time buyers, northern and Scottish cities, the oil industry, the creative industries etc.
Anyone watching would have been cheered.
Osborne’s key challenge was to balance convincing people that he has succeeded while reminding them that there is a lot to do, that we need to stick to the plan and that, if we do, things will become not just a bit better but much better for everyone. Getting that balance right was always going to be hard. I think he achieved the first part, but worry that the second message might be ignored by voters.
Mohammed Amin is a Chartered Accountant and Chartered Tax Adviser, and is Chairman of the Conservative Muslim Forum. He is writing in a personal capacity.
Natalie Elphicke – Great news for savings and housing
Savings and homes: Today’s four-point savings announcements showed a solid commitment to restoring the savings culture of which we used to be so justly proud, and provided a further boost for home ownership. “People should be trusted with their hard earned money” was the Chancellor’s theme – and he certainly delivered on that.
Back in 2013, Harriett Baldwin MP and I linked the homes and savings potential in our housing ISAs proposal for ConHome, so it was fantastic to see a Help To Buy ISA announced today, with a generous bonus for home deposit savers, and the restoration of the link between savings and home ownership.
The continuing low interest environment has hit savers hard. Today’s personal savings allowance is a strong signal that this has not been overlooked, and that those who save will be supported.
Flexible ISAs echo recent changes in flexible freedoms for pensions. This will renew personal financial responsibility and choice in how we manage our finances. It will enhance the attractiveness of ISAs as a savings vehicle of choice, particularly for families.
Further changes to pensions and annuities provided more choice for older people.
Housing Zones were mentioned in the budget speech itself. For those looking for more on housing, there are another 8 big housing announcements in the Budget paper. These include the creation of a Housing Finance Institute, which was recommended in our Elphicke-House Review for the Government earlier in the year; direct government housebuilding at Northstowe; garden towns at Ebbsfleet and Bicester; and release of public land for a further 150,000 homes.
For savings, for homes, this is an excellent Budget.
Natalie Elphicke is a non-executive director of a leading building society, as well as co-founder and Chairman of Million Homes, Million Lives.
Murdo Fraser MSP – The Chancellor delivers for Scotland
George Osborne had a difficult balancing act going into today’s Budget. He had to reinforce the message of stability in the public finances, with a need to keep bearing down on the deficit by controlling the public finances.
But this was also a pre-election budget, so he had to deliver enough “feel-good policies” to attract voters’ attention, and establish a difference with Labour.
Did he achieve both? My initial sense is that he did, aided by a more positive economic backdrop than even he would have anticipated.
The Chancellor’s spending pledges were preceded by a detailed exposition of our current economic position as a country. Economic forecasts for growth are up, employment is up, and living standards are today better than they were in 2010 when the Coalition Government came to power.
There was good news on the public finances, in that that the squeeze on public spending is due to end a year early, in 2019 as opposed to 2020.
From a Scottish perspective, there were two issues where announcements were keenly awaited: on the tax regime for the Oil & Gas sector, and on Spirits Duty. On both fronts, the Chancellor delivered.
The fall in the oil price may be good for the overall economy, but has hit the energy sector hard, with job losses already taking place. The industry, backed by the Scottish Conservatives, has been calling for immediate action to reduce the tax burden.
The Chancellor announced a substantial package of tax cuts worth £1.3 billion, to assist the sector, cutting petroleum revenue tax from 50 per cent to 35 per cent and the supplementary charge from 30 per cent to 20 per cent, backdated to January. This is exactly what the industry has been looking for.
When it came to spirits, the Chancellor delivered a 2 per cent tax cut on duty, in response to extensive lobbying from the whisky industry. Domestic sales of whisky are down, and this tax cut will lead directly to greater employment and increase in investment. It is also likely to boost the public finances by £1.1 billion.
So this was a budget which good news for the UK economy and good news for Scotland. It is a great platform on which to fight a general election.
Murdo Fraser is the Member of the Scottish Parliament for Mid-Scotland and Fife.
John Glen MP – A Budget for all
The Chancellor has deftly avoided pre-election gimmicks and giveaways in this Budget, instead focusing on measures that will ensure that the rising prosperity of the fastest growing major economy will be felt by all.
I particularly welcome confirmation of the largest real terms increase in the national minimum wage since 2008, and the biggest ever boost to the hourly rate for apprentices. Both are particularly significant against the backdrop of 0.2 per cent inflation forecast by the OBR this year.
The news that we are moving out of the red and into the black as our national debt falls as a share of GDP is significant. The difficult decisions we have taken have paid off: living standards will be higher in 2015 than in 2010, which translates to an average family being £900 better off.
The decision to axe the annual tax return will be celebrated by the millions of people who spend the last few days of January bound up in frustrating red tape, and this revolutionary simplification will benefit small businesses, the self-employed and hard-working people alike.
This was a budget to provide help across the generations: five million pensioners will benefit from new freedoms to access their annuities, whilst the Help to Buy ISA offers a practical mechanism to help young people get on the housing ladder.
Rural Britain and my constituents will warmly welcome the additional investment in superfast broadband and improved mobile phone coverage, so more people have the connectivity that is essential to modern life.
On a personal note, I was pleased to hear that Alabare Christian Care, in partnership with local people in Wilton, will receive a generous £3.5 million allocation from the LIBOR fines fund, to provide a specialist campus for vulnerable veterans in Wiltshire.
This Budget presented a clear choice from a responsible Chancellor. Over the next few weeks, we must continue to drive home the positive message that a vote for the Conservatives is a vote for economic stability, opportunity for all and a recovery that benefits the many, not the few.
John Glen is the Member of Parliament for Salisbury.
Tom Hunt – Vote-winning stuff
With growth last year 50 per cent greater than Germany, three times that of the Eurozone and seven times that of France, the Chancellor can be rightly proud.
With the share of debt to GDP set to decrease in 2015/2016 for the first time since 2001, and the IMF labelling his work on tackling the structural deficit as the largest and the most sustained of any major economy, the Chancellor can be rightly proud.
As is right and proper, the Chancellor takes many of the plaudits for this dramatic turnaround. There is no doubt that his comment that “Britain is walking tall again” will strike a chord with many.
However, going into the election, what will be more of a challenge for Conservatives will be going beyond outlining statistics, however eye-catching they might be, and demonstrating unequivocally that the whole of Britain stands to gain from this recovery and that the Conservatives are motivated, as a One Nation Party, in ensuring that this is the case.
The Chancellor boldly reached into the cost of living domain that the Labour Party have tried and failed to claim as their own. The Chancellor was able to point to the average household in 2015/2016 being projected to be £900 better off than in 2010.
I was reminded of proud Yorkshiremen pointing to their tally of medals at London 2012 and how it was higher than many major countries when the Chancellor pointing out that jobs growth in Yorkshire last year was higher than the whole of France.
The Chancellor is often described as being a centraliser and uninterested in localism. This budget went against that. His reforms to business rates, with Manchester and Cambridge being allowed to keep 100 per cent of business rate growth, promises to finally give economic teeth to localism.
This was a vote-winning budget for a Britain standing tall again!
Tom Hunt was a European Parliamentary candidate for East of England in 2014 and is a local councillor from East Cambridgeshire.
Andrew Lilico – No magic tricks, just good old-fashioned effort
George Osborne’s 2015 Budget continued to pursue the themes that have worked for him throughout this Parliament, aside from the hiccup of 2012. Public spending and the deficit being cut, slowly but relentlessly, year after year. Income tax personal allowance rising – now to £11,000. Pensions and savings being reformed further – this time, as expected, with current pensioners being able to exit from annuities and with a general tax-free savings scheme. Home-buying being encouraged – this time interestingly combined with savings, via the creation of a de facto Home Deposit Tax Relief for first-time buyers (whereby the government adds a quarter to first time deposit savings). But no real rabbit. No pre-election magic trick at all.
Over this Parliament, Osborne has done the hard yards. Not with the early big bang front-loading many urged on him, but with a long slog. Now he is starting to reap the rewards. The OBR has revised up the UK’s medium-term sustainable growth estimates, reaching 2.5 per cent by 2019/20. Further such revisions could transform the fiscal task in the next Parliament.
Osborne has effectively called it for the length of the fiscal consolidation plan, with Total Managed Expenditure projected to be unchanged in real terms in 2018/19 (having fallen every year for the previous eight years), and there is to be real terms rise in 2019/20, such that public spending keeps pace with GDP growth and stabilises at 36 per cent of GDP – the low-points reached by Thatcher and Gordon Brown. By being 0.1 per cent above Gordon Brown’s trough, Osborne has eliminated Labour’s scope to claim he’s taking spending “back to 1930s levels”.
Eight years of fiscal consolidation, with the sustainable growth rate returning to 2.5 per cent in 2019 more than a decade after the recession began, is a long slow haul. But Osborne’s Chancellorship has been very traditional in a Conservative sense. He has refused to buy anyone’s magic solutions. Is it genius? Is it rocket science? No. Could it have been a whole lot worse? You bet your life it could. “I have no magic answers and never did. I just keep going until the job is done.” Not very romantic, perhaps. But undoubtedly the pitch that has served Conservatives well for centuries.
Andrew Lilico is an economist and political writer.
Simon Richards – A decent platform for the election
George Osborne – the Man with a Plan – has reached the 5th year of that plan. That may sound a tad Stalinist, but thankfully the closest the Chancellor got to banging on about tractor production was in rightly praising the success of Land Rover.
The new £1 coin design bears an uncanny resemblance to the “threepenny bit” of my youth, and, thanks to debasement of the currency, due to excessive government spending, it’s barely worth more than that old coin. The single most important thing that any government can do is to reduce public spending as a proportion of GDP. On that measure, the Chancellor’s performance has been unimpressive, but an opposition as economically illiterate as Labour allows him to get away with it.
The Chancellor did have an impressive tale to tell of growth in the economy and employment; unlike so many of Gordon Brown’s budgets, the figures didn’t even have to be fiddled.
Mr. Osborne should be applauded for using the proceeds of the sales of bank shares to pay down Government debt; that is the fiscally responsible thing to do. Above all, concentrating on reducing tax on saving is a move that everybody should applaud. It will encourage people to plan for the future, and to take responsibility for their own lives. Such independence and selfreliance is at the very heart of what conservatism should be about.
With inflation under control at long last, George Osborne has laid the foundations for Britain to become a society of savers. True to his word, he has avoided gimmicks, and, in doing so, has provided his party with a platform from which it should be able to approach the coming election with some confidence.
Simon Richards is Chief Executive of the Freedom Association.
David Skelton – Towards a Northern Powerhouse
One thing that marked this Budget out above anything else was the important phrase “building a truly national recovery”. A fundamental part of the message is that, after the sacrifices of the recession and the necessary tough decisions, the benefits of economic growth should reach every part of the country and reach the lowest paid.
The Chancellor is right to note that the last Labour government placed all of its bets on an under-regulated financial sector in the City of London, meaning that manufacturing and the North of England were forgotten about. At the same time, while the City and the high-paid prospered, incomes for everybody else stagnated in the years of “growth” from 2003 to 2008. It’s enormously welcome that George Osborne is determined that this recovery will be a broad and lasting one which benefits everybody.
The measures in the Budget to boost transport and industry in the North and Midlands are very welcome and are a big step towards making the “Northern Powerhouse” a reality. Equally, there are some important measures that benefit the low-paid, such as taking more of the lowest paid out of tax altogether and another freeze in fuel duty. They build on yesterday’s very welcome announcement of the biggest rise in the Minimum Wage for seven years, something that Renewal has long called for and I called for in a new CSJ report.
Housing, particularly broadening home ownership and building more affordable housing, has to be a big part of the Conservative offer, as it was under Macmillan and Thatcher. That’s why measures to allow young people to get on to the housing ladder are so welcome.
This Budget is a big step towards a stronger Northern economy and building an economy that works for everybody. Now we have to fight to ensure that Labour aren’t allowed to ruin the recovery.
David Skelton is director of Renewal.
Joe Storey – Osborne’s personal allowance pledge is misjudged
The announcement regarding a further increase of the personal tax allowance is wildly misjudged, given that it is not complemented by a higher National Insurance (NI) threshold. The benefits of a personal allowance are disproportionately accrued by higher earners, whilst providing an imperceptible gain for those earning less than £10,600.
A personal allowance increase to £12,500 is worth a mere £28 to the poorest quintile, but a princely tax reduction of £445 a week to the richest 20 per cent. The failure to include NI threshold increases has led to 1.5 million of the lowest earners paying the 12 percent employee NI whilst paying no income tax.
The announcement regarding the annual tax return is promising in terms of tax simplification, but a new tax credit for orchestras and abolishing NI for those under the age of 21 undermines any serious attempt at simplifying our burdensome tax system. Britain’s tax code of over 10,000 pages is far too bureaucratic for a nation supposedly open for business.
For savers, a lack of return, rather than inflexible ISAs, appears to be the primary concern. Fraser Nelson notes that £1,000 deposited in a cash ISA in 2008 is worth just £916 today, highlighting the damage done to the fiscally prudent by ultra-low interest rates. Likewise, a Help to Buy ISA is an interesting proposal, but fuels demand rather than addressing supply-side constraints, artificially inflating house prices.
With the claimant count at its lowest rate since 1975 and Osborne presiding over higher job creation rates than any modern Chancellor, the Coalition has reasons to be bullish. That notwithstanding, Osborne’s latest debt plans still exceed Alistair Darling’s heavily criticised 2010 plans and with the de facto abandoning of the surplus target, Osborne’s legacy is unlikely to extend from job creator to substantial deficit reducer in this Parliament.
Joe Storey is an Economics student at the University of Exeter. His interests include the financial sector, fracking and economic policy.