Initial thoughts
Last Wednesday, the Chancellor of the Exchequer, George Osborne, gave his last budget of this parliament; being obvious it was a budget for votes.
It became quickly apparent via Twitter that many viewers were playing ‘Budget Bingo’, a game devised that instead of numbers being called out, Osborne would say an iconic phrase such as ‘recovery’. This shows that many have become bored of the current predictable, boring, long and obvious budget announcements, although it does not seem to have stopped people from watching it. Indeed there was much reaction on Social Media, with Budget2015 trending across the UK as people analysed the chancellor’s plan for the next year.
The Deputy speaker was forced to intervene several times during the budget and during Miliband’s response, due to a particular rowdy budget announcement, with pointing, shouting, head shaking and pleading going on between the benches. This again reminds us all of the irresponsible, loud and frankly rude behaviour of our Members of Parliament. Osborne also attacked the previous Labour government, as you would expect, but accusing the opposition of increasing the north south divide, to the displeasure of the Labour cabinet.
The Office for Budget Responsibility however has said that public service cuts is planned to be like a rollercoaster, with ministerial budget’s deeper than at any point during this parliament, and the decision facing voters has become obvious, deeper cuts but into surplus quicker with the Tories, or less austerity with Labour.
Headlines
The main theme of this budget: the economy. The main message of this budget: “We are delivering a truly national recovery”, with Osborne mentioning this several times throughout his speech. Starting this pre-election budget, stating, “We have grown faster than any other major economy in the world”.
To the joy of Conservative MPs, it seems the economy is faring better than anticipated in the autumn statement, with the forecast for 2015 revised up to 2.5 per cent, with growth staying at around 2.3 per cent in the following years of a Conservative government. Unemployment figures were also released on Wednesday morning, showing a record high number of people in work, but yet still 5.8 per cent of people unemployed, hoping to reach 5.3 per cent by the end of the year. Mr Osborne looked proud, uttering, “We are getting the whole of Britain back to work, with a truly national recovery”, despite loud Labour opposition and Conservative cheer in the house.
On to the all-important borrowing figures, the Chancellor announced that borrowing would be £90.2bn this year, falling to £75.3bn and £39.4bn in 2015-16 and 2016-17 respectively. However, in the autumn statement Osborne hoped to get a surplus of £23bn by 2019-20, but this was revised down to £7bn this week. National minimum wage will also be increased, to £6.70 this year, on course for an £8 minimum wage by 2020. Living standards have also increased, Osborne suggested, with disposable income for families increased since 2010, or so Osborne tells us. Miliband attacked this statement, responding: “On living standards, which the Chancellor made much of in his speech, he knows that on the official measure people are clearly worse off under him. So he had a bright idea. To invent a new measure of living standards.” The Conservatives benches were not amused by this statement, this is party politics at it’s worse. Miliband went on to say, pleading to the electorate “People don’t need a new measure which pretends they are better off. They need a new government to make them better off. This is the reality behind the Budget that can’t be believed.” That is truly the question much reaction has speculated over, can Mr Osborne be believed, with a secret agenda a big possibility with the scale of future cuts needed.
The Chancellor referred back to his first budget where he wanted to get national debt falling as a share of GDP by 2015/16, and seemed proud that he had met it, although looking back it is obvious he has failed on much of his deficit plans. Again Miliband commented on this, stating that Mr Cameron said in 2010 that halving the deficit would not be good enough, and Osborne has failed on a key election promise. This comes only a few months after the new conservative campaign about halving the deficit, but as a share of GDP, misleading many, critics argued. Mr Osborne pleaded to the people of Britain that a slower recover with more borrowing will mean Britain will deviate from it’s recovery plan, meaning Labour’s plan is the wrong plan. Bringing the last Labour government’s failure of the economy into the Budget, Osborne announced that despite the country is now paying off century old debt “The debt issued by Gordon Brown will take a little longer to pay off”, to Labour’s dismay. “Do we return to the chaos of the past, or do we continue along the path that is delivering for you,” he said emphasizing the need for a long-term economic plan.
Labour MPs got very rowdy when the Chancellor announced about the economy, that as a country “we are all in this together”, causing the speaker to intervene. Mr Osborne announced the gender pay gap has never been smaller, while this is a positive outlook; it is still up to 24 per cent in some occupations, still not a figure to be proud of.
Inflation was the main change though since last year, predicted to be just 0.2 per cent this year, dropping from the predicted 1.2 per cent. This is helped by falling food prices and worldwide oil price decrease, being good news for families as “We are delivering a truly national recovery”. After talks with the National Farmers Union, Osborne has finally agreed to let farmers average their income over five years. NFU President Meurig Raymond reacted to this news announced shortly after: “We are very pleased that Mr Osborne said that he had listened to the arguments by the NFU and will allow farmers to average their incomes over five years. As he mentioned in his speech, farmers are increasingly facing a volatile marketplace and this will enable them to manage the impacts of this.”
Tax
Tax was also a hot topic in the house, with the Chancellor announcing that the income tax threshold will be increased to £11,000 next year
There were many incentive tax cuts for voters, or so it seems, from this Budget. The chancellor again confirmed plans to clamp down on tax avoidance, confirming a new measures penalising tax evaded and avoidance. From next year there will no longer be immunity for those who admit to tax evasion, and will face higher penalties. This clampdown, Osborne claims, will rise up to £3.1bn in the period of the next parliament, helping to reduce the deficit.
Miliband stated that these so called ‘tax-cuts’ were not in fact beneficial for families, adding families were £1,600 a year worse off, due to tax rises in many areas. Mr Miliband went further, adding the Chancellor had not mentioned anything about VAT in his budget. Mr Miliband added: “And everyone knows what’s coming if they were to get back in: another VAT rise. The Tax the Tories love to raise.” Despite Tory figures rejecting this, the official manifestos are not yet released and this budget is not binding, therefore we will have to wait and see if the Chancellor even has that option.
The annual tax return will also be scrapped, for a real –time online tax account, to be completed by 2020, although announcing that people who wish to fill out a paper form will still be able to do so.
Another big announcement that was announced was the changes to savings tax, and that anyone earning less than £1,000 in savings income will be exempt from this, a big bonus for savers, not so much so for students.
Miliband accused Osborne of ignoring big cuts in his Budget, which would occur between 2015/6 and 2018, billions of pounds worth. Miliband claimed that eventually the NHS would not be able to be ring fenced, leading to NHS cuts if a next government was a conservative one.
Students
Onto higher education, the chancellor first announced that the number of students form disadvantaged background were at a record high. Mr Osborne announced that he had in fact examined the option of restricting the annual allowance of pensions to use the money to pay for a tuition fee cut. Mr Osborne said: “It involves penalising moderately paid, long-serving public servants, including police officers, teachers and nurses, and instead rewarding higher paid graduates”, going on to say that such a policy would not be fair, and would not be progressive. This comes as expected, but is still a disappointment to many, including the National Union of Students who stated in their General Election manifesto a policy supporting the eventual abolition of tuition fees. When tuition fees were raised there was uproar in the student community, with many protesting in London and the conservative student polling being stagnant at 23 per cent, while the Green Party, who support the abolition of student fees, currently polling at 28 per cent amongst the student population. Mr Miliband attacked Osborne’s actions on students, saying, “the next generation has seen wages plummet and tuition fees treble.”
The Chancellor also promised loans up to £25,000 for students studying for research-based master’s degrees and PhDs, saying “Future economic success depends on future scientific success.” This adds on to the £10,000 loans announced for taught-based postgraduates. The UK Commission for Employment and Skills estimates that by 2022, as many as one in seven jobs will require a postgraduate qualification, a worrying fact as the UK’s number of postgraduate students lags behind international competition.
Wales
So, what about Wales? There were many positive points in the Budget for Wales, starting with the fact that the UK government is opening up negotiations over a £1bn tidal lagoon energy project in Swansea. The lagoon, which could power 120,000 homes for 120 years, is much more expensive in the short term for energy than nuclear.
The Chancellor also announced a development of an infrastructure city deal for Cardiff. Cardiff and the South East of Wales will also benefit from the reduction of the Severn Bridge tolls, when they come into public ownership in 2018. The higher rate for vans will be scrapped, to pay the same as cars, at a rate of £5.40.
Wales’ Finance Minister, Jane Hutt, was not convinced by the Budget, being devastated that the “devastating impact” of austerity will continue. Secretary of State for Wales, Stephen Crabb, however had a vastly different opinion, being a conservative; he said that this was “a Budget to help secure Wales’ future.”
Local MP Jenny Willott announced “This Budget shows just what Lib Dems in government have been able to achieve for the people of Wales: creating opportunity for everyone by building a stronger economy and a fairer society.”
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