Labour’s line that is most being played on news bulletins post-budget is Rachel Reeves’ “It all seems like fun and games until you walk away and find that your purse has been lifted”. While it might be catchy, it’s far from original. Back in 1999, master of the despatch box William Hague stood to oppose Brown’s budget with an almost identical line of attack:
“He’s the man you meet in the pub who says ‘lend us a fiver and I’ll buy you a drink’. He is the pickpocket chancellor who shakes your hand with a smile after he has stealthily removed your wallet”
Guido thought Labour were trying to persuade us they no longer had a problem with uncontrolled borrowing…
The RMT rail union has until 5 pm today to accept the SNP’s terms for ending an ongoing dispute over salaries before proceeding with their planned strike action throughout COP26. So far, the talks have been stuck in deadlock, with the SNP offering an increase in basic pay of between £1700- £2600, and the RMT still demanding a renegotiation. Only four days until delegates arrive for the opening…
The union, which represents Scotrail, is insisting that the SNP’s “new deal” is “just the same numbers repackaged but still loaded with strings that would amount to a defacto pay cut“, and has confirmed that conductors and ticket examiners will strike throughout almost the entirety of the summit unless the Scottish government returns to the negotiating table. RMT general secretary Mick Lynch said:
“…The ball is in the SNP’s court. They need to take responsibility for bringing us to this point and get into a dialogue with the union that puts pay justice on the agenda. We are waiting.”
The Scottish Conservatives have also jumped in to urge the RMT to “take the threat of strike action off the table” and to find “a speedy resolution“. All just to keep COP26 on-track…
Read Guido’s coverage of Rishi’s main announcements on Guido’s live blog here.
Here’s the OBR’s medium term economic and fiscal outlook forecast:
Stick with Guido for live updates of Rishi’s budget announcements. Stay tuned…
Inflation
- Rishi says the house will recognise the “challenging backdrop” of inflation.
- OBR expects inflation to hit 4% next year, up from 3.1% currently
- Rishi blames this on a global rise in demand for goods, supply chains can’t keep up
- He also cites the surge in demand for energy, with oil coal and gas more than doubling
- “Will take months to ease”
- Rishi has written to BoE reaffirming their remit to keep inflation low & stable
State of the finances
- OBR expect economy to return to pre-Covid level at the turn of the year
- Growth expected to be 6.5% this year followed by 6% in 2022
- 2022: 6%
- 2023: 2.1%
- 2024: 1.3%
- 2025: 1.6%
- Unemployment to peak at 5.2%, way down on the 12% originally forecast
- OBR upgrades forecast for business investment
- OBR revised down their scarring assumption from 3% to 2%
- OBR describe Rishi’s plan as “remarkably successful”
New charter for budget responsibility
- Two new fiscal rules:
- Underlying public sector net debt must be falling
- In normal times the state should only borrow to invest in future growth and prosperity – day-to-day spending must be met by taxation
- Supplemented by targets to spend 3% of GDP on capital spending
- The house will vote on Rishi’s new charter
- OBR report today that all Rishi’s fiscal rules have been met
Fiscal judgments
- Will meet fiscal rules with a margin to protect against external economic risk
- Continue supporting working families
- Will meet obligations to the world’s poorest – 0.7% overseas aid will return from 2024/25
- Increases total department spending by £150 billion – the largest increase this century with spending growing 3.8% a year in real terms. A real terms rise in overall spending for every single department.
Healthcare
- Health capital budget to rise from £133 billion by £44 billion
- Better newborn screening and wider R&D improvement
- More operating theatres
- 100 community diagnostic centres
- Local government to get new grant funding of £4.8 billion
Housing
- Multi-year housing settlement totally £24 billion
- £11.5 billion for affordable homes
- £1.8 billion in regenerating brownfield sites unlocking 1 million new homes
- £640 million for rough sleeping and homelessness
Children
- First 1001 days of a child’s life are the most important – £300 million for a start-for-life programme for families
- Funding to create a network of family hubs
- Pay childcare providers more
- £150m for training and development for early years workforce
- £200m in supporting families programme
- £200m to continue the holiday activity and food programme
Education
- £4.7 billion by 24/25. Will restore per pupil funding to 2010 levels in real terms. A rise of £1500 per pupil
- SEND children – more than tripling the amount they invest to more than triple the amount of new school places
- £2bn of new funding to help schools and colleges.
- £5bn total
Local
- £560m for youth services
- £200m for football pitches
- First round of funding for levelling up fund – £1.7bn to invest in the infrastructure of everyday life – £170m in Scotland, £120m in Wales and £50m in NI.
- £800m in local culture
- Tax relief on museums and galleries will be extended from March next year to March 2024
- Tax relief from the whole sector from today to 2023 will be doubled – won’t return to normal until 2024.
Economic growth
- Got to tackle the problem of uneven economic geography
- £20 bn a year on R&D – an increase of 50%
- This is in addition to the cost of the R&D tax reliefs
- R&D relief will be expanded to include file computing & data costs
Immigration
- Today’s budget confirms eligibility criteria for the new scale-up visa
Taxes
- Shipping tonnage tax will be reformed to reward companies for adopting the UK shipping flag, “entirely fitting for a country with such a proud maritime history as ours”.
- Air passenger duty reformed. Domestic flights will be subject to a new lower rate of air passenger duty. A good look the week of COP?
- A new ultra long haul band on air passenger duty of £91. Tackling pollution.
- £1m annual investment allowance extended from December to March 2023
- Bank surcharge within corporation tax will be retained, increasing from 27% to 28%
- Small challenger banks, improving competition, the annual allowance will be raised to £100m
- Rishi attacks Labour’s business rates abolition policy. Rates will be more frequently reevaluated every three years
- A new investment relief to encourage green technologies investment like solar panels
- New business rates improvement relief from 2023. Property improvements won’t be charged business rates for 12 months
- Next year’s planned increase in the multiplier will be cancelled – £4.6 billion saving
- Announcing a new 50% business rates discount for those in hospitality, retail and leisure up to a maximum of £110,000
Chaotic scenes in the Labour tent just now as it emerged last minute that Sir Keir’s tested positive for Covid. Ed Miliband is standing in at PMQs and Shadow Chancellor Rachel Reeves will do the party’s Budget response. Starmer tweeted this photo of him sat right next to Reeves just an hour ago…
Guido understands the pic was snapped today, however both Reeves and Phillipson have tested negative via lateral flows. Chaos with Ed Miliband…
- Dr Neil Hudson (Con)
- Anna McMorrin (Lab)
- Ben Bradshaw (Lab)
- Jane Stevenson (Con)
- Zarah Sultana (Lab)
- Stephen Kinnock (Lab)
- David Warburton (Con)
- Robbie Moore (Con)
- Ben Lake (PC)
- Sir Mark Hendrick (Con)
- Jamie Stone (LibDem)
- Claire Hanna (SDLP)
- Brendan O’Hara (SNP)
- James Murray (Lab)
- Stuart C McDonald (SNP)
