Monday, November 24, 2008

Pre Budget Report: Live Blog

Fasten your seatbelts. You can comment in real time - comments are unmoderated.

4.38. Darling, needless to say, doesn't make any attempt to answer Osborne's points.

4.37. Ends with three questions. Really strong performance from George Osborne.

4.36. The State should live within the country's means.

4.33. Warns against following path of Japan which endured a decade of stagnation. Quotes Jim Callaghan: "You can't spend your way out of a recession".

4.32. Can't disguise the huge tax rises which are on their way for millions of families. £4 billion tax increase through NI. £100m more for NHS wage bill. £2 bn for British business. Precision guided missle at the heart of economic recovery.

4.31. German and French governments have ruled out cut in VAT. Borrowing money for a temporary cut and telling people their taxes will go up to pay for it is not much of a stimulus.

4.30. Half measures he announced were compensating people for 10p tax con. Then tries to withdraw measures he had announced before. Not much new.

4.30. Why is recession going to be worse here than everywhere else? Quotes IMF, European Commission.

4.29. Nonsense to say America is to blame. No American politician said they had rewritten the laws of economic.

4.28. Like a gambler who can't give up, thinks he can borrow his way out of debt.

4.27. All about the political cycle, not the economic cycle. Borrowing figures on a scale never before heard in the Commons. Double what was forecast just 8 months ago.

4.26. Giving away £20 billion and taking back £40bn including a tax on Middle Britain - an increase in NI. All Labour governments run out of money and all Labour governments bring the country to the verge of bankruptcy.

4.26. Osborne. Straight in with an attack. Accuse Darling of not admitting debt will be now £1 trillion. Decade of responsibility initiated by the PM.

4.25. 55 minutes. Phew.

4.23. Child benefit increase will come in three months early, and so will pensioners. January, not April.

4.22. Pensioners: pension credit goes up to £130 for couple - above indexation. Biggest increase since 2003., State pensions will go up in line with inflation.

4.20. Increase in child tax credit payments from April 2009.

4.19. Will go ahead with new car banding. Will phase in though. 2009 duty rates will only rise by £5. 2010 differential will come in. More polluting cars only by £30 not £90.

4.15.Increased mortgage insurance cover to £200,000.

4.13. Need to boost mortgage market. Repossession should be last resort. Lenders agreed to wait 3 months before instigating repossession orders. £15m of free debt advice.

4.09. £100 million more for energy insulation.

4.03. Will defer corp tax hike for small firms.

4.00. Small business. Temporary increase for empty property relief - under £15,000 rateable value exempt. HMRC will enable firms to spread tax payments for as long as they need. Exemption for foreign dividends in 2009.

3.58. Increasing petrol and alcohol duties to offset VAT cut.

3.57. Will tax most those who have done best out of last decade. 45p tax band for those earning more than £150,000 from April 2011. NI going up by 0.5% for all earners. NI will start at income tax threshhold. No one under £20,000 will pay NI. From April 2010 incomes £100-£140,000 will get their allowance reduced.

3.56. Increase in tax allowances will be permanent - and increase from £120 to £145.

3.54. Need to put money into economy now. Best way is to cut VAT from 17.5% to 15% until the end of 2009. Will come into effect on 1 Dec. Will return to 17.5% at beginning of 2010. Equivalent to £12.5bn gift to consumers. Retailers should pass it on as soon as they can. Will encourage spending and boost growth.

3.53. Bring forward infrastructure investment plans. £3bn will be brought forward from 2010 ti this year and next. Motorway capacity, social housing, build schools and energy efficiency.

3.52. Spending will increase by 1.2% in real terms.

3.51. Spending was £584 bn last year. Since 2004 £26.5 bn of efficiency savings. Will now find an additional £5 bn in 2010-11.

3.49. Sharp increases in debt relative to GDP. 41% of GDP this year then 48-53-57% in 2013-14. Wow.

3.47. 35% reduction in Corporation Tax from finance sector. Borrowing will be significantly higher than forecast. Rise to £78 bn this year and £118 next year. From 2010 will reduce to £105bn, £87bn, £70bn, £54bn and then in 2016 only borrowing to invest.

3.46. Debt will start falling by 2015-16. Asked NAO to audit Treasury's analysis of cyclical fiscal position.

3.45. "Significantly lower tax revenues in the medium term". Is abandoning existing fiscal rules. Setting a temporary operating rule. Whatever that means.

3.44. "Will do whatever it takes to support people through these difficult times". "Substantial fiscal loosening - £20 billion fiscal loosening between now and April 2010 - 1% of GDP".

3.43. Growth 1.5-2% for 2010, he says.

3. 39. "Because of size of our financial sector we will be more affected than others".

3.37. "UK economy faces this situation from a position of relative strength" Outrage on Tory benches. Darling then recites list of economic achievement. "We did fix the many roofs that needed fixing".

3.35 "Must make regulatory supervision more effective". Effectively saying nothing to do with us guv. Fingering Isle of Man and Channel Islands governments for lax banking regulation. British taxpayer cannot be guarantor of last resort, he says. He's set up a review.

3.33. "Unprecedenced global crisis". "Root of today's problems are in the global financial systems".
Says must restore and maintain financial stability. Causes of instability are global.

3.32. "Crisis began in America, as America itself has said". Didn't cause our borrowing, PSBR problems though, did it?

3.30. Here we go. "Economic uncertainties not seen for a generation". You can say that again. "Ensure sound finances so we can live within our means". He kept a straight face. "Slowdown will be shallower and shorter than would have been the case without these actions.

63 comments:

Andrew Allison said...

How many times is he going to say global?

Daily Referendum said...

Or America?

cyberknight said...

He must be spinning ...his lips are moving !

Andrew Allison said...

He must be joking; the UK economy has so little strength, it couldn't pick up a can of baked beans.

Oliver Drew said...

Brown looks smug...isn't that just sickening.

Andrew Allison said...

This is Darling in fantasy land. No-one believes the economy will pull around by this time next year.

Oliver Drew said...

2 percent growth by 2010...must be joking!!!!

Oliver Drew said...

"By 2015-16 we will again be borrowing only to invest"

What a joke!

Andrew Allison said...

How does he keep a straight face?

Oliver Drew said...

@Andrew Allison

Fear of the sack...fear of his seat being lost....

Andrew Allison said...

He is very proud of all the extra spending, but he fails to mention that the results are not worth the investment. Government is going to get bigger and bigger.

Alexander Hilton said...

What's your alternative plan - do nothing? let banks go to the wall? is unemployment still a price worth paying?

Andrew Allison said...

Oliver: Very true

Wrinkled Weasel said...

WV this is absolutely true, someone at blogger must have a GSOH...



Spinna


!

cyberknight said...

The borrowing figures for the next gazillion years are truly frightening...were all doomed to a big mortgage with middle east plc who will throw us out on the streets with our broken furniture when we cant make the repayments..

Andrew Allison said...

VAT at 15% for 13 months. He thinks it will encourage spending and increase growth. He does live in a fantasy land. It won't make a blind bit of difference.

cyberknight said...

Now we get to it...alcohol,petrol and tobacco revenues to rise to offset the vat cut !

Oliver Drew said...

Wow...talk about naive.

I predict that prices will not drop with the VAT reduction next week, but will increase by 2.5% in 13 months!

Then...keeping the price of petrol the same by increasing duty! HA! STEALTH TAX RISE ALERT!

Andrew Allison said...

This whole budget - as that's what it is - is dependent on the economy being back on the tracks in 2010. Do you see a gaping hole?

Newmania said...

This whole budget - as that's what it is - is dependent on the economy being back on the tracks in 2010. Do you see a gaping hole?


Its interesting how confident Brown is about seeing the future .His record for prediction has been uncanny has it not

Andrew Allison said...

I wonder how many changes in forecasts Darling will have in his last budget in March 2010?

Oliver Drew said...

This is a general election set-up I think - with the immediate implementation of lots of these measures and their temporary status, I can see Brown wanting to get an election out of the way in the next 12 months.

Blue Eyes said...

NI going up by 0.5% for all earners

Gee, thanks!

John Pickworth said...

I'm not an expert by any means, but all this sounds like a spot of deck chair rearranging?

Give some, take some, fiddle at the edges.

Is it merely designed to give the appearence of doing something so to excuse the massive Government borrowing? And where is this borrowed money going... I don't see much coming my way!

Andrew Allison said...

I thought that about half an hour ago, Oliver. Then after the election tax increases will bite.

cherami said...

Do hope that Osborne and Cameron just say 'interesting' and reserve their firepower for the next few months.
Mountains and mice spring to mind.

Andrew Allison said...

Where are people who have more polluting cars supposed to get the money from to buy a less polluting car?

cyberknight said...

Expect a snap election next year before these short term giveaways expire !

Oliver Drew said...

Definitely going to be an election after all those giveaways in January.

John Pickworth said...

Go George... give it to them :-)

John Pickworth said...

Brown and friends doing their usual chatting between themselves and not listening to the opposition... how rude!

Andrew Allison said...

I'm not sure about a snap election, but the Tories had better get their message across pretty quick, just in case there is.

Blackacre said...

With VAT not changing until next Monday, that has ruined this week (and therefore November) for shopping. Hope the retailers in difficulty can struggle through another week of 0 sales.

Andrew Allison said...

I'm not a fan of George Osborne, but he has to give the speech of his life and I hope he does. He's started well.

CMQ said...

Jesus christ! Osborne's on fire! So far...

Andrew Allison said...

He's come out all guns blazing. Keep it up, George.

cherami said...

He didn't even tackle the structural problems.

Osborne is doing extremely well - a most coherent litany of Labour failure.

Surprising and pleasing.

John Pickworth said...

Okay, I'm biased, but Osborne's speech is so much better than the one Darling delivered. Much better.

He's also making a lot more sense than that rubbish we were listening to over the past hour.

Jess The Dog said...

0.5% increase on NI! Ouch!

Has he mentioned any cutbacks in government expenditure? Unlikely....

John Pickworth said...

Jess The Dog said...

Has he mentioned any cutbacks in government expenditure? Unlikely....

Hahahhahahhahahaaaaaaahhahaaaa... and Hahhhahhahahahahaa!

The short answer is no.

They've gone barmy and MASSIVELY increased it.

CMQ said...

Well done George!!!!

cherami said...

Bravo, George. A real tour de force.

Darling already repeating the tedious mantras of NuLab.

Niall said...

Stupid question but if one earnt £20,500 is NI still payable?

Andrew Allison said...

A good response, but not telling us what the Conservatives would do. He can't leave it too long before he states there must be cuts in public services and I don't mean doctors, nurses, etc. I mean those doing non-jobs, QUANGOs and the scrapping of ID cards.

cyberknight said...

Jeff Randall on Sky says Darling has a credibility problem...

Andrew Allison said...

Jeff Randall also said he was surprised he could deliver his speech with a straight face.

Dick Puddlecote said...

Tobacco, Alcohol and Fuel duty increased. Even in a recession, Labour won't stop the declared healthist war on its own people.

http://dickpuddlecote.blogspot.com/2008/11/when-is-vat-cut-not-vat-cut.html

word ver. Perpi - cola with red bull?

Blue Eyes said...

Did Darling say how much the immediate tax rises (booze, fags, petrol) were going to raise to offset the cut in VAT?

If this is "tough long term decisions" then I'm an Icelander.

CMQ said...

The FTSE is up nearly 10% on the back of George's reply to darling.

Am I being a tad partisan?

Oliver Drew said...

@BlueEyes

He said that as the price of petrol, and alcohol declined with VAT loss and inflation dropping etc. Duty would increase to keep the prices more or less the same.

Basically...just as the petrol price drops they take advantage to nick a bit more...not that it affected the amount of borrowing they are going to do!

John Pickworth said...

Analysis on Skynews...

Once all the tax changes have kicked in: A basic rate taxpayer will be £25 a year better off. Someone earning £50k will be £500 a year worse off and a £200k earner £9000 a year worse off.

Also, FTSE nothing to do with the budget. I expect it to fall tomorrow once the markets have digested the numbers.

Doug said...

well done George Osborne. Gave them both barrels. Give me George as Chancellor any day.

Mark Senior said...

Footsie up over 9% Dow up , £ up against the dollar , Help for the poor and pensioners , a day of unremitting bad news for the Conservative doom and gloomsters who like to run down the British economy in the hope of it being a means of them returning to power .

The Raven said...

There's a word for people like Mark Senior - traitors.

The Raven said...

BTW, on a lighter note; has Darling always had that gigantic bald spot? I hadn't noticed it at all until today. Wouldn't be surprised if Brown shouting at him for the last fortnight caused his hair to fall out.

John Pickworth said...

Mark Senior said...

Footsie up over 9% Dow up , £ up against the dollar , Help for the poor and pensioners...

Is that it? That the best spin you can put on the bankrupting of the nation?

The FTSE rise was NOTHING to do with the pre-budget statement and the DOW certainly wasn't. Yes, Pound up slightly against the Dollar, as it has been all day but we're actually down against the Euro.

Poor getting some tax credits, if they can be bothered to claim the damn things. Workers getting £25 a year off their taxes. Pensioners getting an extra £4.50 a week... that'll be a big help won't it?

And we haven't even read the small print yet!

cherami said...

Why not cut income tax for the lowest paid? Cable.

We are taking the necessary steps to help people in these difficult times. Yvette Cooper.

Where on earth did NuLab find her? A purebred Brown lapdog.

MattyT said...

Oliver Drew said "Basically...just as the petrol price drops they take advantage to nick a bit more "
Anyone for a fuel price stabiliser?

MattyT said...

"BBC political editor Nick Robinson says ... there is not a "bombshell" in terms of a surprise, but there will be a "shock" for many when the changes kick in"

No surprise, just a shock. LOL. Wish I could use the appropriate language to comment on this type of Newspeak b******t.

Oliver Drew said...

@MattyT

Fuel price stabilisers are not something I've ever agreed with - but this is not what Alistair Darling is offering.

He is offering an increase in duty as the price drops, but no guarantee of a decrease once the oil price rises again.

neil craig said...

The final result is that we are going to see unproductive government becoming a yet bigger part of the economy & destructive regulation expand as well. National debt is going to increase massively by £512 bn plus interest & that absolutely nothing is being done to make any part of the economy more productive. It is all playing with money (& grabbing more of it for government).

(Nothing conforming to A Place to Stand's 16 points to encourage competitiveness & growth)

John Pickworth said...

Half percent increase in National Insurance will raise £8bn

The 45% tax rate will raise £1.5bn

Labour came to power with a £50bn surplus, currently sat on a £120bn deficit.

Expert's views seem to be concerned that the obscene borrowing is still based upon an overly optimistic forecast of a shallow and short recession. If its not, we're in for a world of pain.

M said...

To all those who are defending the government's VAT cut and new tax positions on fuel, alcohol etc...

Fuels (utility) are charged VAT at the reduced rate of 5% which is not affected by the cut in the top rate from 17.5 to 15%. This cut won't help anyone who is suffering as a result of increases in living costs due to gas or electricty prices - such as, those on lower incomes. The government have admitted that the increase in duty on petrol is because the price has fallen since the summer - thereby depriving the treasury of some revenues. Doesn't matter that the price in the summer was excessively high and was crippling to many.

Food and general grooceries, childrens clothes and other essentials are not subject to VAT at all - so yet again there will be little benefit. Deloittes have calculated that the cut in VAT on an average £50 shopping bill will amount to a saving of ... wait for it ... 53p! (more than enough to go on an economy saving spending spree!). On alcohol, just because the Chancellor didn't actually say it, it looks like they're increasing duty by around 8%.

On top of all this, official borrowing is "forecast" to be £118bn next year. Lets put that into context - the cost of the Olympics was forecast to be £9bn and is now predicted to cost £19bn (twice as much plus a billion for luck!), so I'm never sure that government forecasts are reliable (the Millenium Tent is another good example). If you add in the so called "investments" such as banks, PFI and public sector pensions, we're looking at a national liability of over one TRILLION pounds which is more than our GDP and effectively means that UKPlc is trading insolvently.

One more thing. This was supposed to be about fixing the economy. All about economics. So, how politically cynical is it to build up masses of debt now and to say that the tax rises (which will be huge) to pay for it will happen after the next General Election? Nice to know that HMG aren't being politically expedient at a time when we need them to be economically sound.

Difficult times call for difficult measures. Unfortunately, these measures look like making times more difficult.