George Osborne’s Autumn Statement: latest updates and reaction

George Osborne leaves Downing Street for the Treasury. Picture: Getty
George Osborne leaves Downing Street for the Treasury. Picture: Getty
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CHANCELLOR George Osborne confirmed his plans for Whitehall’s budgets, including the Scottish Government, in his Autumn Statment today. Follow teh reaction live with The Scotsman’s politics team.

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Peter MacMahon (@petermacmahon), Eddie Barnes (@EddieBarnes23), David Maddox (@DavidPBMaddox) and Tom Peterkin (@TomPeterkin) with the latest...

4.55pm: Lib Dem Chief Treasury Secretary Danny Alexander said: “This is an Autumn Statement that responds to the difficult times we are in. But while there have been some tough decisions, this is a good deal for Scotland. Scotland will see a net benefit of around over £330m as a result of the decision taken to prioritise capital spending. Cancelling the planned Fuel Duty rise will help 2.7m motorists in Scotland save on average £40 per year, and 2.2 million people in Scotland will benefit from a further increase to the Personal Allowance with 21,000 Scots lifted out of income tax altogether. It’s also good news for Perth and Aberdeen that they will become super-connected cities.”

3.55pm: Reacting to the Chancellor’s Autumn Budget Statement this afternoon, in which he announced additional capital spending for Scotland, SNP Westminster leader Angus Robertson said: “Today the Chancellor has admitted that, once again, he has overestimated the growth of the UK economy and his forecasts have had to be revised downward again - and yet again blamed this on everyone except himself.

“The fact is it’s his right-wing pursuit of austerity that has put the UK economy in the situation that it is - and his response today has simply been to announce yet more austerity which will bear down extremely harshly on some of the most vulnerable people in society.

“Lengthening the period of austerity simply confirms that the only certainty of a No vote in the referendum is yet more cuts. George Osborne’s Autumn Statement - and Ed Balls’ lacklustre response - completely summed up why we need to make these decisions in an independent Scotland.

“The extra capital funding is obviously welcome but long overdue - and the SNP has been calling for additional capital investment literally for years.

“As with Mr Osborne’s belated admission today that PFI is ‘discredited’, the Westminster Government are many years behind the SNP when it comes to addressing economic reality.

“Right at the start of the economic crisis, Alex Salmond used his conference speech in October 2008 to call for more capital investment – and the Scottish Government has written to the UK Government at least eight times, and there have been at least four joint calls with other devolved administrations. Today Scotland has finally received a response – but only a belated and partial one.”

3.50pm: Downing Street says that cancellation of 3p fuel duty increase saves an average £40 a year and a haulier £1,200 a year. In total 2.7 million vehicle owners in Scotland benefit.

The briefing goes on to say that 21,000 Scots will be lifted out of paying income tax and 2.2 million will benefit from rise in tax threshold.

Also one million pensioners in Scotland will benefit from above inflation increases to the state pension.

3.48pm: Downing Street briefing on Scotland: net gain for Scotland is £331m for 2013/14 and 2014/15 overall in parliament will be almost £1.5billion

3.45pm: OBR briefing: Government debt is £1,078,450,211,486

3.30pm: In a preliminary reaction to the Chancellor’s Autumn Statement today, CBI Scotland’s assistant director, David Lonsdale, said: “With the national debt set to swell by a further £260 billion over the next three years and important export markets overseas still in a funk, this was always likely to prove a difficult backdrop to the Chancellor’s autumn statement. However he is right to continue to try and eliminate the public spending deficit, crucial if he is to halt let alone start to reverse the ballooning national debt and higher interest payments that come with it.

“The autumn statement does contain a number of positive announcements for business, amongst the most eye-catching is the promised further reduction in corporation tax. Retained profits are playing a larger role in funding firms’ future investment plans given the constraints on traditional lending sources, and so the further reductions in the pipeline are significant and welcome.

“There were welcome decisions too on infrastructure spending, capital allowances for firms investing in plant and machinery, science, and support for exporters, although the reduction in pension tax relief is a disappointment.

Mr Lonsdale added: “The decision to exempt newly built commercial development from empty property rates for up to 18 months will encourage private sector investment, and the Scottish Government must act to ensure that the empty rates regime here is equally attractive.”

3.15pm: Lib Dem Scottish Secretary Michael Moore’s words on Autumn Statement:

“Against a difficult economic backdrop, we are taking the targeted measures we can afford to get Scotland’s economy moving.

“There is a good deal of specific, positive news for Scotland.

“The Scottish Government will receive more than £300 million of new money - in addition to the £1 billion it has already received since the Spending Review – all of which it can invest in shovel-ready projects.

“Our 2.7 million vehicle owners - particularly those in rural Scotland - will benefit from the decision to cancel the January fuel duty rise.

“And an additional 21,000 low income Scots will be taken out of tax altogether next April, bringing the number in Scotland to 183,000 in total, with around two million more receiving an income tax cut. Fairer taxes are essential at this time of economic strain, and that is what we are delivering.”

“Business will also benefit, whether from the Annual Investment Allowance increase, a reduction in corporation tax or new allowances for the North Sea oil and gas fields. The news that Perth and Aberdeen are to benefit from UK Government funding for broadband will also help prepare Scotland for the challenges ahead.

“The Autumn Statement makes clear we are on the right track in terms of borrowing and deficit reduction, despite the troubles on our doorstep in the eurozone. The UK Government will continue to take the right decision for our economy, allowing Scotland and the rest of the UK to compete and grow.

2.55pm: A clear-as-mud explanation of the implications for the Scottish Government:

The Scottish Government gets £394m extra capital funding, as its share of the £5bn extra announced by Osborne across the UK, over the next two years.

It also gets £90m Barnett consequentials from other spending announcements today which only impact the rest of the UK.

However, it will then have £155m taken out of its day-to-day budget over the next two years, as its share of the cost of the extra £5bn in capital spending.

That leaves it with £331m extra money over the next two years.

But the £394m HAS to be spent on capital spending - Scottish Ministers do not have the power to move it back into day-to-day spending.

So they’re left with a new £60m cut in the resource budget (£155m - £90m) to fill over the next two years

2.25pm: What they’re saying....

Robert Peston / @Peston: “OBR forecast of economic recovery predicated on business investment rising 8.1% & consumer spending 1.6% in 2014. Plausible?”

Paul Waugh / @paulwaugh: “Cuts recap: of £16bn new cuts planned for 15/16, £3.6bn welfare cuts, £2.4bn Whitehall cuts, £0.5bn aid. Leaves £10bn hole for SR due nxt yr”

Faisal Islam / @faisalislam: “The deficit would be rising in this financial year, were it not for the £3.5bn 4G sale. Sneaky.”

David Maddox / @DavidPBMaddox: “Treasury says that this Autumn Statement increases tax burden on the richest by £8.5 billion”

2.19pm: According to the Treasury Green Book international development budget, which was protected, will be cut by £680 million in total in 2013/14 and 2014/15. This can be done without breaking the promise because the aid budget is 0.7 per cent of gross national income (GNI) which is falling because the economy is doing badly.

1.59pm: Treasury says that this Autumn Statement increases tax burden on the richest by £8.5 billion

1.52pm: According to Treasury briefing the number of higher rate tax payers will have increased by 400,000 over course of this parliment but they will all be at least £270 better off.

1.50pm: If you missed the Autumn Statement, here are the key points.

1.48pm: To recap, the Scottish Government will receive an extra £394m of capital funding over the rest of the Spending Review period (up to 2015).

With its resource budget being reduced as a result of the statement, by 0.2% next year and 0.4% the year after, the total extra is less, however - £331m.

Perth and Aberdeen will also take a share of £50m Government funding to deliver ultra-fast fixed broadband access and large areas of public wireless connectivity.

1.30pm: Government Green Book on Autumn Statement shows that international development is cut the most of any area of spending at £250 million next year followed by defence £245 million.

1.24pm: Statement from Scottish Secretary Michael Moore says the Scottish Government will receive more than £300 million of new money - in addition to the £1 billion it has already received since the Spending Review – all of which it can invest in shovel-ready projects.

“Our 2.7 million vehicle owners - particularly those in rural Scotland - will benefit from the decision to cancel the January fuel duty rise,” Moore said.

“And an additional 21,000 low income Scots will be taken out of tax altogether next April, bringing the number in Scotland to 183,000 in total, with around two million more receiving an income tax cut. Fairer taxes are essential at this time of economic strain, and that is what we are delivering.”

1.22pm: Personal allowance - the amount of money someone can earn before paying income tax - is to rise by over one thousand pounds to £9,440.

1.20pm: Osborne cutting the main rate of Corporation Tax another one per cent. In April 2014, it will go down to 21 per cent.

Chancellor describes it as the “lowest rate of any major western economy...come here, invest here, create jobs here...Britain is open for business.”

1.15pm: Osborne cancels the next 3p fuel tax rise intended for January to loud cheers from both parties on the government benches. No increases in petrol taxes for nearly two and a half years.

1.11pm: Save £3.7 billion each year by 2015/15 on benefits. Most benefits to rise by one per cent over the next three years. But increase less than inflation.

1.08pm: Osborne says he is to secure “the largest tax evasion settlement in British history.” HMRC will not have its budget cut and there will be a further £77m to investigate tax avoidance.

On taxing the wealthy, he adds: “The richest will pay a greater share of revenues in every year of this coalition government than in every year of the 13 years of the last one.”

He confirms cuts in tax relief for those with big pension pots. “When you look for savings, it is fair to look at the tax relief we give to the top 1%”.

So the annual relief contributions reduces from £50,000 to £40,000.

But no mansion tax, he says - to Nick Clegg’s evident unhappiness.

1.03pm: Osborne hits tax relief on pension pots worth £1.25m or more to show “we’re all in this together” which he says to guffaws from Labour.

1.02pm: Scotland will get Barnett share of the £5bn extra capital cash, says Mr Osborne. This should out at just shy of £500m for Alex Salmond to spend on his own “shovel-ready” projects. There will also be £600m more for UK scientific research infrastructure.

1.01pm: Good news for Aberdeen and Perth which are among 12 smaller cities to get superfast broadband. They join Edinburgh which has already been allocated funding for it.

12.59pm: Very significant announcement on regional pay means that NHS, civil service and prison service pay will still be nationally based but teachers’ pay will be regionally negotiated. Scottish Government will be able to set teacher’s pay in Scotland to level it wants, which currently is higher than England.

12.57pm: The deficit - the gap between what the government spends and what it receives in tax revenue etc - is forecast to fall from 7.9% last year to 6.9% this year, then 6.1%, 5.2%, 4.2%, and 2.6%, reaching 1.6% in 2017-18.

Osborne also confirms that the country’s debt to GDP ratio will go up to 79% and will take an extra year - 2016 - before it starts coming down.

And, he says, austerity goes on for another year, up to 2017-18.

12.53pm: Osborne says the plan is working, so Autumn statement measures will be “fiscally neutral”.

12.50pm: With the agreement of the Bank of England, excess cash in asset purchase facility to be transferred to the Exchequer.

Chancellor says deficit stood at 11.2 per cent when the Government came to power, but is coming down every year of this parliament.

In the last two years the deficit has fallen by a quarter, says Osborne, and is forecast to fall this year.

The Chancellor adds that cash borrowing will fall too. Deficit to fall to 6.1 per cent this year down to 1.6 per cent by 2018.

12.46pm: Osborne believes he is on track: “In the last two years the deficit has fallen by a quarter and is forecast to fall this year too.”

12.45pm: Osborne: OBR predicts growth of 1.2 per cent next year; two per cent in 2014; 2.3 per cent 2015; 2.7 per cent 2016 and 2.8 per cent 2017.

“The economy is recovering more quickly than our neighbours,.” says Osborne.

12.43pm: Growth forecast for 2012 is down to -0.1%. The OBR says it is the eurozone crisis to blame, declares the Chancellor. We have a problem with “credit rationining”, he adds - which presumably an improvement from a credit crunch.

The OBR’s longer term forecasts show that growth will be 1.2% next year, 2% the year after and 2.3% in 2015.

12.42pm: Osborne: “The economy is recovering and more quickly than our neighbours.” Growth of 1.2 per cent growth estimated by OBR for next year.

12.40pm: OBR forecast says economy performed less strongly than expected and will shrink this year but weaker than expected growth over optimism by net trade not government fiscal policy. OBR gets Osborne out of trouble a little.

12.39pm: It is taking time but Britain’s economy is healing,” George Osborne said, prompting laughter from his opponents. “People know we face deep seated problems at home and abroad.”

He says the UK has had to live with a decade of debt and a failure to equip the economy. Abroad, there is the US fiscal cliff and a eurozone in recession. “We are on the right track and turning back would be a disaster,” Osborne says.

12.38pm: As PM sat down, Clegg motioned Cameron to move along the bench. Did he want to get out of TV shot?

Osborne begins with a bold, perhaps too bold, statement about the efforts about the UK Government. “This coalition government is confronting the country’s problems, instead of ducking them”. He adds: “It is a hard road but we are getting there. Britain is on the right track”

12.36pm: A surprisingly confident looking George Osborne opens off: “It has taken time but the British economy is healing.”

Osborne adds: “The message from this statement is that we are making progress”.

Progress but not as fast as he hoped as he will have to explain later.

12.27pm: Signs of the coalition rift growing further. For the first time since the Tories and Lib Dems came together in May 2010 there will be a separate Lib Dem briefing on the Autumn Statement. This has happened for previous Budgets and Autumn Statements and, as with the Leveson report last week, could mean there will be two different government lines.

12.23pm: During a very-soon-to-be-forgotten Prime Minister’s Questions, David Cameron insists we are “cutting the deficit”, and have reduced it by 25% since it came into office. He also exhibits what will be the Coalition’s main line of counter-attack against Labour today. “How on earth can you deal with a borrowing problem by promising to borrow more?” he asks Ed Miliband. Ed Balls, needless to say, looks like he can barely wait to get on his feet to get stuck into the fact that Mr Osborne’s deficit reduction plan is now no longer.

12.08pm: Here’s what’s at stake today... Robert Peston tweets: “Can the Chancellor save UK’s AAA rating today? Investors tell me AAA is impossible to salvage,. will go in new year”

11.30am: The Chancellor has briefed the cabinet on the Autumn Statement, telling them “Britain is on the right track” and we are “equipping Britain to succeed in the global race”.

Some leaks emerging: Lib Dem president Tim Farron says he expects benefits may be adjusted by less than the rate of inflation. He says this is “unavoidable” but the rich should shoulder the biggest burden.

But it also looks likely that Mr Osborne will raise taxes on banks to help fill the hole in his budget.

Overall, the Chancellor will be delighted this afternoon if the detail of his plans today - such as extra cash for infrastructure - overshadows the gloomy economic data to be published today which looks set to cause Mr Osborne to extend the ‘era of austerity’ and force him to re-set his big deficit reduction plans.