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In summary he's going to be spending £683bn in 2012/13 of which £592bn will be raised in taxes, and £92bn borrowed. Last year he spent £710bn so at first glance this looks like a £27bn drop in spending! But no, the government is taking on the Post Office's pension fund preparatory to selling it off. This gives it £28bn of assets, which have been applied to the "Other" slice of the pie, so in the top chart above the £43bn Other should really read £71bn if they were being honest. (Unfortunately the government is also acquiring the PO's pension liabilities, which are larger than the assets.)
Osbourne forecast that GDP growth for this year would be +0.8%, this is quite a reduction from his +1.7% prediction in Budget 2011, but it still on the right side of zero.
For the record his future predictions (from the OBR) are:
Year GDP delta 2011/12 +0.8% 2012/13 +2.0% 2013/14 +2.7% 2014/15 +3.0% 2015/16 +3.0%The numbers for future are likely to be complete fiction of course.
The numbers for the deficit were given as:
Year Deficit 2011/12 £126bn (including PO pension) 2012/13 £120bn 2013/14 £98bn 2014/15 £75bn 2015/16 £52bn 2016/17 £21bnThe deficit is now planned to hit zero in 2017/18, after which we can start thinking about paying off the debt.
The chancellor confirmed what had been widely leaked, that he will be looking at issuing very long term gilts, and perpetual gilts. He seems motivated by the fact that the UK is currently borrowing at a very cheap rate, cheaper than the UK has ever borrowed in fact, and he wants to "lock in" that rate, eg when a 30-year bond matures he would roll it over into a 100-year bond. This is a good idea for the government, it wouldn't be a good idea for anyone actually to buy one of these bonds (unless they're index-linked, which they won't be) since in 100 years the real value of the capital is likely to be zilch.
Osbourne announced various incentives for business to stay in, or come to, the UK - much focused on video gaming and the like. He also announced a corporation tax reduction from April 2013 to 24% - down from 28% when the collation came to power and significantly lower than most other Western countries.
He confirmed that all taxpayers in contact with HMRC would received a personal statement of the tax they paid, and how it was spent, from April next year. Also from April next year the personal allowance will rise to £9,205, the aim is to get it to £10,000 within the parliament.
Osbourne finally tried to do something about his disastrous Child Benefit proposal. Previously it was to be stopped when either parent earned more than £42,500 ish - that limit has been raised to £50K - and it will now taper off at 1% per £100 earned, so all gone at £60K.
This is still pretty dire. A couple earning jointly £99K keep their Child Benefit while a single parent earning £60K gets nothing. This issue is not going away any time soon.
The 50% top rate of income tax is being reduced to 45% from April next year. Supposedly the 50% rate earns the exchequer nothing anyway. (I'm not sure I believe this!) George is hitting the rich through their houses instead.
Stamp duty land tax (SDLT) for houses costing more than two million is going up to 7%. And to prevent that cunning dodge where a house is sold to a company and thereafter the company is sold not the house any house being sold to a "non-natural person" which attract a punitive SDLT of 15%! And George reserves the right to apply additional, even retrospective, charges on evil people who try this thing.
The current SDLT holiday for cheaper houses was not extended.
Those evil rich people are also going to have all the exotic income tax allowances they can claim capped at 25% of income as soon as they try to claim more than £50K in relief.
Osbourne repeated his intention to simplify income tax and national insurance into a single tax. He has been saying this for several years now, but so far no action.
Alcohol, no change; fuel duty, no change, ie will be going up by 3p in August, he didn't cancel the rise, some thought he would; cigarettes, an extra 37p on a packet of 20 from tomorrow.
Gambling taxation is to be changed, the aim being to get all those offshore firms back onshore, mainly by taxing them just as much offshore as onshore.
There will be seven Sundays of relaxed trading rules to cover the Olympics, starting on July 22nd - just so the nation of shopkeepers can gouge every last tourist dollar. (And why not?!)
The second state pension, SERPS, whatever, is being merged with the basic state pension. An earnings-related element will remain. This had been telegraphed to the pensions industry ahead of time so no surprise.
Planning permission is to be simplified, one thousand pages of regulations will become 50 pages. This is supposed to help inward investment.
The plan is make public sector wages "responsive" to local conditions, ie pay civil servants less out in the regions, was confirmed. This was already announced last year anyway.
Overall conclusions: a budget of little change, nothing surprising or inventive about it; most of it had been leaked ahead of time by the government anyway.
The big surprise of the afternoon happened after George Osbourne sat down. Ed Miliband got up to respond and was actually rather good. He aimed at the easy target of the reduction of the 50% tax rate and hammered away at it. He invited all the members of the cabinet sitting in front of him to indicate whether they would benefit personally from this but not one of them would so much as nod or shake their head. Transparency in government - none!