By Matthew Barrett
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1pm update: On the Andrew Marr programme this morning, George Osborne said:
"I’m very clear going forward we’ve got to deal with this deficit, it is going to take longer – that means more difficult decisions and it’s got to be done fairly, and that means yes, the richest need to bear their fair share – and they will. That means more than they’re paying at the moment. There’s not going to be a mansion tax – we made that clear – you’ll just have to wait and see, wait until Wednesday. But there is another conception of fairness – there is the fairness for the individual who goes out to work and the next-door neighbour is living a life on benefits, and it is also unfair for that individual. So we are also going to tackle welfare bills, and that is the Conservative approach to fairness – make the rich pay, but also make sure you’re tackling welfare, the welfare system which is deeply unfair for working people"
George Osborne's Autumn Statement, which will be presented to the House next week, gets plenty of previews in the Sunday newspapers. If the various reports are to be believed, there is a fairly coherent story of the Lib Dems blocking any significant welfare reductions, and insisting on some form of anti-rich measures. I have pulled together the various stories below.
In the first story, the Sunday Times (£) tells us that George Osborne has agreed a new "raid" on higher earners with the Lib Dems. The "raid" will consist of lowering from £50,000 the amount people can pay into their pensions each year with tax relief. Mr Osborne could reduce the figure to £40,000 or even £30,000, saving £600m or £1.8bn respectively. This would, the Sunday Times suggests, buy Mr Osborne the political goodwill from the Lib Dems to tackle the welfare bill.
However, the Mail on Sunday contradicts this, saying that the welfare bill will continue to rise after Vince Cable blocked any reduction in benefits spending. Whereas the Chancellor – and Iain Duncan Smith – had wanted a freeze, the paper says, the Lib Dems will force a 1% increase in spending. This would "save" only £2bn, as opposed to the £4bn the Chancellor wanted. It compares to a 5% increase last year.
The MoS also reports that Nick Clegg decided to insist on the welfare increase as payback for David Cameron not agreeing to a mansion tax. The Chancellor had been in favour of some "watered-down" form of a mansion tax, but the Prime Minister was sensitive to the fact the tax would hit natural Tory supporters the hardest, and would not consent to it. Further welfare news comes from the Observer, which reports that Mr Osborne has dropped his plan to withdraw housing benefit from under-25s, again thanks to a Lib Dem revolt.
The Observer also has pro-growth news. The newspaper says (in the same story as above) that Mr Osborne will announce £1bn in taxpayer-backed guarantees for small firms attempting to break into foreign markets, and a state-backed business bank. Mr Osborne will also implement Lord Heseltine's proposal to give up to £50bn in funding for growth to local councils and development funds.
On the cost of living front, the Sunday Telegraph confirms, as widely expected, that the Chancellor will not proceed with the 3p fuel duty increase which has been repeatedly planned and continually postponed, but never cancelled. James Forsyth, in the Mail on Sunday, says that Mr Osborne plans to freeze the fuel increase until "the next Budget, at least".
The Independent on Sunday reports on the Chancellor's apparent plan to bring in tax breaks for the shale gas industry. Mr Osborne will argue that fracking is "vital to economic growth" and the Treasury will argue that an expansion in the fracking industry will cause gas prices to fall and reduce household bills – and, vitally, create jobs.
The Chancellor writes for the Sun on Sunday today, and sets out how the Autumn Statement will be "based on three core principles":
- Britain is on the right track and turning back now would be a disaster
- We are still all in this together
- There is no point solving today’s problems if you don’t also prepare for tomorrow
The Chancellor says of his second principle:
"Every one of my budgets has raised more from the richest. The situation under Labour, where top City people were paying lower tax rates than their cleaners, has been ended. And we are hunting down those who evade tax. But fairness isn’t just about taxing the rich. It’s also about ending the something-for-nothing benefits culture. So we have introduced a new cap on benefits and are changing the welfare system with our new Universal Credit so it always pays to work."
This is a familiar argument, but Mr Osborne will clearly frame his Autumn Statement as another instance of the Government clamping down on those at the top as much as those at the bottom of the economic system, and introducing pro-small business measures to "prepare for tomorrow". Read the full Sun on Sunday article.