Budget 2013 as-it-happened
Budget Buildup
10:30 – Hello, fellow recessionaries. Welcome to what is likely to be the most appallingly predictable Budget in modern history. The chancellor has about as much wiggle room as a commuter on the Central Line. He has no option but to go on and on, trudging further into the desert of despair as the clouds around him gather ominously. Even by my mixed metaphor standards, that is pretty good going. I'll be providing more throughout the day. I just can't help meself.
10:35 – The bleak truth, though, is that even in the most tedious of all Budgets there will nevertheless be some scraps of news to examine. There's the updated forecasts for the state of the economy, for example: does the Office for Budget Responsibility still think the UK economy will grow by 1.2% this year? Then comes the chancellor's big news stories. The Treasury press machine can't help but come up with little tweaks here and there that might just be newsworthy. I'll sum up what we know already in a moment, but there's a decent chance there'll be a big rabbit out of the hat moment, too. We can only hope.
10:40 – Cabinet met at 08:00 this morning. It probably wasn't much fun: most departments are being asked to come up with a further one per cent of cuts in 2013/14 and 2014/15. Only home secretary Theresa May, defence secretary Philip Hammond and communities and local government secretary Eric Pickles have escaped this latest round of chops. The phrase 'National Union of Ministers', beloved by journalists, is clearly something more than a tag made up by Westminster insiders. Membership requires some sort of threat to the Tory leaders, however.
10:45 – What is so fiendishly clever about this Budget process is its capacity for generating headlines about good news which will make people feel better about themselves. Pub-goers will be cheered by the scrapping of the 6p beer duty hike. The autumn's fuel duty rise may be put off, our plucky soldiers might be getting a 1.5% pay rise (don't spend it all at once) and the £10,000 personal allowance might materialise in 2014, not 2015 as previously scheduled. These are all going to make people feel like things aren't so bad. But even the great British public are unlikely to be convinced by all this. As one of my pals on Facebook asked this morning: "We're going to find out how much poorer we're getting, aren't we?"
11:06 – Wait – a dawning intelligence is awakening in the press gallery. This might just be the working man's Budget: a potpourri (that's not very working man's) Bombay Mix of policies which will appeal to those distant creatures, Ordinary People. Having spent the whole of last year being hammered for providing a tax cut for millionaires, the chancellor may be feeling like he wants to dodge the bullet this time around. Meanwhile, Twitter informs me that today is #HappyDay. What terrible timing.
11:26 – There has just been an important development. The chancellor has appeared outside the Treasury, clutching his red box, and walked in a ridiculous fashion down to his waiting car. Osborne's walk has opened himself to a little criticism in the press gallery, it has to be said. He appeared to be sticking his bottom out just a smidgin too much. The arm holding the red box was so rigid it looked like he might have had some sort of correcting brace fitted underneath. Let's hope his delivery at the despatch box is a bit more free-flowing.
11:30 – Moments later, I spy the chancellor's car entering the Palace of Westminster gates below from my desk next to Big Ben. I didn't have to pay to view this. I'd have happily rented the window to the Skycopter, no problem. Hopefully they'll just get in touch next time.
11:43 – There is a moment during labour when a mother-to-be enters a weird mental state. It's called the moment of transition, when the uterus switches from unfolding itself to pushing the baby out (or something). It's typical for the mother to want to go home, or enter a state of utter denial that this horrible event is actually about to definitely, undeniably, unavoidably happen. They announce they are leaving the hospital and going home, or they try and hide in the toilet, or anything to avoid confronting the reality of what is going to happen in the next few hours. I feel a bit like that now.
12:00 Prime Minister's Questions
11:55 – Before George Osborne stands up for the main event at 12:30, we've got prime minister's questions as per usual. This is about as irrelevant as PMQs comes; on the other hand, it's about as good as warm-up acts get. politics.co.uk's editor Ian Dunt has done up his top button and stalked off down the corridor to the chamber, so it's very nearly time to get underway.
11:59 – In the Commons , Cabinet Office questions is just wrapping up. It's on occasions like these that the chamber becomes far, far too small for its purpose. MPs are cramming in wherever they can. So here's an alternative wiggle room metaphor: George Osborne has as much wiggle room as a backbencher during his Budget statement.
12:01 – Meanwhile the chancellor has just tweeted for the second time. He "won't be tweeting while I'm speaking", he tells his 20,000-plus followers. There will be many more by the end of the day. Big Ben is now bonging, which Speaker John Bercow takes as a prompt to begin the session.
12:03 – Tory Philip Davies calls for a "blue collar Conservative Budget". He suggests cutting spending on aid, prompting him to get booed by his fellow backbenchers. Cameron says that "there will be a tax cut for 24 million people in this country" – he's talking about the income tax personal allowance increase, of course. The PM has a long list of ways that the government is being marvellous, in general, on tax issues.
12:04 – Ed Miliband raises the situation in Cyprus with his first question. Cameron says this is a "sensitive and difficult time for the Republic of Cyprus". What about the British forces stationed out there, then? He says they "won't lose out", guaranteed, guv'nor. There's laughter in the Commons chamber as Cameron refers to the plane with ONE MILLION DOLLARS – er, euros – on board.
12:05 – Miliband is probing to find out what the UK government knew about the bailout before it happened. Quite an intriguing line of question, here. Cameron dodges it, saying the UK was out of the loop because it's not in the eurozone. "What we are doing is now waiting to see the action the Cypriot government and the euro group will agree," he explains.
12:06 – Miliband says this is about "confidence and trust in banks" – and thinks Britain ought to have been more pushy in getting involved in the issue. "We've made our view very clear," Cameron explains. And that's that: Bercow calls Harriett Baldwin, the Tory backbencher. Miliband is holding his fire for another set of three questions later on.
12:08 – Dame Joan Ruddock is worried about Lewisham hospital. She's listened to carefully before finishing, very powerfully: "Can anyone trust this prime minister on the NHS ever again?" Cameron fights back by blaming Labour for the PFI deal which has messed Lewisham's NHS care up. He seemed very well briefed about that. Next comes Gordon Birtwistle, the Lib Dem MP for Burnley, who reminds me of that chap who used to present Bullseye. I didn't understand a word of his question. Sorry.
12:09 – Time for Ed Miliband's second set of questions. This time he raises Syria, playing the statesman, and wants to know whether Cameron will seek a relaxation of the EU arms embargo. The Commons chamber is quiet as Cameron explains the discussions he had with the French president at the European Council. He wants the situation changed. "We should not be restricted for months and months ahead when we don't know exactly what could happen in Syria," Cameron explains.
12:11 – The problem is a lack of unity among the opposition groups – some of them are rather dodgy, he suggests. Cameron is happy to agree with Miliband. "Are we more likely to help the good elements of the opposition by standing back, or are we more likely to help by getting in there and shaping?" This is a serious, non-partisan discussion. But Miliband presses that it's important that the government gets this right. He cites top UN people who have worried about the situation.
12:13 – Cameron explains at length that there is a "slight similarity" between discussions on Syria and discussions on Bosnia. That's a rather interesting point for him to end with: if it wasn't for the Budget, that comparison would be worth writing a news story about. It's a powerful message the PM sent: look what happened in the Balkans. Do we want another disastrously delayed international response to that?
12:15 – Will welfare reform be Cameron's poll tax? That's the question asked by one Labour backbencher. Cameron is insisting "in every case" people will be better off in work. Huge cheers, now, for Henry Bellingham, who is concerned by road deaths in Norfolk. "We should never be complacent," the prime minister mutters, meaninglessly.
12:16 – Here's a snap verdict on the main exchanges: they were a non-event. Not often you get a goalless draw at PMQs. Ne-ext!
12:18 – Jonathan Ashworth, one of the highest-pitched Labour males, asks a resounding question about lowering the top rate of tax. Cameron is defiant, as you'd expect. Then Paul Uppal, the Tory, raises the contribution the British Sikh community makes to the country. Our top article of the week is on British Sikhs, you might be interested to learn. In the Commons, Chi Onwurah (Labour, rather unsubtle bright red top) asks yet another backbench question about social housing headaches and the bedroom tax. The PM has answered this question approximately 7,348 times in the last few months, so has his answer pretty well sorted by now.
12:21 – Lorely Burt, Lib Dem, is jeered by – well, everyone – for daring to ask a question. Her question about "women's empowerment" is barely audible over the din from backbenchers. Must be tough being a Lib Dem with a majority like hers (it's so thin it's barely there).
12:22 – Diana Johnson, Labour, suggests putting the Cabinet on performance-related pay and seeing how much could be saved. That question was dripping with sarcasm. Then Richard Fuller, the Bedford Tory MP with a barely-there beard, asks a loyalist question about business issues. Alex Cunningham, Labour, says the word "obscene" in relation to "next month's tax cut for millionaires". Is it something about the Scottish accent that makes the word "obscene" just a little bit more – well – powerful?
12:24 – I can't spot Osborne on the frontbench – in previous Budgets he's been leafing through his speech and making some last-minute amendments amid the din of PMQs. Not this time. Some last minute changes, perhaps?
12:26 – After a question on the president of Malawi's visit to Britain, which Cameron addresses by calling for more action against slavery, Lib Dem MP Duncan Hames gets in a bit of gloating about the personal allowance increase. He's being mocked. There's no other way of putting it. But Cameron stands by this "important action", and tries to take as much credit for the policy as possible. Vince Cable looks on, a twinkle in his eye, looking like he'd rather be somewhere else. Danny Alexander, the top Lib Dem in the Treasury, is busy nodding. He is more animated, but less so at the same time.
12:30 – Ah, I'm being told by someone in the press gallery that Osborne is "right there" in the chamber. Good to know. I'm a little preoccupied, trying to work out what colour tie he's wearing. Osborne is best priced 5/4 to wear a Tory blue tie at 5/4 while the chances of him wearing Labour red are 25/1, according to Oddschecker.com.
12:32 – "I look forward to the first tweet after the Budget this afternoon," Cameron declares after being asked what too many tweets make? He had suggested they make a "twat" back in the day…
12:33 – First, though, Caroline Lucas, the Green party MP, is asking a question about nuclear energy. She's not so keen on it. Cameron refers to a "fleet" of nuclear power stations. Is that really the right collective noun? This is important, but not as important as what's about to take place.
12:30 George Osborne's Budget statement
12:33 – Time for the main event. George Osborne delivers his fourth Budget. Prepare yourselves.
12:34 – There's cheers of approval in the chamber as deputy Speaker Lindsay Hoyle replaces John Bercow in the chamber. Osborne is called. He begins: "This is a Budget for people who aspire to work hard and get on. It's a Budget for people who realise there are no easy answers to problems built up over so many years." He's wearing a blue tie, just to be clear.
12:36 – "I'm going to level with people about the difficult economic circumstances we still face." As his hopes slither away he's being bombarded with scorn from the opposition benches. Osborne is being more forceful than usual in tone – while actually saying things that make him appear rather weak.
12:36 – Chucking in such a prolonged partisan section at the start, blaming Labour for it all, doesn't bode well for what's to come. The heckling gets so bad Hoyle has to intervene and appeal for calm.
12:38 – Time for the economic figures. There's uproar in the chamber now as Ed Balls is rebuked. "He should know better," Hoyle fumes. "Let's not this become a circus of the day," he barks.
12:39 – Before giving the UK economy figures, he says the situation is very bad in the global economy and the eurozone. "I'll be straight with the country," Osborne says grimly. More uproar from the opposition benches as he builds up to the big number. The first number below is what the Office for Budget Responsibility predicted at the time of the autumn statement, less than four months ago. The second is what Osborne announces now, obviously. The news is much worse than expected. Halved growth is a real shocker. We were expecting 0.8% at the worst.
2013 – 1.2% REVISED DOWN TO 0.6%
2014 – 2.0% REVISED DOWN 1.8%
2015 – 2.3% STEADY AT 2.3%
2016 – 2.7% STEADY AT 2.7%
2017 – 2.8% STEADY AT 2.8%
12:43 – On employment, the chancellor has cause to be a bit more chirpy. Then it's time for the deficit state of play. More bad news, it appears, as Hoyle again is extremely robust. The complication is the Royal Mail pensions assets, however.
2011/12 – deficit was 7.9%,
2012/3 – 6.9% (with Royal Mail assets) – 7.4% excluding Royal Mail assets
2013/4 – 6.1% REVISED UP TO 6.8%
2014/5 – 5.2% REVISED UP TO 5.9%
2015/7 – 4.2% REVISED UP TO 5%
2016/17 – 2.6% REVISED UP TO 3.4%
2017/18 – 1.6% REVISED UP TO 2.2%
12:46 – On borrowing, by my count the situation is getting worse. You wouldn't think it from Osborne's rhetoric, however.
2012/3 – 108bn REVISED UP TO 114bn
2013/4 – 99bn REVISED UP TO 108bn
2014/5 – 88bn REVISED UP TO 97bn
2015/7 – 73bn REVISED UP TO 87bn
2016/17 – 49bn REVISED UP TO 61bn
2017/18 – 31bn REVISED UP TO 42bn
12:47 – The usual smoke and mirrors in the actual statement, then. A simple comparison of the key figures shows the OBR's forecasts are significantly worse than those made on December 5th.
12:48 – Now the chancellor is moving on to reveal the nature of his "fiscally neutral" package. "Tax cuts in this Budget aren't borrowed, they're paid for," he explains. No borrowing here. Just more cuts. Not that he uses that word. Nor does he explicitly refer to Vince Cable, who he was slapping down there just as much as he was Labour.
12:50 – Despite some speculation the Bank of England is keeping its inflation target at two per cent. It will apply "at all times". Still, Osborne continues, there is going to be a new remit which requires setting out the "trade-offs" required. Interesting. The open letter system is being changed so there will be "a more substantive change of views" between the chancellor and the Bank of England. Ie, a move towards politicising the situation a little more. Osborne is also saying "intermediate thresholds" might be deployed, as they are across the Atlantic.
12:53 – The chancellor says "rigorous financial management across Whitehall" is thoroughly important, ignoring the fumes from the National Union of Ministers. Again he's deploying those departmental underspends, used for the first time to get some more cash in the autumn statement. This is why the one per cent cut is taking place, he suggests. Schools and health budgets are protected; local government and police allocations are also not being affected. Exactly as expected. On the 0.7% aid target, the chancellor is also holding firm. "We should all take pride in this historic achievement for our country."
12:54 – £11.5 billion of savings will be sought in the 2015/16 spending review – a major reduction which is going to be thoroughly painful, and worse than the £10.5 billion previously slated. "Existing protections apply," Osborne explains. Cameron is looking very grim as he listens to Osborne's statement. He seems to have aged about five years in a moment.
12:56 – Oh dear – the chancellor's perennial cough is developing now. He's having a bit of a spluttering fit now, prompting the usual jibes from the opposition. Once recovered, he confirms the pay rise for armed services personnel. Public sector pay is being held at one per cent for a further year. That's a big story in itself.
12:58 – Now Osborne is saying there has been a £3.5 billion of savings from Europe. He talks about a new spending limit, making it harder for departments to get "out of control". We'll need to see a bit more detail on that – but it sounds very alarming to the secretaries of state…
13:00 – Time to look at capital spending, now, which he says would have fallen back by 2015/16. There's going to be a £3 billion annual boost from 2015/16, he announces. "By investing in the economic arteries of this country we will get growth flowing to every part of it." He's putting off revealing any detailed plans until June, however.
13:02 – A long list of "success stories", talking about growth in general terms following the Heseltine report and the industrial strategy, next. It just sounds like a summary of government press releases over the last few weeks.
13:04 – Some good news for Tristram Hunt, whose constituency in the potteries will get a boost by being exempted for some sort of ceramics levy. Hunt theatrically flaps his order paper around to fan himself.
13:06 – On a "competitive tax system", Osborne revels in KPMG's league table putting Britain at the top. He announces a range of measures which will help employers. Commuters can get their tickets paid for tax-free by employers in advance – a "great idea". Osborne cites the MP who came up with the idea. There's definitely a theme developing of him "listening" to backbenchers. A sharp contrast with Gordon Brown, for example, who didn't even listen to his prime minister. Osborne can't help politicking on this sort of thing.
13:08 – Next, to corporation tax. It's already been cut from 28% under Labour to 21% next year. "I want to go further," Osborne says, not for the first time. "Britain is open for business!" the chancellor says manically. It's going down from April 2015 to 20%. "That's a tax cut for jobs and growth," he declares.
13:11 – Time to tax avoidance and tax evasion next. Osborne presents an "inconvenient truth" – the rich are paying a greater proportion of their revenues in tax under the coalition than at any time under Labour. More Labour-bashing: "That is what I call fair." Deals with the Isles of Man, Guernsey and Jersey are being unveiled which will bring in £1 billion, he says. And there's more. "We will name and shame the promoters of tax avoidance schemes," Osborne declares. Lots of approval there in the chamber.
13:13 – Tax-free childcare for working families. £1,200 for each child, Osborne declares, outlining what we were already told yesterday. The new single tier pensions is being brought forward to 2016, he announces. That's a feather in the cap for pensions minister Steve Webb. "Public sector employers will have to absorb the burden," he adds. Uh-oh.
13:14 – Osborne has been going for 41 minutes now, but there still hasn't been anything remotely exciting just yet. Is a rabbit going to come out of the hat before the end?
13:15 – In response to Osborne's "arteries" quote, @tustuleca asks us: "Are the poor the cholesterol?"
13:17 – The rhetoric is getting a little out of control now – this is one of Osborne's more florid Budget statements. The "new offer to our aspiration nation" is… something to do with property buying. "Help to buy" is the solution, he announces. This will fix the problem "in a dramatic way". There are two components: spending £3.5 billion on capital spending to shared equity loans, from the start of next month. A five per cent deposit from your savings will result in you receiving a loan totalling 20% of the value for first-time buyers – it's now available to anyone of all incomes, he explains, for all new-build properties. "It's a great deal for homebuyers, it's a great support to homebuilders."
There's more, too. A new mortgage guarantee is being made available to lenders, allowing them to provide an extra £130 billion of mortgages from 2014 to three years. THAT is the rabbit out of the hat. "For anyone who can afford a mortgage but can't afford a big deposit, our mortgage guarantee will help you afford to buy your own home."
13:21 – I sense Osborne is starting to wrap up now – but first he's looking at duties. On fuel duty, where Osborne moved dramatically in the autumn statement, he now announces the issue. Once again, lots of name-checking. Osborne cancels the September fuel duty increase. "Petrol will now be 13p a litre cheaper than if we'd not acted over these two years," Osborne says. Cameron looks like he's witnessing the Second Coming. Or at least, it will be cheaper for him to drive down to wherever it's taking place.
13:23 – "BEER!" The way the chancellor says it is full of relish. So much for the beer duty escalator. But wait! He's actually CUTTING beer duty by one pence. "We're taking a penny off the point!" he says. The Commons becomes delirious with excitement.
13:24 – Deputy Speaker Hoyle tells Labour backbenchers off for indulging in a bit of panto. Time for the personal allowance on income tax, now, as the barrage of Good News continues. This is going up to £10,000 from next year. Absurdly theatrical cheers from the Lib Dem benches, who have obviously been looking forward to that for the last 51 minutes. If not longer.
13:26 – Now time to look at the "concept of a 10p tax rate" – one which Osborne lashes Labour for introducing, abolishing it, then reintroducing it – etc, etc. Then, finally, it's time for a "jobs" tax change. He's going to use the money from national insurance tweaks to implement "the largest tax cut in this Budget". The 'employment allowance' takes the first £2,000 off the employer national insurance bill off every country. "It is a tax off jobs," Osborne explains. He says 450,000 small businesses will pay no jobs tax at all. Huge, huge Tory cheers.
13:28 – NOW he's wrapping up with a list of this Budget's key headlines. The key is to "energise the aspirations of the British people", he explains. "If you wanna work hard and get on, we are on your side," he yells. "This is a Budget that doesn't duck our nation's problems – it confronts them head on. It's a Budget for an aspiration nation. It's a Budget that wants to be prosperous, solvent and free – and I commend it to the House."
13:30 – That was received with a lot of warmth from Tory backbenchers. The Budget always gets a barnstorming welcome, but this one seemed especially rousing. Which, given the bleak economic news underpinning it, is something of a minor miracle.
13:30 Ed Miliband's Budget Response
13:30 – Some rather painful procedural details in the Commons chamber, now, before Ed Miliband stands up. He instantly commences some audience participation by getting Labour backbenchers to yell "DOWN!" Hoyle has to intervene to shut up the Tories, now, once again.
13:33 -"I cannot understand an opposition that doesn't want to hear its own leader," Hoyle roars. He is very well respected, really. I'm sure Ed Miliband will say something worthwhile sooner or later. When he does, I'll write it down. And then you can read it.
13:34 – Pardon me. You can tell me I'm starting to suffer Budget fatigue, and it's only half 1. Especially as Miliband is starting to make the very good point that, ultimately, the government's economic policies are not working. "It's a downgraded Budget from a downgraded chancellor," he declares. He then gets in a rather personal jibe. "He has secured one upgrade this year: travelling first class on a second class ticket." He then references the chancellor being booed at the Olympics. "Stay away from the Cup Final, even if Chelsea get there," Miliband continues.
13:37 – Osborne's claims that the situation is under control are nothing but "nonsense", Miliband says. "The prime minister says from a sedentary position 'borrow more' – YOU ARE BORROWING MORE!" That's rather animated from the Labour leader. More, please.
13:38 – Now Miliband is getting into his stride. He points out the "deal" Osborne offered voters in 2010 was four years of austerity. Now, three years later, he's saying exactly the same thing. "After all the misery, all the harsh medicine, all the suffering by the British people, three years, no progress – deal broken!"
13:40 – Another truism now from Miliband: "The chancellor is lashed to the mast." It's because "he is the prime minister's last line of defence – the Bullingdon boys really are in this together". Pretty coruscating stuff, here – I don't remember Miliband doing better. He's not being cheeky – just a little bit of a bully himself. And for someone more used to being kicked, this is impressive work.
13:41 – "The chancellor is giving with one hand and taking far more away with the other," Miliband continues, citing George Osborne's own tax arrangements.
13:43 – "Hands up if you're not getting the 50p tax cut," Miliband says to the Cabinet. They're all not budging. This is agonising stuff, excellently puerile politics from Miliband. Justine Greening looks especially red-faced, oddly. Great fun.
13:46 – Miliband mentions Osborne joining Twitter for the first time. He suggests this tweet from George: "Growth down borrowing up families hit and millionaires laughing all the way to the bank #downgradedchancellor." That's very close to the end of his speech, which finishes with the declaration: "Britain deserves better than this."
13:58 – I'm turning my attention to news, news, news, now, so come back to the site in an hour or so and we'll be bombarding you with comment, analysis, some more detail on those rabbits-out-of-the-habits. Thanks to the tweeter who liked my 11:43 analogy about this being comparable to giving birth. The difference is that, while mothers get the delight of holding a newborn infant in their arms at the end of it all, reporters covering the Budget are just left with a mountain of work to wade through. Happy International Happiness Day, everyone!
