George Osborne unveiled a dramatic root and branch reform of stamp duty today, promising to save homebuyers thousands of pounds.
The Chancellor said the levy was a “tax on aspiration”, and said he would remove the ‘cliff edges’ which distorted the property market.
In a bold move, Mr Osborne said that from midnight tonight stamp duty will be cut for 98 per cent of homebuyers - £4,500 less on the average priced home of £275,000.
Read our live updates as the Statement unfolded below
1.25pm: Mr Osborne takes his seat, having spoken for around 50 minutes. The biggest talking point is undoubtedly the stamp duty.
1.23pm: Tom Peterkin adds: George Osborne’s pledge to devolve Corporation Tax to Northern Ireland, if practicable, will ramp up SNP calls for it to be devolved to Scotland.
1.21pm: Mr Osborne announces a rise in personal tax threshold again also for those on higher 40p rate reducing number paying it by 38,000, to loud cheers from Tories.
Ninety eight per cent of homebuyers in England will see stamp duty cut as Osborne introduces a new staggered system. Will apply in Scotland until next year.
1.19pm: The Scotsman’s Political Editor Tom Peterkin reports that the Scotland Office has just claimed that the personal allowance increase in 2015-16 will lift 38,000 people in Scotland out of income tax altogether.
1.15pm: Mr Osborne unveils the first steps of English devolution with Manchester at heart of new northern powerhouse.
Northern Ireland to get corporation tax as long as Stormont can handle the financial implications.
Scotland denied control on corporation tax.
1.12pm: Mr Osborne jokes about gazing at the ‘red planet’ looking for signs of intelligent life, as he announces the UK has a lead role in the exploration of Mars.
1.11pm: Government backed student loans of up to £10,000 for all young people wanting to do post-graduate degrees.
1.10pm: Mr Osborne says the oil price presents a challenge to North Sea industry. Present immediate effect is a new cluster development allowance among other measures.
Danny Alexander to announce more details in Aberdeen tomorrow.
Air passenger duty for under 12s abolished and this will be extended to under 16s.
1.05pm: Mr Osborne says his new measures will take £9 billion from the rich who he says will be paying more than the poor.
“This proves we are all in this together,” he says to cheers from Tories.
1.02pm: Mr Osborne announces a new Google tax of 25 per cent on multinationals that divert their profits abroad to offset taxes.
He adds that he will limit the amount banks can offset against tax.
12.59pm: Aid workers will be exempt from inheritance tax if they die volunteering abroad. Hospices will be exempt from paying VAT.
Plan published for a further £10 billion of efficiencies in Whitehall, and Chancellor commits to raising at least £5 billion by cracking down on tax avoidance and evasion.
12.58pm: Mr Osborne makes it clear that immediate savings will fall on the shoulders of those who live off benefits. Another freeze in working age benefits and removal of benefits from migrants.
12.55pm: The coming years will require “very substantial savings in public spending” and a new Charter for Budget Responsibility will be published next week, with a House of Commons vote in the new year, to reinforce the commitment to deliver them.
Interest on national debt set to be £1.6 billion lower than forecast at the start of the next Parliament.
The Government will spend £10 billion less this year than set out in its plans.
12.52pm: Fall in tax receipts off set by reduced welfare payments, continued spending cuts in government plus reduction of £16 billion in debt interest payments.
Mr Osborne: “I do not hide from the House that there are going to be tough decisions to make in the future.”
MPs will be asked to vote on new cuts in January.
12.48pm: Borrowing will be eradicated by 2018/19 when there will be a surplus of £4 billion and by 2019/20 this will rise to £23 billion.
Deficit “is no longer down by a third but now cut in half,” boasts Mr Osborne.
12.46pm: The Scotsman’s Westminster Correspondent David Maddox reports:
“Mr Osborne’s voice is growing increasingly hoarse.
“The Chancellor says the deficit is falling and borrowing is lower than forecast despite previous reports to the contrary.”
12.44pm: Mr Osborne continues: “Last year those claiming unemployment benefit down 23 per cent and young people claiming unemployment benefit has been halved. Eighty-five per cent of new jobs are full time. Fastest growing areas of new jobs are Scotland and North of England.”
12.43pm: British economy forecast to grow by three per cent. Mr Osborne says that since 2010, growth in the UK has been three times higher than Germany and seven times higher than France.
12.41pm: Mr Osborne announced a £45 million package to support exporters to economies in Asia, Africa and South America.
12.40pm: Mr Osborne says: “The warning lights are flashing over the global economy.”
12.37pm: The Chancellor says Britain faces a choice between squandering economic security or finishing the job, adding: “I say we stay the course. We stay on course to prosperity.”
12.35pm: Osborne gets to his feet.
“Four years ago in my first autumn statement I presented the picture of an economy in crisis. Now in my last Autumn Statement of this parliament we have the fastest growing economy in the G20.”
He adds: “More needs to be done (on the deficit) and the measures I announce today will tighten the belt.”
However, he promises an Autumn Statement of “aspiration”.
12.30pm: In heated exchanges moments before the final Autumn Statement before the 2015 General Election, Mr Miliband claimed the PM had failed to fulfil commitments to cut net migration to the tens of thousands and to not have a “top-down reorganisation” of the NHS.
At Prime Minister’s questions, the Labour leader said: “He has failed every test he set yourself and the thing about this Prime Minister is he has turned breaking promises into an art form.
“And as the election approaches the thing the British people know about this Prime Minister is that when he says it he doesn’t mean it.”
Mr Cameron replied: “What a contrast. This is a Prime Minister and this is a Government that has turned our economy round, sorted out our public finances and got the economy growing.
“And no one in this country will ever forget that Labour are the people who sold the gold, who broke the economy, who bankrupted the nation, and still they sit there completely hopeless and unelectable.”
12.26pm: During PMQs David Cameron tells Ed Miliband that the news in the Autumn Statement will “make you look as awkward as when you ate that bacon sandwich.”
12.03pm: George Osborne enters the Commons chamber ahead of PMQs. He is wearing a petrol black tie to deliver his Autumn Statement today. Maybe symbolic of measures for the oil and gas sector or just generally bad economic news.
Osborne to appeal for voters to let him finish economy overhaul
GEORGE Osborne will appeal today for voters to let him finish the job of overhauling the economy, despite rising borrowing and the prospect of more painful spending cuts.
In his final Autumn Statement before the general election, the Chancellor is expected to be able to boast that UK plc is creating jobs and growing faster than any other G7 power.
But the latest forecasts are also likely to indicate that the Government’s deficit could actually rise this year amid stalling tax receipts. Instead of balancing the books by the end of the parliament as he originally promised, experts believe the gap between income and outgoings is on track to be more than £90 billion.
The figures will set the stage for a high-stakes political showdown between Mr Osborne and Labour counterpart Ed Balls, who will seek to regain the initiative on the economy by claiming the recovery is only benefiting the wealthy.
Tory big beast Ken Clarke has risked providing the shadow chancellor with more ammunition by conceding Britain would now be in a “bad way” if the coalition had pushed ahead “full steam” with deficit reduction.
He also appeared to question whether Mr Osborne would be able to hit the new target of achieving balance by 2017-18 and said the Conservatives should not “shut out” the prospect of tax rises.
Among the measures expected to be announced in the Autumn Statement are:
• Funding and guarantees to unlock around £1 billion in investment for small and medium sized businesses, and an extension of the Funding for Lending scheme specifically focusing on smaller firms;
• A review of business rates to remove ‘roadblocks’ to growth;
• Plans for the Government to directly commission housebuilding on public land for the first time in more than 40 years;
• Using fines paid by banks for manipulating Libor to help Ghurka veterans
Ministers have already heavily trailed a multi-billion pound infrastructure drive - including a tunnel under Stonehenge and bolstering flooding defences. Mr Osborne has also indicated that £2.5 billion will be allocated to ease pressure on the NHS, although there are disputes over how much is new money.
But the wider fiscal position could overshadow much of the detail in Mr Osborne’s package. Experts believe the independent Office for Budget Responsibility (OBR) will raise its prediction for UK growth this year to over 3 per cent, from 2.7 per cent.
Public Sector Net Borrowing ‘could be revised’
But revenues from tax revenues have been running below forecasts, with speculation that many of the new jobs being generated are low paid or part time, and a slowdown in the housing market hitting stamp duty income.
Public Sector Net Borrowing (PSNB) for this year could be revised to £95 billion, although there are suggestions that a bumper season for self-assessment tax returns in the New Year could recover some of the lost ground. In 2010 the OBR predicted it would be running at around £40 billion by now.
Mr Osborne is bound to face questions from both the political right and left about whether he can meet promises to eradicate the deficit by 2018 - and deliver billions of pounds worth of tax cuts by 2020.
Both he and David Cameron have come under fire for playing down the scale of the public spending cuts needed after the election - with respected think tank the Institute for Fiscal Studies (IFS) suggesting the fiscal consolidation is only halfway to completion.
Liberal Democrat Chief Secretary to the Treasury Danny Alexander yesterday argued that the further tightening required would be “smallish”.
However, while Mr Osborne has said he wants to eradicate the rest of the deficit through spending curbs alone, the Lib Dems have made clear they would push for tax rises to take some of the strain.
Former chancellor Mr Clarke told the BBC’s Newsnight that the Government’s original plan of eradicating the deficit by May 2015 would have left the country “in a bad way”.
“We had a target of getting rid of the deficit in this parliament. I actually think that although it perhaps wasn’t entirely planned it was very sensible that we didn’t do it that quickly,” Mr Clarke said.
“Had we tried ... getting rid of the whole deficit, ‘let’s charge ahead’, we would not be in the state we are. We would be in a bad way.”
Mr Clarke, who recently stepped down from the Cabinet, said the 2017-18 deadline was a “legitimate target” but should not be immovable.
Labour claim VAT increase plans
“I would aim to do it, get rid of the deficit by 2017-18. We should try to hit it but we should not be oblivious to the fact that nobody knows what the state of the world economy is going to be in 2017-18,” he said.
Amid Labour accusations that Mr Osborne is plotting to increase VAT again, Mr Clarke also insisted he “wouldn’t shut out” the possibility of tax rises.
“Has George really ruled out any kind of tax rises? I wouldn’t personally if I were him burn my boats on that,” he said.
“I would very much like to avoid tax rises, because it’s actually advantageous to growth at the moment. “Taxes sometimes go up, sometimes go down. It’s reacting to the reality and events. George is good at that.”
Mr Clarke said the current levels of public spending would have been regarded as “ridiculous” in past decades.
“I think the totality of public spending, I think we’re down to 2003 aren’t we? We’re not down to the levels I was used to,” he said. “We’re spending sums of money that I would have told you were ridiculous not too many years before that.”
Mr Balls 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 £1,600 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.”