The 2014 Budget review: Cuts, Coins, Controversy and Cautious Optimism

Chancellor George Osborne began his annual budget statement in a predictable manner –  highlighting the ‘mess’ Labour left the country in before 2010. Promoting the ‘rapidly’ growing economy, and voicing the long term plan of the government, he moved onto the key points of this year’s budget.

Osborne was keen to reinforce the building of a ‘resilient economy,’ and this would be done by further decreasing the deficit from two-thirds its original size to half. In his opening statement, Osborne also showed his support for ‘makers and savers’ by promising to back manufacturing in all regions and stating that support for savers would be at the center of this budget.

This support for “makers and savers” was marked by a merging of cash and stock ISAs to make a new ISA with a ceiling limit of £15,000, which will come into effect from this year. This has been introduced alongside policies which will reduce the cost of running and maintaining manufacturing businesses in the UK.

The Chancellor announced there would be a cut in energy costs to manufacturing businesses around the UK, in addition to a reduction in corporate tax to 21%. Osborne also discussed how the treasury would be backing export businesses so that all over the world “the words made in Britain would be visible.”

This was also supported in a flat rate of tax for long haul flights to make sure people traveling to the emerging markets of China and India are paying the same amount as people traveling to places like Hawaii on holiday, encouraging the expansion of British business interest. However, Nick Robinson of the BBC warned during the statement that, “taxes will be lower, but so will [government] spending.”

The chancellor made a point of mentioning Scottish independence when discussing exports. His speech discusses the predicted fall in tax revenue north sea oil will bring, and therefore “an independent Scottish economy would be precarious, and would only highlight that Britain is better together.”

In addition to the discussion on North Sea oil, the chancellor also promised more investment in new energy, including nuclear, in an attempt to secure Britain’s future energy supply.

With regard to the duties paid on commodities, the Chancellor announced that the government would once again be cancelling the planned fuel duty rise, leaving motorists better off, as well as freezing the duty on whisky and other spirits. Following the budget, the price of beer is set to be cut by 1p per pint, and tobacco duty will rise to 2% above inflation.

Other key points of the statement were the introduction of a new 12-sided pound coin. This coin is said to be nearly impossible to make counterfeit, thus adding to the overall theme of a “resilient budget.”

The increase in the basic tax allowance, as had been expected, from £10,000 to £10,500 will mean that people on basic incomes will pay tax on £500 less of their earnings, as well as an abolition of the 10p rate of tax for savings. The Chancellor hoped all of these policies would mean more money in real terms for families on basic incomes, whilst reinforcing the central theme of a resilient budget for makers and savers.

However, following the commending of the budget to the house, , Ed Miliband was given the opportunity to respond.

In accordance with his recent performances in Prime Minister’s Questions, Miliband seemed more expressive and energised than the Chancellor, however, he failed to directly tackle the policies raised in the Budget speech.

Rather than take issue with the content of Osborne’s speech, Miliband focussed instead on was not said, frequently reverting to what has been his go-to soundbite of “same old Tories.” He emphatically stated the people of Britain were worse off under a Tory-lead government as living standards are down and have been falling for 44 out of the 45 months since the coalition took office.

His anger was largely directed at what he considered to be an overprivileged front bench who are out of touch with the people. He cited the 350,000 people still using food banks as a result of losing their jobs, and the previously unmentioned 24 tax rises that have been introduced in this parliament.

The highlight of Miliband’s response came during discussion over the, again, unmentioned ‘millionaires tax cut’, in which, Miliband repetitively posed the question of whether the Prime Minister would rule out a top end tax cut from 50% to 40%, a point which Cameron refused to answer.

When Miliband finally came to discuss the points raised by the Chancellor, he implied that many of the figures were massaged to look better than they were. Where Osborne had promised investment in housing, Miliband replied by stating that there has been the least number of houses built since 1920s under this government and that rent has risen at twice the speed of wages. In addition to this he stated that bankers wages in the city of London, have risen at five times the speed of the average worker.

Miliband closed out his statement with: “This is an economy of the privileged, by the privileged and for the privileged… Britain can do better than them, Britain needs a Labour government.”

Matt Harding