PLMR RESPONSE: BUDGET STATEMENT 2013
The Chancellor of the Exchequer, George Osborne, today delivered his fourth Budget Statement under increasing pressure and scrutiny to improve the ailing economy, which as critics in the UK and abroad argue, has yet to reap the benefits of the Coalition’s austerity measures.
Osborne has admitted that his measures to reduce the UK debt burden will take even longer than expected. The target for a decline in public debt as percentage of GDP is now earmarked for 2017-18, rather than Osborne’s original target of the current fiscal year.
Osborne’s Budget attempts to boost the economy and help “hard-working families” through various measures. Infrastructure initiatives will be paid for by 2% cuts to government departmental spending, saving an estimated £2.5 billion. Pension and social care reforms have been fast tracked, with single-tier pensions brought forward and a cap set on care home fees at £72,000 to be introduced in 2016. The personal tax allowance has also been increased to £10,000.
Further changes to the tax system include a cut to corporation tax, a crackdown on tax evasion schemes and changes to national insurance contributions for some small businesses. The beer duty escalator and the planned increase in fuel duty were scrapped while Osborne also announced an extension of the NewBuy scheme to help all people with small deposits to build new homes.
Please find PLMR’s analysis below of the 2013 Budget Statement from our Conservative, Labour and Liberal Democrat party experts.
JAMES FORD: CONSERVATIVE TITLE GOES HERE
James Ford is the Adviser to the Digital Chamber of Commerce at the London Chamber of Commerce. James was formerly an aide to Mayor of London Boris Johnson (2010-12), specialising in transport, environment and digital policy. Prior to joining City Hall he worked in the Square Mile as Public Affairs Manager for the London Chamber of Commerce and Industry (2004-10).
Whether it’s a sign of the strictures of austerity or the Chancellor’s waning political authority, there were few surprises in today’s Budget (even if you hadn’t read the contents in advance in the Evening Standard). George Osborne made clear that there would be no deviation from the tightening of the reigns of his ‘Plan A’ and used his appearance in front of a packed House of Commons to unveil a few small, populist tweaks to tax – fuel duty rise scrapped, income tax threshold to rise to £10,000 and 1p off a pint of beer. However, there was some red meat for the Conservative back benches with corporation tax set to fall to 20% by 2015, the military to be exempt from the public sector pay cap, and there was £3bn extra for infrastructure spending, tax breaks for childcare costs, and an endorsement for Lord Heseltine’s report, which suggested the creation of a pool of funding for local businesses.
It was clear that some of the Conservative’s key messages for the next election were being rehearsed today too, as the House was told that government debt was down (though only as a proportion of GDP), that borrowing was now at a lower level than under the previous government, that six private sector jobs were being created for every one lost in the public sector and, whatever the Government’s ‘fiscal mandate’ is, the Office of Budget Responsibility says the Government is on course to meet it a year early (collective sighs of relief all around, I’m sure).
The major announcements – saved for the end of the Budget as always – were an attempt to define the differences between the Conservatives and other parties. The changes to National Insurance – which will see one third of all employers exempt from paying this ‘tax on jobs’ – was a re-run of one of the big campaign issues in the 2010 election. And the government help for home buyers is intended to not just stimulate house building, but also provide a point of contrast with the mansion tax proposals supported by both Labour and the Lib Dems.
Has the Chancellor done enough to salvage his reputation and the Government’s electoral prospects? Tomorrow’s headlines may well decide that….
ELIN TWIGGE – “THE #BUDGET”
Elin Twigge previously worked with SERA, the Labour-affiliated environmental campaign and produced briefings for the leader of the Opposition, Ed Miliband, in his former role as Secretary of State for Energy and Climate Change. At PLMR, Elin is at the heart of PLMR’s award-winning education, green and health and social care practices.
In a budget full of buzzwords and hashtags (the Chancellor choosing today to make his social media debut), Labour’s reaction focused on the fact that Plan A is not working: borrowing is up, growth is slower than expected, and the economy has been downgraded.
The FT has already dubbed this a ‘Daily Mail Budget’, and indeed many of the measures that did make it in were hat tips to media campaigns. The scrapping of beer duty was a success for The Sun’s “Axe beer tax” crusade, whilst putting a halt on fuel duty rises will be celebrated by both the red tops and broadsheets alike. Indeed it was the populist campaigns that cut through the most, with Labour’s Tristram Hunt having to physically steady himself after Osborne confirmed he would be exempting the ceramic industry from the climate change levy.
In advance of today Labour had called for a u-turn on cutting the top rate of income tax, to be replaced by a temporary cut in VAT. Unsurprisingly this tax cut isn’t going anywhere, and the Conservative Front Bench still refuse to confirm whether or not the status quo directly benefits them.
After a tough few weeks for the Chancellor, Ed Miliband was full of confidence and zeal in a bombastic response. Downgraded growth figures and strong polling leads for Labour not only gave the Leader of the Opposition a boost, but should also translate into confidence for campaigners on the doorstep.
The Spectator has produced a graph showing that the Government will likely be contesting the 2015 general election with the worst deficit of all western nations. Let’s hope that ‘help to buy’ isn’t followed by ‘help to pack’ when first time buyers default on their new unsustainable mortgages.
#downgradedchancellor? – we’ll see.
STEVEN GAUGE – “YELLOW TIES AND FLAPPING ORDER PAPERS”
Steven Gauge is a Senior Consultant at PLMR and spent the last two general elections on the road managing media events in battleground seats for Nick Clegg and Charles Kennedy. He has been a local councillor, award winning election agent, parliamentary candidate and was also Chief Executive of the Suzy Lamplugh Trust.
<style=”font-family: arial,=”” helvetica,=”” sans-serif;=”” font-size:=”” 12px;=”” “=””>Nick Clegg has had to look to the Republic of South Africa to toughen up his strategy team. The word is that special adviser Ryan Coetzee, is a very forceful new voice within the Deputy Prime Minister’s office. Liberal Democrats are repeating his mantra, “On Message, in Volume and Over Time” in local party headquarters from the Shetlands to the Scilly Isles.
So over the next few weeks after the budget we should expect the Liberal Democrats to be repeating, in volume, over and over again their own little victory in this coalition budget – the rise in personal tax allowances to £10,000. Clegg and his general election campaign chair Paddy Ashdown are trying hard to position themselves as the party that brings a commitment to “fairness” to the coalition government. The yellow tie wearing MPs on the Lib Dem benches will have been instructed to wave their order papers with wild enthusiasm at the precise moment that George announced the new tax allowances.
However, party members are not as loyal or enthusiastic as their Members of Parliament. A new poll published today by Lib Dem Voice reveals that just 26% of Lib Dem members support George Osborne’s Plan A. 47% believe that cutting the deficit is hurting the economy and that there should be more borrowing and fewer public sector cuts. Clegg and his antipodean adviser will still have their work cut out to win round the party rank and file, let alone the wider electorate, that they are doing enough to lock fairness into coalition policy.</style=”font-family:>