George Osborne

John Aglionby

George Osborne has presented his Autumn Statement. Its highlights included a large increase in the economic growth forecast, a predicted budget surplus in 2018, a hike in the state pension age and free school meals for all infants.

By John Aglionby and Emily Cadman with contributions from FT colleagues

 

Kiran Stacey

Osborne sets off from 11 Downing St

When George Osborne announces the 2015-16 departmental cuts today in the Commons, he will also spell out some more detail about how his plans for an AME cap will work. The idea behind this is that benefit spending will be treated more like departmental spending, where it is given a set limit, and then policies are adjusted to make sure spending doesn’t go higher than this.

In reality, this is little different to what happens now, as Ian Mulheirn of the Social Market Foundation explains here. But in terms of political rhetoric, this is an important tool for Osborne to claim he is clamping down on welfare spending. Read more

Kiran Stacey

Philip HammondPhilip Hammond appeared on the Today programme this morning defending his position after being accused of dragging his heels on the spending review.

The defence secretary has not yet submitted his draft plans for how he could cut 5 per cent of his budget in 2015-16 (half of that asked of other departments), but he told the BBC he was not a “hold out” adding that he hopes to have an “adult conversation” about where the axe should fall.

But in case anyone was in any doubt of how willing he is to stand up to the Treasury, he added this:

We should be very clear that there is a difference between efficiency savings, which may be difficult to achieve but are painless in terms of the impact on the front line, and output cuts, which are of a very different order and require proper and mature consideration across government about the impact that they will have on our military capabilities.

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What was your response to the Budget? We asked readers on social media what the most important decisions were for them.

For Peter Curnow-Ford it was the stamp duty cut: Read more

Kiran Stacey

George OsborneSome fascinating economic research by Ipsos Mori, published today, shows that George Osborne is the least popular chancellor in nearly a decade, with net approval ratings of -33. Nobody has had such bad ratings since Ken Clarke in the early 1990s.

At first sign this is unsurprising: this is the first recession we’ve had since the early 1990s (if you take 2008-now as one recession). But actually when you plot the popularity of chancellor’s against economic growth, the two are surprisingly unconnected.

Plotting chancellors’ approval ratings since 1976 tells us a few things: Read more

Kiran Stacey

George Osborne and Danny Alexander

George Osborne and Danny Alexander

This June, George Osborne will unveil his spending review for the financial year 2015/16. The chancellor is expecting to have to make around £10bn of cuts to Whitehall departments, which, as we revealed in the FT a few weeks ago, would mean some departments taking a particularly heavy whack.

Our figures show that cutting at the same pace as the government has done so far, which is what Osborne has promised, would mean another £1bn taken out of both the business department and the money that goes to local government. The defence budget, possibly the most sensitive of budgets, at least within the Conservative party, would fall by nearly £770m. Read more

Kiran Stacey

This year is likely to be one of the hardest for the coalition, as spending cuts begin to hit harder than ever before. Tory MPs are warning that the measure that is most worrying their constituents is the removal of child benefit from higher earners, and analysis today from the Institute of Fiscal Studies gives us some inclination as to why.

The IFS has examined how much this will cost parents earning over £50,000 – the point at which the payments begin to be taken away. It has found that the measure will mean that for someone with one child who earns over £50,000, they will have a marginal tax rate of 52.6 per cent. In other words, for every extra pound earned over that level, 52.6p will be taken away. As they continue to go up the income scale, they will lose more and more cash until they hit £60,000 and all the child benefit payments are gone. This results in a marginal tax graph that looks like this:

IFS Child benefit chart

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Tom Burgis

George Osborne

Welcome to our rolling coverage of the Autumn Statement.

George Osborne has missed his fiscal targets and cut corporation tax.

We’ll bring you all the day’s developments live. By Tom Burgis and Ben Fenton.

15.45: We’re winding up the blog now, but you can follow events as they unfold through constantly updating stories on the front page of FT.com

15.31: A representation of the “flamethrower of uncertainty” can be found in the documentation of the OBR. It is also known as a “fan chart”. I doubt George Osborne is a fan of it, though.

15.24: Chote speaks of the “flamethrower of uncertainty”- a favourite phrase, unsettlingly enough, of the OBR, which is a chart showing forecasts in a wide range that makes the chart lines look like a firebreathing dragon.

15.18: Chote says that the variation in the possible range in the forecast of net debt figures for the UK is a large number, but is “dwarfed by the scale of uncertainties” on the issuance of debt. I think that’s the second time he has said that in his address.

15.12: The Spectator is running a rather scary chart showing the lost output of the current “seven-year slump” in the UK.

15.07: Robert Chote, director of the Office for Budget Responsibility, is live now, going through his department’s figures that underpinned the bad news Mr Osborne has just had to deliver.

15.05: Gavyn Davies has blogged for the FT with his view on the autumn statement while the FT’s Lucy Warwick-Ching has collated some very interesting instant reaction from personal finance experts.

14.49: Hannah Kuchler on the FT’s UK desk has been keeping an eye on business reaction to the autumn statement.

She says:

The CBI, the employer’s organisation, urged the government to stick to its guns on deficit reduction to retain international credibility, saying it was no surprise that austerity would last longer than expected.

John Cridland, director-general, welcomed investment in infrastructure and support for exports, but said the proof was in the delivery. He said:

“Businesses need to see the Chancellor’s words translated into building sites on the ground.”

But the British Chambers of Commerce was less positive, declaring the statement not good enough for a country meant to be in a state of “economic war”.
The government is just “tinkering around the edges”, John Longworth, the BCC’s director general said, adding: “The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation. That means reconsidering the ‘sacred cows’ of the political class, including overseas aid and the gargantuan scale of the welfare state. Only a wholesale re-prioritisation of resources, to unlock private sector finance, investment and jobs, will be enough to win the ‘economic war’ we are facing. The danger is that our political class is sleepwalking with its eyes open.”

14.40: Lionel Barber, the FT’s editor, just passed by the live news desk so we asked him what he thought of the autumn statement.

The Chancellor is in a hole, but the good news is that he’s stopped digging. The FT supports the government’s fiscal stance, but is there more to be done on monetary policy to boost growth? That’s the question.

14.26 Who says the British don’t like doing things the French way? Might we surmise from this tweet from the BBC’s Robert Peston’s interview with Danny Alexander, Osborne’s Lib Dem No2, that the UK’s crediworthiness might be going to way of its Gallic cousins’?

[blackbirdpie url="https://twitter.com/Peston/statuses/276330461142327296"]

Others are more chipper:

[blackbirdpie url="https://twitter.com/MJJHunter/statuses/276330252601524225"]

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Kiran Stacey

This blog revealed back in March just before the Budget that George Osborne was considering capping child benefit at a certain number of children per family. At the moment, parents receive £20.30 a week for their first child and £13.40 for each additional child after that, but Treasury officials were looking at stopping those payments once a family had reached a certain number of children.

At the time, the measure was supposed to be an alternative to capping child benefit at a certain income level: the family-size measure would have been easier to implement and involve less of a cliff-edge for

people increasing their earnings. In the end, it was ruled out as too controversial, but judging by George Osborne’s speech at the Tory party conference today, the idea is back on the table. The chancellor said:

How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?

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Kiran Stacey

This morning’s research from the IPPR lays out in thorough detail just how difficult George Osborne will find it to meet his fiscal rules when announcing his spending review for the period 2015-2017 next year.

The think tank has analysed the forecasts from the OBR and the Treasury and calculated the cuts needed to make sure the current structural deficit is cleared by the end of the five-year period and debt is falling as a ratio of GDP by 2015.

Firstly, let’s assume no cuts are made to welfare. If that is the case, the chancellor needs to make average savings of 3.8 per cent from departmental budgets. If spread equally among the departments, that would mean hugely controversial measures such as cutting the NHS budget by nearly £8bn a year and education by nearly £4bn.

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Kiran Stacey

George Osborne

George Osborne

This morning’s papers are not going to make comfortable reading for George Osborne (not the first time we’ve said that recently…).

The Guardian has splashed on a story in the New Statesman that several of the 20 economists who signed a letter in 2010 backing the Osborne deficit reduction strategy had now changed their minds. The story was picked up in other papers too.

But of greater political significance is the piece I wrote in this morning’s FT about how the first fissures are starting to show in the joint coalition commitment to Plan A. Three Lib Dem MPs went on the record to say they wanted the chancellor to be more flexible with his   spending plans, and allow the deficit reduction targets to slide in order to pay for a short-term stimulus. Read more

Kiran Stacey

 

Sir John Vickers

Sir John Vickers

I revealed in this morning’s FT that Nick Clegg and Vince Cable want to reopen talks on how to put the Vickers recommendations on banking reform into law.

When the commission led by Sir John Vickers first set out its proposals, the government accepted most of them – most significantly that banks’ retail operations should be ringfenced from their investment banking side.

But the banks won two crucial victories in their attempts to water down these proposals. The first was that the government scrapped the Vickers recommendation that ringfenced banks should have stricter standards on how much equity they had to issue compared with their assets. The second was that ministers allowed for interest-rate and currency swaps to be sold from within the ringfenced arms of banks, putting them in the same category as ordinary loans and making them cheaper and easier to sell. Read more

Kiran Stacey

David Cameron and George OsbornePrime ministers aren’t supposed to engage in reshuffle speculation. Once they answer one question about a reshuffle, not only have they admitted it is going to happen, they invite a whole load of others.

But David Cameron seems to have been sufficiently spooked by recent speculation surrounding his chancellor that he felt moved to say the following to Sky’s Kay Burley:

KB: The economy will pick up, and George Osborne, his job will be safe?

DC: George Osborne is doing an excellent job in very difficult circumstances and he has my full support in going on and doing that job.

KB: And he’ll still be the chancellor at the next election?

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Jim Pickard

Wind turbinesLast month it emerged that George Osborne had ordered the energy department to carry out deeper cuts to onshore wind subsidies in a move designed to appeal to Tory backbenchers – 100 of whom have signed a petition to that effect.

While Decc is already planning a 10 per cent cut to “Rocs” (renewable obligation certificates) the Treasury was seeking cuts of up to 25 per cent, it was widely reported.

But I have been handed a letter from the chancellor to Ed Davey, energy secretary, which suggests that the wind subsidies are only a microcosm of a wider battle over the green agenda raging in Whitehall. Read more

Tom Burgis

Welcome to our live coverage of Paul Tucker’s testimony to MPs probing the Libor scandal. The deputy governor of the Bank of England faces questions about his actions at the height of the financial crisis. By Tom Burgis and Ben Fenton in London with contributions from FT correspondents. All times are London time.

19.00 That’s that for our live blog. There are three main points from Tucker’s testimony.

  1. Did Labour ministers lean on him to get banks to lower Libor in the middle of the financial Crisis, as alleged by George Osborne? “Absolutely not.”
  2. Was Libor considered an ideal measure of interbank lending, even before the rigging revelations? Nope.
  3. Is the FSA board engaged in contingency plans should Libor collapse? Yes.

Thanks for reading. See FT.com through the evening for anaylsis of Tucker’s words. Tomorrow its the turn before the committee of Marcus Agius, Barclays’ outgoing chairman. 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

 

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…

 

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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