Full coverage of chancellor George Osborne’s Budget
Corbyn ridicules chancellor’s Ebbsfleet announcement of two years ago. “The government has been very busy, and put out 30 press release, and built over 250 homes. That’s nine homes per press release,” he says. He also notes the North East has just 1% of the projects in the national infrastructure pipeline, despite the northern powerhouse.
Corbyn ridicules Osborne for “March of the makers” rhetoric - manufacturing is smaller than it was. Osborne says “We are the builders” - since then the construciton industry has been stagnating he says.
Corbyn starts “A culmination of six years of failures” Raises laughs from Tory MPs. Failed on debt, failed on productivity, failed on the welfare cap, failed to tackle inequality in this country. Growth revised down this year every year of forecast, business investment revised down he says. “This budget has unfairness at it’s very core.”
There’s lots of speculation on twitter about the surplus prediction for 2019/20 - many say it is unreasonable to expect government books to swing from £20bn deficit in 2018/19 to £10bn surplus in 2019/20
While we’re waiting for JEremy Corbyn’s response, we’ve had some reaction in on the decision to cut the Carbon Reductions Commitments from the UK Green Building Council. Policy advisor at the UKGBC, Richard Twinn, said: “It’s a big deal in terms of the fact this was quite a significant policy but it became a bit of a lame duck in the last few years so it’s not a huge surprise. After a while it reduced incentives and just became a tax, and there was also overlap with over schemes.”
He’s summing up again. “The storm clouds are gathering again - we act now so we don’t pay later.” This is a budget that gets investors investing, savers saving - a low tax enterprise Britain. “I commit to the house a budget that puts the next generation first.” He sits down.
Now final measures, he says. Raising tax free personal allowance - a typical basic rate payer will pay £1000 less than when came in to government in 2010. No-one paying the 40p rate under income of £43000.
New flexible way for the young to save - a “lifetime ISA”. Anyone under 40 save up to £4000 each year - the government will give you £1000. It’s the equivlent of tax free savings into a pensions. The Help to Buy ISAs will be able to be rolled in to this.
Now he’s talking about pensions - where he says no consensus gained about proposals. Uses this moment to get the biggest laugh of the day by pledging to abolish the Liberal Democrats “I’m tempted to say from midnight tonight,” he adds.
Cut to capital gains tax from 28% to 20%. Tax will be kept on residential properties. “Putting rocket boosters on the back of business investment.”
Now the news on fuel duty - a rabbit of sorts - it’ll be frozen again, despite speculation that he would raise it. Surely Osborne wouldn’t have deliberatley ensured Treasury briefings suggested fuel duty would rise, only to make it look like he’d done something new by freezing it?
“Industry can act, and with the right incentives it will.. I’m not prepared to duck the difficult decisions.” Osborne announces a new levy on sugary drinks - addressed on volume of drinks they sell. It’ll raise £520m. He’ll use the money to double funding for sport, and pay for longer school days.
“Long term plan for the country”. Can’t do this without a plan for children’s health, he says, before talking about childhood obesity. Now talking about sugary drinks. A tax maybe??
Introduce a “fair national funding formula”. Our objective to get over 90% of schools on to the formula by the end of the parliament. Tomorrow will be a white paper on further improvements in education.
Now on to education. This also trailed today - so what will be the last minute surprise for the front pages? By 2020 every school will be in the process of converting to an academy. Focus on schools in the north
New Shakespeare North theatre on the site of the first permanent theatre outside of London, Osborne says.
Further big increases in flood defence spending. Raising it from increasing premiums on flood insurance, giving £700m extra for flood spending. This means raising it from people affected by flooding, essentially. Specific projects for Hull and others announced also.
National Infrastructure Commission section now. “Green light to HS3, new money for four lane M62, business case for tunnel road from Manchester to Sheffield.” “we’re making the northenr powerhouse a reality and rebalancing our country.” Accept recommendations on power and london trasponrt too - giving the go-ahead to Crossrail 2. All great news - but all trailed over the last few days.
Receipts from Stamp Duty to support Community Housing Trusts.
The GLA will get to retain business rates three years earlier than planned. And - this is a shock - Lord Heseltine to lead a Thames Estuary growth commission. Back to the Thames Gateway anyone?
Over half of the population of the Northern Powerhouse will be able to elect mayors in the next years, he says. Devolving powers over justice to Manchester. New combined authorities and elected mayors for East Anglia and the West of England - essentially Bristol and Bath. By the end of this parliament 100% of local government resources will be raised locally.
Now we’re on to another Osborne favourite - devolution to local powers. Opening negotiations with Edinburgh. Openind discussion for a city deal for Swansea. For 2018 will halve the price of tolls on the Severn Bridge crossings.
Carbon reduction commitment to be abolished - this is a big announcement. “It is not a commitment, it is a tax,” he says. Retailers have complained bitterly to him about it, he claims.
Making the same reform to stamp duty for commercial properties as he did for residential properties last year - abolishing the slab tax. Tax regime will come in to effect at midnight tonight. Will raise £900m a year, but smaller properties will pay less than now, he says. New commercial stamp duty bands will be 0 up to £150k, 2% to £250k, then 5% above that.
Now on to business rates reform - this could be important for the local growth/commercial development story. Small businesses will be exempt up to £15k in revenue. 600,000 small businesses will pay no rates at all. Half of all properties will see rates fall or be abolished all together. A typical hairdresser in Leeds will pay no business rates, he says. A conservative government which is on your side, he says.
Reforms to corporation tax - which are incredibly complicated - will bring in £9bn in extra taxation from firms that currently trying to avoid tax. He will use this money to lower overall rate of corporation tax to 17% by April 2020. “Britain is blazing a trail - let the rest of the world catch up.”
He’s on to tax avoidance clampdown now - the infrastructure bit will come later.
It’s starting to come now - “major commitments to infrastructure projects” will be announced, he says.
“Solid steady growth, more jobs…on course for a surplus. We’ve stuck to our long term economic plan,” he says. Few announcements so far.
Osborne makes a reference to the stamp duty reforms for second home owners trailed in the autumn statement - but, vitally, doesn’t give any details. There has been a solid backlash from developers and landlords to the proposals, which are likely to reduce demand for second homes, and the detail is key. We’re likely to have to wait until the documents are published at 13.30
Debt and deficit figures now - deficit to fall to 2.9% of GDP next year. Borrowing will fall to around £20bn by 2018/19. Because of further savings, by 2019/20 there will be a surplus of £10bn Osborne claims. “A commitment to decisive action in challenging times. We act now, so we don’t pay later. We put the next generation first.”
“This is a budget for the next generation.” This is the third time Osborne has said this already - it’s clearly being aimed as the tag line for tomorrow’s headlines
The OBR growth forecasts represent downward revisions for every year in the spending period, according to the FT
Paymaster general to undertake further efficiency drive to save £3.5bn in spending in 2020
Osborne confirms that public spending will hit a low of 36.9% of GDP by the end of the parliament.
Osborne’s former special advisor has been on twitter saying the revision down of productivity will herald an even worse downgrade to public finances than expected.
Real wages will outstrip inflation in every forecast year, according to the OBR
Businesses have created 150,000 more jobs than expected in the last forecasts.
OBR: Last year GDP grew 2.2%. It will be 2% this yr, 2.2% in 2017, then 2.1% for three years after that. These forecasts are predicated on Britain remaining part of the EU. The OBR says: “A vote to leave could usher in an extended period of uncertainty…this could have negative implications for activity in business and consumer confidence…There appears to be a greater consensus it will result in a period of disruptive uncertainty.” Osborne says the Birtish people should not put this hard work at risk.
Decision to revise down our potential UK productivity growth the most significant chnge in the OBR’s forecasts, Osborne says. Osborne says he is giving the country the truth: “We fix our plans to fit the figures, not fix the figures to fit our plans.” No hiding that this will be a difficult one for Osborne’s reputation for economic competence
Now he’s moving on to the OBR’s Budget forecasts - the question is how much worse will they be than the Autumn Statement forecasts from December? World economic outlook “materially weaker” it finds
He trails “investment to build homes and infrastructure.” Sounds like there will be something on housing, despite speculation that the Budget may be housing free
Osborne says a “dangerous cocktail of risk” in the world economy. “Britain is not immune to slowdowns and shocks.” We choose to put stability first, he says. “With this budget we choose the long term.”
He starts: “Today I report on an economy set to grow faster than any other major advanced economy in the world… and I report on a deficit falling each year and on course for a budget surplus.”
Prime minister’s questions has come to an end. George Osborne is about to step up
11.30 Hello and welcome to Building’s Budget 2016 live coverage. Please stay here for constant updates and full coverage of all the developments of relevance to the construction industry and built environment, as the news breaks. Click here for all our coverage so far.
Today’s Budget statement by George Osborne is being billed in the national press as the most “political” of all time – by which the pundits seem to mean sensible policy decisions and much-needed long term reforms (such as to pensions tax relief, which has been shelved) will be eschewed in favour of not upsetting the apple cart prior to the EU referendum. Osborne, we all know, has his eye on the prime minister job post Cameron, but Boris Johnson’s decision to join the Brexit campaign has catapulted him to the favourite spot to take over.
Meanwhile, Osborne’s ability to give voters a warm fuzzy feeling toward him with generous handouts and unexpected rabbits out of hats will be constrained by recent economic news, which has been pretty uniformly bad. Slower than expected collection of tax receipts, slower than expected economic growth both worldwide and domestically are likely to mean that Osborne will be on course to miss one of his key fiscal rules – to collect more tax than he spends by 2019-20. All this means further spending cuts are expected – though they may not need to be detailed now.
Nevertheless, while all this may be true, Osborne will no doubt find some baubles to dangle in front of the newspaper editors to generate tomorrow’s front pages, and he will attempt to do it while maintaining his self-declared image as a reforming chancellor interested in long-term structural changes.
For the construction industry, it is hard to predict what this will mean. However, we have already seen quite a few announcements in recent days, particularly over infrastructure, with the first three reports from the National Infrastructure Commission published, and today on schools. This includes:
- £300m of support for infrastructure to allow authorities to work up plans for Crossrail 2, HS3 and the development of sophisticated energy storage capacity
- £1.5bn to convert all state schools into academies by 2022. It is unclear what effect if any this will have on schools capital spend
- A £1.2bn city deal for the Cardiff Capital Region, including £50m to build a so-called “catapault centre” to incubate new business, the construction of a South East Wales Metro system, and electrification of the Valley Lines