George Osborne started by telling us that growth was up (his March prediction is now doubled to 1.4% for the year), the deficit is down, employment is up and unemployment is down (strangely these two stats can move independently of each other - there are a whole bunch of people who are neither employed not unemployed, nor even self-employed) and there was no double dip recession after all.
Chancellor: Santa Claus arrives early
For the record his GDP growth and deficit predictions are now:
Year Growth Deficit 2013/14 1.4% £111 bn 2014/15 2.4% £96 bn 2015/16 2.2% £79 bn 2016/17 2.6% £51 bn 2017/18 2.7% £23 bn 2018/19 2.7% £Zero!
Most of these numbers should be ignored, but this year's might be accurate.
He now predicts that the deficit will reach zero in the year 2019, so pretty much the end of the next parliament. In his first budget in 2010 he predicted a zero deficit in 2015 so a pinch of salt is required here.
Next he came out with a few austerity measures: overall welfare spending to be capped (excluding state pensions and job-seekers) so presumably as claims go up the entitlement will go down. He will be taking £1 billion out of Whitehall's admin budget and applying capital gains tax to foreigners who sell houses here and also reducing landlords' CGT relief.
After these minor items of no great import he was into the give-aways:
- £100 mil of LIBOR fines to go to military charities.
- State pension up £2.95 a week.
- Investments in infrastructure/quantum technology/shale gas
- £1 billion in loans to build to houses.
- Councils to sell expensive council houses to buy more cheap ones.
- Right-to-buy your council house extended.
- Free school meals for all for the first 3 years of school (was previously first year only.)
- Funding for 20,000 more apprenticeships.
- Removing cap on University places; sell student loan book to fund this.
- Business rates reduced for small businesses.
- Cancel employer's national insurance on under 21-year-old employees.
- Marred couple transferable tax allowance of £1,000.
- Council tax freeze to continue until 2015.
- Fuel duty: 2p rise due in April cancelled.
- Train fare rises capped at inflation (were going to be 1% above inflation.)
The other change was that people over pension age can continue to make voluntary national insurance contributions to increase their pension when they finally claim it.
This could be interesting to private sector workers who do not have index-linked pensions since the state pension is guaranteed to go up by the highest of inflation, average wage increase or 2.5%. So contriving to put your eggs in this basket is very attractive to defined-contribution pensioners.
Fifty minutes after standing, Osborne sat down and up jumped Ed Balls to respond for the opposition.
Balls: It's not prices that are frozen but people
This was a difficult task for him due to all the give-aways, but he made two very good points. First he hammered hard on the fact that despite the GDP growth people's living standards are falling and have been for the entire duration of this parliament (this is because price inflation has been higher than wage inflation since 2007).
He also derided the Chancellor for borrowing more in 3 years than Labour did in 13 years - which is pretty sobering when you think about it, considering that Labour borrowed three times more that the total borrowing of all previous governments since governments were invented.
And that wrapped it up. The markets barely budged. It was not a statement likely to have any great impact.