Autumn Statement 2014: what you need to know

The key measures from today’s Autumn Statement.

The key measures from today’s Autumn Statement

Fuel duty to be frozen

Sovereign wealth fund for north of England to keep benefits of shale gas exploration

ISAs to be transferrable to partners tax free

55 per cent death tax passed on to loved ones abolished

Isa threshold increases from £15,000 to £15,240 next April

Personal tax allowance to increase to £10,600 next April

Air Passenger Duty to be scrapped for under-12s from 1 May next year and for under-16s the following year

World War One debt to be repaid

Inheritance tax to be cut for families of aid workers who die in course of duty

Libor fines to support Ghurkhas and their families

VAT paid by hospices and search and rescue organisations to be refunded

Introduce 25 per cent tax on profits generated by multi-nationals that are shifted out of the UK, set to raise £1bn over five years

Bank profits which can be offset by losses for tax purposes to be limited to 50 per cent

New £90,000 charge for non-doms resident in the UK for 17 of the past 20 years.

Welfare spending to be £1bn lower than forecast in March

Two year freeze in working-age benefits (first announced in October)

Migrants to lose unemployment benefits if they have “no prospect” of work after six weeks

£2bn extra every year until 2020 for the NHS

GP services to get £1.2bn in extra funds from bank foreign exchange manipulation fines

Employment Allowance extended to carers

£10,000 loans for postgraduate students studying for masters degrees

Business rates to be reviewed

Theatre tax break extended to orchestras

Research and development tax credit increased for small and medium-sized firms

New tax credit for children’s TV producers

£45m package of support for exporters

Expand tax relief on business investment in flood defences

Old pacer carriages on Northern Rail and the Trans-Pennine Express replaced with new and modern trains

£1.5bn for 84 roads projects in England

£2bn for flood defence schemes

Distributional analysis

Distributional analysisj

Overall the top 10 per cent are losing out the most, but beyond that it’s the poorest who are hit the hardest, largely due to changes taking place in the benefits system.

The rabbit that came out of the hat: stamp duty

Designed to help those at the lower end of the property ladder (and to counteract the political appeal of Labour’s mansion tax), the reform of residential stamp duty will mean that stamp duty is from tonight paid at the following rates:

0% up to £125,000

2% up to £250,000

5% up to £925,000

10% up to £1.5m

12% over £1.5m

The move will benefit 98 per cent of homebuyers who pay it, Osborne claims. Full details are available in the Autumn Statement document, but the important bit is here:

Stamp dutyj

Sleights of hand

Growth

In his last autumn statement before the election, the chancellor said the economy would grow 3 per cent this year. However this year was the only year in which growth would reach 3 per cent. A closer look at the Office for Budget Responsibility’s (OBR) predictions, however, reveals that growth is forecast to be significantly lower (around 2 per cent) in the years ahead. The OBR is forecasting 3 per cent growth in 2014, 2.4 per cent growth in 2015, followed by 2.2 per cent, 2.4 per cent, 2.3 per cent & 2.3 per cent in the following four years.

Spendthrift Labour

Once again on Labour’s ‘out of control spending’, which George Osborne supported back in 2007 – see video:

‘£2 billion extra will be made available to the NHS’

In reality, £750m of the £2 billion is money that is simply being re-allocated from within the Department of Health. In other words, it isn’t new money that is being plowed into the NHS; it’s money that is being moved around to give an impression of extra funding.

Reaction

Ed Balls MP, Labour’s shadow chancellor, speaking ahead of the Autumn Statement, said:

“David Cameron and George Osborne have now failed every test and broken every promise they made on the economy.

“They promised living standards would rise, but while millionaires have got a huge tax cut working people are £1600 a year worse off under the Tories. This cost-of-living crisis is why the Chancellor will have to admit he has broken his promise to balance the books by next year.

“A Labour Autumn Statement would set out a better and fairer plan to deliver a recovery that works for the many and not just a few.

“Labour’s economic plan will raise the minimum wage, expand free childcare for working parents, get more homes built and cut business rates for small firms.

“We will balance the books in a fairer way, starting by reversing the £3 billion a year tax cut for the top one per cent of earners.

“And we will save and transform our National Health Service with a fully-funded long-term plan. We will raise an extra £2.5 billion a year to deliver 20,000 more nurses and 8,000 more GPs – a commitment the Tories refuse to match.”

Natalie Bennett, Green Party Leader, said:

“Chancellor George Osborne is continuing with his clearly false diagnosis of the source of Britain’s economic problems, so unsurprisingly his prescription is not going to cure the patient.

“Osborne’s suggestion that ‘disastrous decisions on spending and borrowing and welfare that got us into this mess’ are demonstrably false. What got us into ‘this mess’ is the fraud, errors and mismanagement of the financial sector. Urgent action is needed is to tackle the still out-of-control sector, the still too-big-to-fail banks and their hulking dominance of our imbalanced economy.

“What the coalition government needs to do is stop making the poor, the disadvantaged and the young pay for those bankers’ errors, and rebalance the economy so that it starts to provide jobs that workers can build a life on, while paying decent benefits to everyone who needs them.”

Alison Garnham, chief executive of Child Poverty Action Group, said:

“It’s striking that the only giveaway for children was for families who can afford to fly them abroad on holiday. For millions more children, today’s Autumn Statement is about staying the course for poverty rather than prosperity.

“The chancellor once again failed to mention child poverty – it’s now two years since an Autumn Statement or a Budget mentioned child poverty, despite the government’s binding legal obligation to reduce it and IFS projections warning that the Government is on course to rapidly increase, not reduce, child poverty.

“By cutting Universal Credit once again, the chancellor is in very real danger of torpedoing Iain Duncan Smith’s flagship policy. Freezing the work allowance will harm work incentives and hit low paid families hard. Two thirds of poor children live in working families; we should be redistributing help towards them, not away from them.”

More to follow…

Elsewhere on Left Foot Forward:

Five things George Osborne won’t say in his Autumn Statement

Transport for the North, or the North and by the North

On offshore tax income at least, the chancellor gets it right

2 Responses to “Autumn Statement 2014: what you need to know”

  1. Selohesra

    Trouble is Osborn can get away with murder as he is only opposed by Balls who few outside Labour party (or in it) seem to take seriously. EdM should have taken tough decision to sideline Balls in 2010 as he was too tainted with the previous failure – it would be history by now and allow alternative message to be heard

  2. Cole

    The video of Osborne saying, in 2007, that he’d match Labour spending needs to be seen more widely. So much for all that nonsense about irresponsible socialist expenditure we hear about from the Tories.

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