UK Budget 2012

Kiran Stacey

The last session of PMQs before recess today felt, in the words of one Twitter wit, like an “end of season clip show”. Both leaders played their greatest hits as they tried to buoy their troops ahead of the long break and remind the wider public of how they view each other.

For Ed Miliband, this was about tying in last night’s rebellion on House of Lords reform with the problems he’s had over the last few months with the Budget and the economy. The linking device wasn’t subtle (“House of Lords reform isn’t his main problem….”), but the attacks were effective, if not new.

We heard about the “tax cut for millionaires” (the end of the 50p top rate of income tax), paid for by a “tax on pensioners” (the end of preferential tax rates for pensioners), and to cap it all of, the “double-dip recession made in Downing Street”. Read more

Kiran Stacey

Journalists were told two days ago in the wake of the u-turns on the pasty tax and caravan tax that there would be no imminent decision on the charity tax. The position is the same, said Treasury officials – there will be some form of compromise with the charitable sector, but not a full u-turn, and it will come after a consultation during the summer.

Today we were told there would be no consultation, and that a full u-turn would take place immediately. What on earth is going on at the Treasury? Read more

Kiran Stacey

David Cameron is fond of saying that u-turns are not a problem, they are actually a sign of strength and a government that listens to voters and is willing to change its mind.

He may be right: voters stuck with him through a spate of u-turns early in the government’s life – on selling off national forests, on GP commissioning, on sentencing. But today we have three in one day – will this now start to look like a government that doesn’t know what it’s doing?

Ken ClarkeThe key may lie in the way in which the u-turn is handled. When he announced he was abandoning plans to offer 50 per cent discounts on sentences for offenders who offer guilty pleas, Ken Clarke united the House in laughter by telling MPs:

I have done a few u-turns in my time, and they should be done with purpose and panache when you have to do them.

This is exactly the way Clarke has gone about his u-turn today on secret courtsRead more

Kiran Stacey

The data released last night on how much the super-rich paid in tax in 2010-11 was fascinating. As Robert Peston comments on his blog, getting this information out of the last government was nigh-on impossible, as Labour didn’t want to put wealthy people’s tax affairs in the spotlight. So it is an amazing irony that it is a Conservative-Lib Dem coalition that is choosing to do so instead, as it looks to bolster support for its unpopular decision to cap tax reliefs, which will impact on charitable giving.

The Treasury released the data in an attempt to show us how much rich people avoid tax. George Osborne told the Telegraph that when he saw these figures he was “shocked”. And certainly there are some shocking figures within them, such as that thousands of people in the 50p tax band actually pay less than 20 per cent tax. Twelve people who are mega-rich, earning over £10m, even pay less than 10 per centRead more

Kiran Stacey

David Cameron in JakartaDavid Cameron today repeated the claim his spokesman made yesterday that one of the reasons for the cap on tax reliefs was that some wealthy people were putting money into bogus offshore charities as a way of reducing tax.

The prime minister said:

I’m quite convinced we can get the balance right increasing philanthropy and charitable giving, which is an important part of our culture which I want to see expanded, and making sure the tax system isn’t abused.

The government’s comments on this have been met with confusion: if bogus charities were in operation, why didn’t the Charity Commission stamp them out?

The answer, strangely, lies in a legal case launched by a German man, Hein Persche, against his local tax office in the province of Lüdenscheid, in 2009. Read more

Kiran Stacey

This morning the prime minister’s spokesman was grilled by the Westminster press pack on why exactly the government was putting in place a cap on tax reliefs when it could reduce charitable giving.

This is the explanation the spokesman gave:

The reason was that certain individuals in this country on very high incomes are exploiting some of these reliefs to reduce their tax burden.

But surely the whole point of offering tax reliefs on charitable donations is to encourage wealthy individuals to give donations by allowing them to reduce their tax burden? The PM’s spokesman explained that it was not just use, but abuse of these reliefs that was concerning the government: Read more

Kiran Stacey

One of the biggest announcements from the Budget was one that may not happen, and if it does, is unlikely to be implemented for several years. George Osborne told parliament:

If in the next spending review we maintain the same rate of reductions in departmental spending as we have done in this review, we would need to make savings in welfare of £10bn by 2016.

 Read more

 

Welcome to the FT’s rolling coverage of the UK Budget.

By Kiran Stacey at Westminster and Gordon Smith, Michael Hunter, Darren Dodd, Tom Burgis and Ben Fenton on the FT news desk.

All times are GMT.

16.45 So, that is about it for the live blog. The main FT coverage can be found in the usual place.

We thought we would leave you with a small image of what life in the Financial Times London newsroom is like on Budget Day. Below, you can see Chris Giles, economics editor, briefing the rest of us on what it all means. This picture was taken less than two minutes after the Chancellor sat down at 13.29.

So, from the FT live news desk, enjoy digesting the ramifications of the 2012 Budget, whether you are an outraged pensioner, a relieved 1-percenter or the Chancellor of the Exchequer. FT Live Blogs will be back just as soon as something big enough breaks. Goodnight.

Chris Giles briefs the Budget team on what it all means. He is the figure in a light grey shirt immediately below the left-hand TV image of George Osborne.
Chris Giles briefs the Budget team on what it all means. Chris is the figure in a light grey shirt immediately below the left-hand TV image of George Osborne.

 

16.25 John Authers and Martin Wolf parse the 2012 Budget

16.06 The top trending phrase on Twitter in the UK at present is #grannytax.

And one of the main users of Twitter, Lord Prescott, has his say on the Budget.

[blackbirdpie url="https://twitter.com/#!/johnprescott/status/182489902074703875"]

16.01 The FT’s Christopher Cook tweets:

[blackbirdpie url="https://twitter.com/#!/xtophercook/status/182490962516393984"]

15.57 This was a budget, opines the FT’s Philip Stephens
that was in part “about George Osborne’s ambitions to establish
himself as David Cameron’s heir apparent”.

 

The chancellor talked about a Budget to put Britain back to work, but

the measure most likely to stick in the public mind was the cut from

50 per cent to 45 per cent in the top rate of income tax. It marked a

tilt to the tax-cutting right that he hopes will build his support on

the Thatcherite wing of the Tory party.

 

 

15.52 Podcast time.

 

15.48 Our colleagues over at FT Alphaville have been going through the
Budget documents and have found the official issuance plans for the
Osborne super-long bond.
The question, it seems, is not how long the bond should be, but how
big…

 

 Read more

Kiran Stacey

The quad - David Cameron, Danny Alexander, George Osborne, Nick Clegg

Tim Farron, the Lib Dem president, told me yesterday:

I suspect that we are going to see a Budget which has got more Liberal Democrat stuff in it than Tory. The amount of money being returned to individuals will go overwhelmingly to middle and lower income earners.

He’s right, to the extent that by far the biggest spending measure announced by George Osborne tomorrow will be the increase in the personal tax allowance to around £9,000 – a move likely to cost around £3.3bn. Read more