Budget 2013: Main points and comment

Chancellor of the Exchequer George Osborne outside 11 Downing Street before delivering his budget: Picture: PA
Chancellor of the Exchequer George Osborne outside 11 Downing Street before delivering his budget: Picture: PA
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George Osborne will deliver his budget speech from the House of Commons at 12:30pm. The Scotsman’s political team will be providing live budget updates on this page and on Twitter, through the hash tag #scot_budget

KEY BUDGET POINTS

The Chancellor's first Tweet. Picture: PA

The Chancellor's first Tweet. Picture: PA

“Generous” new tax regime to promote early investment in shale gas

Beer duty escalator scrapped - beer duty cut by 1p

Petrol fuel duty increase cancelled

• Personal tax allowance to 10,000 pounds in 2014-15, a year earlier than expected

• New Employment Allowance will take the first £2,000 off the employer National Insurance bill of every company in the country

• Large new package of measures on tax avoidance and evasion to bring in £3 billion in unpaid taxes

Infrastructure plans to be boosted by £3 billion a year from 2015/16, a total of £15 billion over the next decade

Capital Gains Tax holiday to be extended

• OBR predicts UK will avoid a second quarter of negative growth and triple dip recession

• £11 billion underspend by Whitehall Departments

• Public sector pay cap of 1% extended by one year in 2015/16

Whitehall department budgets to be cut by 1% after £11 billion underspend this year, with protection for schools and health

THE SCOTSMAN COMMENT

Bill Jamieson: OBR growth cut Budget’s big talking point

John McLaren: Scotland set to lose out on oil revenue

Brian Monteith: Latest Budget a victim of Osborne’s thirst

David Bell: Raining on OBR’s optimistic forecasts

Graphics: Bill Jamieson sketches out GDP performance, public sector net debt and annual debt interest

GDP performance actual and latest forecast

2. Public sector Net debt (and previous forecast)

3. Annual debt interest charge (and previous forecast)

Hope these help

HOW THE BUDGET AFFECTS YOUR WALLET

• Beer duty escalator scrapped, but planned rises for all other alcohol duties maintained

Planned 3p rise in beer duty tax scrapped and replaced by a 1p cut in duty on a pint of beer.

• September’s planned fuel duty rise has been scrapped.

• New mortgage guarantee, sufficient to support £130 billion worth of loans, to help people who cannot afford a big deposit

New Help-to-Buy scheme for those struggling to find mortgage deposits will include £3.5 billion for shared equity loans, and a Government

• Cap-on social care costs to come in in 2017 and protect savings above £72,000, with the threshold for means tested help raised from £23,000 to £118,000.

• New Help-to-Buy scheme for those struggling to find mortgage deposits will include £3.5 billion for shared equity loans, and a Government interest-free loan worth 20% of the value of a new build house.

• Help for Equitable Life policy holders extended to those who bought with-profits annuities before 1992, with payments of £5,000 and extra £5,000 for those on lowest incomes.

• Flat rate pension worth £144 a week to be brought forward to 2016.

• Tax free child care vouchers worth £1,200 per child and increased support for families with children on universal credit.

• Rise in personal allowance to brought forward to 2014, meaning no income tax on the first £10,000 of earnings.

• New Employment Allowance will take the first £2,000 off the employer National Insurance bill of every company in the country.

BUDGET MEASURES AFFECTING BUSINESS

• Around 450,000 small busineses - one third of all employers - will pay no employer National Insurance at all after introduction of Employment Allowance in April next year.

• Small company and main rates of corporation tax to be merged at 20p.

• Abolition of stamp duty on shares traded on growth markets like AIM.

• Corporation tax reduced by a further 1% to 20% in April 2015. 201307

• Small company and main rates of corporation tax to be merged at 20p.

• Bank levy rate to increase to 0.142% next year to off-set reductions in corporate tax.

• New Support for small firms through Government procurement budgets, growth vouchers and controls on regulators’ charges.

BUDGET WEBCHAT: AS IT HAPPENED

13:43pm: PETER MACMAHON: Always very difficult for the leader of the opposition to reply to the Budget. Ed Miliband sticking to playing the man, not the ball, attacking George Osborne. “A more of the same Budget from a down-graded Chancellor”

However, he is right in pointing out the down-grading of growth and more gloomy economic forecasts.

13:42pm: PETER YOUNG (Tax partner at Johnston Carmichael): The rabbit out of the hat or perhaps two:

1. A reduction in the main rate of Corporation Tax to 20%

2. £2,000 employment allowance representing a real cut of NICs for all businesses.

Fewer fiscal banana skins perhaps after last year’s pasty/granny tax announcements

13:41pm: ANDREW WHITAKER: Secretary of State for Scotland Michael Moore said that the budget “shows the Coalition Government is building a stronger economy and fairer society to equip Scotland and the UK to succeed in the global race.”

13:40pm: EDDIE BARNES: Osborne’s white rabbit comes last - a new Employers Allowance of £2000.

13:38PM: PETER YOUNG (Tax partner at Johnston Carmichael): National Insurance - employer NIC currently 13.8%. Employment allowance will reduce NIC bill by £2,000 in total per year from 2014 (small and large) - funded by increase in NICs following abolition of contracting out.

13:37PM: SIMON BURTON (Director of Tax, Johnston Carmichael): New Employment Allowance reducing NIC for businesses by up to £2,000 from April 2014

13:36pm: TERRY MURDEN: Chancellor’s rise in income tax allowance takes more out of tax regime as I predicted earlier.

13:35pm: PETER YOUNG (Tax partner at Johnston Carmichael): Personal allowance: 2013/14 £9,440 as set out last year so no change. Government to increase allowance to £10,000 in April 2014 - 1 year earlier than expected

13:33pm: EDDIE BARNES: The crowd pleasers come in. Osborne confirms that the fuel duty increase due this autumn will be scrapped. He will also scrap the planned rise in duty on beer and actually reduce duty on beer by a penny. “We are taking a penny off a pint,” he says. The Scotch Whisky Association will not be impressed that whisky duty, however, will rise as planned.

13:32PM: TOM PETERKIN: Osborne announces shale tax field allowance to tap into this energy source. Will be interesting to see Scottish Government response to this. We have yet to see Scottish ministers outline a position on this form of energy.

13:30: BRIAN MONTEITH: Radical and substantial intervention in “help to buy” scheme clearly aimed at boosting private sector house building and helping people obtain their own home...

13:30pm: PETER YOUNG (Tax partner at Johnston Carmichael): Duties: extension of freeze on increase in fuel duty. No September increase.

13:29pm: EDDIE BARNES: A major move to boost housebuilding - £130bn of state backed mortgages for those moving into a new build home. But the question is whether planning will allow all these new homes to get built.

13:28pm: PETER MACMAHON: Offer of big help to home buyers - will help both those who want to buy a house or move up the housing ladder. and help building industry with, presumably, increased employment

as ever, devil in the detail, but interesting

13:26pm: SIMON BURTON (Director of Tax, Johnston Carmichael): Fuel duty increase planned for September again cancelled

13:26 PETER YOUNG: Kick start to residential construction industry - Up to 20% loan for 5 years for all new builds no greater than £600K and mortgage guarantee for customers who cannot afford large deposit. A good boost for housebuilding

13:19pm: ANDREW WHITAKER: The Chancellor pledges to tackle tax avoidance and promises a plan for cooperation with the Isle of Man and Jersey.

13:18: PETER YOUNG (Tax partner at Johnston Carmichael): Tax avoidance schemes- agreements with Jersey and Isle of Man Governments to disclose savings to HMRC. Just like Switzerland.

13:18: EDDIE BARNES: Osborne confirms as expected that he’s reducing Corporation tax to 20% in 2015. This has implications for the independence referendum debate in Scotland. The SNP is pledging a lower Corporation tax rate in Scotland - a policy which has attracted leading business figures. But, in the words of one SNP figure, the fact that the UK is lowering its rate makes that policy “less of an issue” for them.

13:17: BRIAN MONTEITH: Going for Shale Gas growth and reducing or even abolishing some business taxes brings Hapiness day to British commerce...

13:15: PETER YOUNG (Tax partner at Johnston Carmichael): 20% Corporate Tax rate from April 2015. There will no longer be differential rates for small and large businesses. This is welcome tax simplification

13:12: TERRY MURDEN: Corporation tax cut to 20% from April 2015. Bank levy rate rises.

13:10: PETER YOUNG (Tax partner at Johnston Carmichael): New CGT relief available on businesses selling to their employees;

Increase in tax free employer loans to employees from £5K to £10K. Significant tax saving for employer and employee alike, particularly those with expensive season tickets

13:09: SIMON BURTON (Director of Tax, Johnston Carmichael): Chancellor announces a new tax regime for onshore shale gas exploration will be introduced

13:07: EDDIE BARNES: Shovels at the ready? Osborne finds £3bn extra for infrastructure, £15bn over 10 years but it doesn’t look like any of the new money will be freed up before 2015. This won’t impress those businesses which want investment now

13:05: PETER MACMAHON: £3bn more for infrastructure. will be interesting to see how that reads across to Scotland and those famous SNP “shovel ready projects”. stand by your shovels?

12:55: First solid budget measures outlined by Osborne

• Infrastructure plans to be boosted by £3 billion a year from 2015/16, a total of £15 billion over the next decade.

• European budget deal secured by David Cameron saved the UK £3.5 billion according to OBR.

• Chancellor seeks £11.5 billion savings in spending review for 2015/16, up from previously announced £10 billion.

• Public sector pay cap of 1% extended by one year in 2015/16.

• Whitehall department budgets to be cut by 1% after £11 billion underspend this year, with protection for schools and health

12:48pm: EDDIE BARNES: Osborne’s 1% pay rise for 2015-16 and crack down on “progression” payments won’t strictly apply to many public sector workers in Scotland. But John Swinney has so far tended to copy whatever the pay deals the Chancellor has announced, so a big steer on further restraint for teachers, doctors, local gov staff and public servants in Scotland.

12:48pm: BRIAN MONEITH: £11 billion underspend by Whitehall Departments - impressive and very useful...

12:48pm: EDDIE BARNES: Osborne announces a tweak to the remit of the Bank of England’s Monetary Policy Committee. It will still have to focus on the 2% inflation target, but will be given more flexibility to do so.

12:48pm: ANDREW WHITAKER: Chancellor George Osborne says that spending reduction promises have been more than delivered and that the proportion of national income spent by the state has fallen

12:48pm: BRIAN MONTEITH: So, as we have been briefed, the budget will be fiscally neutral – no new borrowing but no fresh cuts either.

12:47pm: TERRY MURDEN: Bank of England to use unconventional instruments to support the economy. Inflation target to stay at 2%.

12:46pm: PETER YOUNG (Tax partner at Johnston Carmichael): According to Chancellor this will be a fiscally neutral Budget. It will be interesting to see what changes are in store and who are the winners and losers.

12:45: More figures revealed by the Chancellor:

• Office of Budget Responsibility revises up forecast for employment, with 600,000 more jobs expected in 2013 than this time last year.

• Deficit has fallen from 11.2% of GDP in 2009/10 to a forecast 7.4% this year and is expected to fall to 6.8% next year, 5.9% in 2014/15, then 5%, 3.4% and 2.2% by 2017/18.

• Borrowing predicted to fall from £108 billion next year to £97 billion in 2014/15, then £87 billion, £61 billion and £42 billion in following years.

• Public sector net debt to be 75.9% of GDP this year then 79.2%, 82.6%, 85.1%, 85.6% in following years before falling to 84.8% in 2017/18.

12:45pm: TOM PETERKIN: Ed Balls reprimanded for heckling after Osborne criticises previous Labour Government - feelings running high

12:44pm: TERRY MURDEN: UK will avoid second quarter of negative growth

12:43pm: EDDIE BARNES: Osborne manages to show that borrowing is falling to £114bn this year, but expect major scrutiny to be applied to those numbers in the hours that follow.

However, he then reveals how Britain’s total debt mountain will continue to get bigger and bigger - up to 85.6% of GDP by 2016-17. Only then will the debt mountain begin to shrink.

The news on employment continues to “surprise on the upside” says the Office of Budget Responsibility, as he claims that OBR expects an extra 600,000 jobs next year than previously.

TOM PETERKIN: Osborne claims that for every job lost in the public sector, six have been created in the private sector. Unemployment rate lower than when Tories/Libs came to office.

“Not a competition for who can shout the loudest,” says Deputy Speaker Lindsay Hoyle.

It may not be a competition but both sides of house seem to be taking the view that it’s always nice to win - nonetheless.

12:40pm: Few opening points made by the Chanceller:

• Government has cut the deficit by a third and helped businesses create 1.25 million new jobs.

• UK military and civil service personnel in Cyprus to be “protected in full from any tax on their deposits”.

• OBR output forecast reduced to 0.6% growth. 2

12:35 TOM PETERKIN: Grim realism from Osborne saying it is “taking longer than anyone thought” to sort out economy.

12:34: PETER MACMAHON: Still odd to see Lib Dem chief secretary to the Treasury, Danny Alexander, nodding in agreement with Tory Chancellor George Osborne. seems to fit in on the front bench

12:34: EDDIE BARNES: “I’m going to level with people....It is taking longer than anyone hoped” to recover from the crunch, begins Osborne. Presumably he’s hoping that an unsugared pill will at least show he’s being up front - as opposed to sleekit tax rises a la grannie and pasties last year.

12:33: Mr Osborne said: “This is a Budget for people who aspire to work hard and get on.”

12:33: EDDIE BARNES: Oops. The Evening Standard’s first edition is out already and seems to have broken the Budget embargo.

It says the OBR is forecasting growth of just 0.6 per cent this year.

Also that Corporation tax wil be cut to 20%, beer tax will be cut by 1p and the personal allowance will be increased to £10,000.

12:32: George Osborne has taken to the floor

12:25: BRIAN MONTEITH: Today Osborne faces not just public disquiet but huge doubts among growing numbers of Tory supporters who believe his first budget should have cut deeper and faster to offer tax cuts to deliver growth. This is his last chance to redeem himself in their eyes.

Today is also United Nations Hapiness day - we shall soon see if the majority of us will celebrate it...

12:20: Civil servants staged a Budget day strike today, hitting courts, government departments, museums and driving test centres in an escalation of a bitter dispute over pay, pensions and working conditions.

The Public and Commercial Services union said tens of thousands of its members joined the 24-hour walkout, which will be followed by a half-day strike on April 5 and other forms of industrial action.

12:17PM: DAVID MADDOX: There is a Barnett consequentials shot across the bows already even before the Budget is started with Tory MP Henry Bellingham calling for “a fairer share for Norfolk”.

12:15pm: DAVID MADDOX: Osborne is wearing a pale blue tie today, a colour that represents calm, peace and serenity. Is it a sign of the tone of this budget after last year’s disaster with him needing to calm political and City nerves?

12:05pm: DAVID MADDOX: Rightwing Tory backbencher Philip Davies calls for the government to perform a U-turn in Budget and end the protection for overseas aid. This shows that Tory backbenchers are not just going to sit back and give their support to Osborne easily.

11:55am: @Bill_Jamieson “Arguably the bleakest budget background since the emergency Denis Healey package of 1976.”

11:40am: DAVID MADDOX: Even before Osborne gets to his feet there is a rumour that Scotch whisky will be hit to help fund a reduction in beer duty.

11:30am: Today’s Budget will show the government “sticking to the course of tackling the deficit whilst continuing to support aspiration”, Prime Minister David Cameron’s official spokesman said.

11:15am: EDDIE BARNES: Two potential Scottish bear-traps for the UK Government today that may be seized on by the SNP in the referendum campaign.

1. The Sun reports this morning that the beer tax rise is to be cut. All very well for bitter drinkers, but it doesn’t look like the Chancellor is going to be as generous with people who prefer spirits - such as whisky. The Scotch Whisky Association is demanding that the excise duty escalator, which increases alcohol duty by 2% above the Retail Prices Index (RPI) every year up, is cut. Might they be disappointed?

2. The Office of Budget Responsibility is publishing new forecasts this afternoon which will include new figures on oil tax receipts from the North Sea. Last week, pro-UK figures cried foul after SNP Ministers discounted the OBR’s current estimate of £31.3bn over the next five years. John Swinney put the figure at more like £48bn. What will the OBR come up with today?

11:00am: Chancellor George Osborne signed up to twitter this morning. A few hours after launch, his account was already over 20,000 followers.

GEORGE Osborne delivers his fourth budget today and will detail how he plans to save £2.5 billion over the next two years.

Most Whitehall departments will have to cut 2% of their spending over the next two years, amounting to about £2.5bn. however health, schools and HM Revenue & Customs budgets will be unaffected.

It is expected that the Scottish Government will have to find another £250 million of savings as a result of a cut in the country’s block grant for daily spending.

The cuts come on top of the 3% spending reductions announced for the next two years in last year’s Autumn Statement.

The cuts are reportedly being made to fund capital projects across the UK and pay for new measures to help working mothers.

The Scottish Government is expected to recieve a share of the extra funds, accured from cuts to government departments, to spend on “shovel ready” capital projects.

George Osborne is expected to reveal that government departments have underspent by £6bn, an amount which will be redistrubuted in today’s budget.