Budget 2009: As-it-happened
Read minute by minute coverage of prime minister’s questions and Alistair Darling’s 2009 Budget.
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11:00 – One hour until the most depressing festivities on Earth begin. From an entirely professional standpoint, it seems inconceivable that the Budget should be announced on the same day official figures show 2,000 people are losing their jobs daily, but that’s how its happened. We’ll be live blogging until the last of the opposition spokespeople comments, but stick with politics.co.uk for the instant response of MPs in parliament throughout the afternoon.
11:21 – The chancellor is outside Downing Street, holding the old, rather battered Budget box. He’s surrounded by a variety of forced smiles, most of which come from Cabinet members.
11:26 – The mood in Cabinet this morning was “quite serious”, we’re told, despite the giggles on show for the cameras before the meeting got started. Gordon Brown told his ministers that the Budget would prioritise growth, jobs, and investment in the “new economy of the future”. Alistair Darling warned that the government could not be complacent. Now that is a laughing matter.
11:36 – The government, as usual, is keen to point out Britain is doing much better than other comparable countries like Germany, Italy and Japan. When Darling finished working his way through the same old explanation about it being a global downturn – really? – the focus turned to a need to “get through the difficult period” with investment and growth. Preventing temporary unemployment becoming permanent is a key priority.
12:00 – PMQs kicks off. It’s worth noting, by the way, that it’s opposition leaders – not shadow chancellors – who respond to the Budget. Not everyone knows that.
12:04 – Cameron gets up. He says the unemployment figures are a reminder of the human tragedy at the heart of the recession. Is this the fastest increase in unemployment in our history? “That’s exactly why…” Brown starts. The Tories make so much noise he has to stop. A Tory speaking particularly loudly gets a glare from the Speaker. “Order! Don’t tell him what to say,” Michael Martin says.
12:05 – “The fact is his schemes aren’t working,” Cameron says, in a soft-toned and very-reasonable sounding voice. It contrasts well with Brown’s disposition to get irate. Brown is in statistic/scheme-listing mode, trotting out facts endlessly. Cameron goes for the common touch instead. Beside him, George Osborne looks supremely ill. Brown throws comparisons between now and 1997 in terms of youth employment and education. It’s unconvincing. Darling looks… well, he looks nervous.
12:08 – “What we’ve heard is a complete failure to address the facts,” Cameron says. Since Labour got to power, unemployment is up. Cameron must have been waiting years to say that. “Let me try another fact,” he continues. In terms of the recession – are we now in the deepest recession since the second world war? Brown says he’s glad he asked that. In early 1990’s the Tories did nothing when people became unemployed, and who was the chief advisor to the chancellor at the time? The leader of the opposition. Cameron retorts: Perhaps we can talk about some of your advisors and what they’ve been up to – referring of course to Damian McBride. “As well as bringing the country to the brink of economic bankruptcy, he’s brought the party to the brink or moral bankruptcy as well.”
12:11 – Will Brown admit he didn’t end boom and bust? It’s hard to believe the Tories are still going on about this. But it’s also difficult to believe Brown won’t just say it. “On this day of all days, on this day of judgement, let me have one more go,” Cameron says. “What is it about the prime minister he won’t admit what everybody knows – he didn’t end boom and bust?” Brown looks battered. James Grey – Tory – gets a scolding by the Speaker. The Tories are trying to control their jubilation. They are struggling with that.
12:14 – Nick Clegg lists off the PM’s promises. It adds up to a million new jobs. Will he tell the jobless exactly how many have been created so far? Brown says he believes hundreds of thousands of jobs which could have been lost, have not been – but urges him to wait for the chancellor to give a precise figure.
12:15 – Clegg’s on the attack. He slams the electrical car proposals – what’s the point of subsidies for cars which don’t even exist yet? he asks. The MPs enjoy his newfound passion, making handbag signs and shouting: “Oooo”. Brown backs up his record – “I ask him on green technologies to wait for the chancellor’s remarks.”
12:17 – The backbenchers are up now. They may as well not bother. Hardly anyone cares about the leader’s contributions on Budget day, let alone back bench comments. Simon Hughes – who has a fairly healthy public profile – stands up to ask about Sri Lanka. Will Brown bring proposals for a ceasefire to the Commonwealth and others? He wants monitoring and urgent political action. Brown: “There are many members of this House who are very concerned and dismayed” about Sri Lanka. David Miliband nods unconvincingly as Brown says how involved the two of them are. A Dfid minister will go to the country this week to push for humanitarian help and a ceasefire.
12:22 – Nadine Dorries, one of the Tories smeared in the McBride emails, stands up to loud cheers and asks him to apologise to her personally. He skips his way around it, reiterating his previous letter and apology and saying there’s “no place in politics for” this sort of thing.
12:24 – Beyond writing the word ‘dejected’ over and over again, it’s difficult to describe the mood on the faces of the Labour frontbench. There are happier funerals.
12:25 – There’s something emphatically distasteful about the high jinks on display in the Commons today. MPs tend to get excitable when the House is the centre of attention, but they would do well to remember the seriousness of what’s being discussed. The unemployment figures should have brought them back to earth. They evidently haven’t. Tory backbenchers are slamming Brown on his MPs’ expenses proposals. He says it’s up to the Commons to decide.
12:29 – The deputy Speaker has taken the chair for the Budget statement.
12:31 – Here we go. “Taken together this Budget will build on the strengths of the British economy.” It’s guided by core values. Today’s Budget will take Britain through one of its most serious economic downturns.
12:33 – The Budget apparently builds on pre-existing actions – including the G20 summit. He says the economy is expected to start growing again towards the end of this year. Rather optimistic. “Britain can and will be a world leader,” he says. Darling gives us a timeline of the world crisis – from bank failure onwards. He frames the world downturn, with the clear suggestion that things in France and Germany are worse. He argues, rather quickly, that bank lending will soon begin. The previous actions are now filtering through the economy.
12:37 – It’s remarkable, and totally against most prediction (including mine) that Darling is sticking to his 2009 forecast. Half a million jobs will be protected by government action, he argues. “There are no quick fixes,” but because of domestic and international action the world can move out of recession quicker. When he stresses how high employment was when the UK hit the downturn, the first murmurs of Tory discontent are heard. Previously, you could hear a pin fall.
12:41 – He confirms the economy will shrink by 3.5 per cent this year – as experts had predicted. Growth of 1.25 per cent in 2010, he says. From 2011 – growth of 3.5 per cent. The Tories laugh horribly. The retails price index will remain negative until moving back to zero next year. But it will hit minus-three per cent by September. The recession has had an impact on public finances, he says. The current deficit is expected to halve in four years, due to the measure to be announced today. That’ll be interesting.
12:44 – The VAT reduction will continue until December. There will be more funding to help with unemployment support. The inflation target is two per cent. Brown is fascinating to watch – like an old guard dog with nothing to do, occasionally nodding his head.
12:49 – The employment support will constitute an extra £1.7 billion. Housing plans coming up: The stamp duty holiday on homes under £175,000 will be extended until the end of the year. £80 million will be added to the shared equity scheme.
12:51 – There will be a scrappage scheme for old cars. Peter Mandelson will announce more details shortly.
12:56 – There will be new funds for higher education. The bank bailout will cost 3.5 per cent of GDP. Loss making companies will have help with reclaiming tax extended. We’re on to public finance. Hold on to your seats. To cut services would lead to “higher, not lower debt”. Public sector net borrowing will be £175 billion in 2009/10. It should fall by 2015/16, he says. Public spending growth will be cut from 1.1 per cent to 0.7 per cent from 2011/12.
12:58 – Pensions tax relief is coming into line. It’ll be restricted for those over £150,000. The 45 per cent new rate of income tax – for those in that same top income bracket of £150,000 – is being changed to 50 per cent.
13:02 – Alcohol duty goes up by two per cent by midnight tonight. Tobacco duty goes up by the same amount by 18:00 BST. New duties will raise £6 billion by 2012. There’ll be £9 billion of extra efficiency savings by 2013/14.
13:04 – £1 billion will be dedicated to fighting climate change. Still trying to get our heads around these figures, but the suggestion is national debt will peak at 80 per cent.
13:06 – A Treasury paper on banking regulation reform will soon be published. Risk and liquidity – things like that. It will propose action on reducing the impact of failed financial firms. Fuel duty, by the way, rises by 2p per litre from September.
13:07 – £500 million of extra financial support will go to housing projects stalled because of the downturn. £100 million will go to local authorities to increase energy efficiency. £50 million will be brought forward to accelerate the modernisation of armed forces housing.
13:11 – There will extra funding to expand broadband across the country. A new target: 34 per cent reduction in carbon emissions by 2020. At this early stage we can already start talking about a firmly left-wing Budget. The income tax aspect is the political message, but the increased borrowing is bound to make the City angry.
13:17 – Statutory redundancy pay will increase. From April next year, the child element of the child tax credit will increase by £20. Grandparents who care for their grandchildren will have their contribution added to their basic state pension entitlement.
13:21 – Darling ends the statement. Cameron follows.
13:23 – “Today, everyone can see what an utter mess this government has made,” he begins. “As of today, every claim they have ever made to economic competence is finished.”
13:27 – “Instead of putting up taxes in 2011, why doesn’t he get to grips with it now?” Cameron adds that they have broken a manifesto promise not to increase the top rate of income tax, “by the way”. He continues: “These aren’t taxes for the few. These are taxes for the many. Every single prediction they have made is wrong. This isn’t just boom and bust. It’s the worst boom and bust ever.”
13:30 – Cameron’s getting rather theatrical, picking up the Budget and asking “where is it?” about a new fiscal stimulus, and then rubbing in Mervyn King’s opposition to it. He’s now the precise opposite of his calm PMQs self: red faced and visibly angry. If he’s putting it on, he should stop. He was far more convincing when he appeared statesman-like. He almost looks flustered. On the other hand, Harriet Harman is wearing a terrible expression, as if she’s watching something awful happen to a relative. Darling is inconceivably neutral, like a machine that’s been switched off. The Tories are too happy for their own good though.
13:37 – He sits down, looking rather nervous, actually. It’s a lot of pressure. We’ll have to wait a while for the Liberal Democrat response.
13:57 – Clegg is up to speak. He calls on MPs to remember the great Budgets – ie: the People’s Budget. It was their coherence which made them special. But today, we got a mismatch from a government incompetent at delivering practical help. “He could have given a People’s Budget for the 21st century. Instead we got a politician’s Budget.”
13:58 – Clegg laughs at the forecasts as overly optimistic. If Cameron was too theatrical, then Clegg could use a little more animation. He appears principled
and honest but not entirely engaging. The biggest failure of all is it’s failure to sort out Britain’s unfair tax system. Britain’s taxes are too heavy on those who can’t afford it and too easy to avoid for those who can.
14:01 – The new top rate will only bring in £200 million, so it’s pointless. This is the consensus already – just minutes after its announcement. The plan is designed to prompt political discussion, but economically it’s irrelevant. OK, that’s it for the politics.co.uk live coverage, but stay on-site for all the reaction from parliament, as well as comment and analysis.
