Afternoon summary
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The Institute for Fiscal Studies has criticised George Osborne for a misleading budget pledge to help Britain’s lowest paid workers, and warned that the chancellor’s new soft drinks tax could backfire by raising sugar consumption.
As Katie Allen reports, the respected thinktank used its closely watched post-budget analysis to highlight “disingenuousness” in Osborne’s claims he was taking the lowest paid “out of tax”. It also warned that Osborne had only a 50/50 chance of meeting his goal to put the public finances in surplus by the end of the decade, and attacked a decision to freeze fuel duty for a sixth year running.
- The Conservative MP Andrew Percy has said that a “significant number” of his backbench colleagues are opposed to plans for a £1.3bn cut in disability benefits. As the Press Association reports, he said that the squeeze on personal independence payments (PIPs) sent out the wrong message and that he has organised a letter to the chancellor from concerned backbenchers urging a rethink. Speaking on the World at One he said
It is not about welfare reform or necessarily wholly about getting better value for money. This is about the welfare cap...
The government has a very small majority so you don’t need very many for this to be a problem of parliamentary arithmetic. It is fair to say the numbers on this who have expressed concern are very significant indeed.
He also posted about this on Twitter.
My name appears to be out there on disability benefit changes so let me me clarify. My concern relates to Personal Independence Payments ...
— Andrew Percy (@andrewpercy) March 17, 2016
... these are still out to consultation and as part of that I've made clear I dont think they are acceptable. Different to recent ESA change
— Andrew Percy (@andrewpercy) March 17, 2016
If I can be honest, I'd rather have a penny or two on fuel if it protects PIP. A point a made in weeks running up to budget
— Andrew Percy (@andrewpercy) March 17, 2016
The reason I say that is because I do feel if opposing something, we should also identify where else it could be funded from
— Andrew Percy (@andrewpercy) March 17, 2016
- Cameron has said that Britain will not be taking any extra migrants as a result of a deal being struck between the European Union and Turkey. He was speaking as he arrived at an EU summit in Brussels.
- Stephen Crabb, the Welsh secretary, has said paedophiles involved in abusing children in care who believe they are “untouchable” should be “looking over their shoulder”. In a statement to MPs he said successes by an ongoing criminal investigation into recent allegations of historical abuse in the North Wales care system shows offenders can be tracked down. He said that Operation Pallial, led by the National Crime Agency (NCA), has seen seven men convicted while 102 complaints are being investigated, with a total of 51 men or women arrested or interviewed under caution. A further eight people have been acquitted after a jury trial, Crabb added.
That’s all from me for today.
Thanks for the comments.
And here are two more charts from the IFS’s distributional impact analysis (pdf).
This one shows the impact of all tax and benefit changes since the election, by income decile.
And this one shows the impact of all tax and benefit changes since the election, by household type.
Working-age families with children in the second poorest decile do worse. They are set to lose 12% of their net income.
The IFS briefing is now over.
The final question was about the distributional analysis. (See 2.45pm.) Paul Johnson was asked to confirm the the rich gained most from yesterday’s budget measures.
He agreed that they did - although he said that, compared to the way other budgets have affected income, the effect was rather small. Although the rich gained most, their income only went up by about 0.2%, he said.
If you looked at a chart which covered the period from 2010 to 2020, you would not be able to see what happened yesterday on the chart [because] it was so small. But given what did happen, as you can see on that chart, the biggest gainers were those towards the top of the income distribution, with most towards the bottom broadly unaffected.
Updated
IFS says the wealthy do best from Osborne's budget measures
Here is the key chart from the IFS’s distributional analysis. It shows the long-term impact of the tax and benefit reforms in yesterday’s budget.
It shows the richest 20% of people are doing best, both in cash terms and as a proportion of income.
To be more precise, in proportional terms (ie, as a proportion of net income) those in the second richest decile (the ninth) do best (look at the white line), closely followed by the wealthiest decile. Both groups are well ahead of the group that does third best (the third richest decile).
In cash terms, the richest decile does best, followed by the second richest decile, followed by the third richest decile.
The IFS has now published its distributional impact analysis of the budget (pdf).
Q: Can you say more about the extra year of austerity? I must have missed it when the chancellor mentioned it yesterday.
Johnson says, because the economy is doing less well, the government will have to spend less.
All the IFS presentations are over. Paul Johnson and his team are now taking questions.
Q: Why have you not done a distributional impact assessment?
Stuart Adam says the usual charts will be published on the IFS’s website.
Johnson says they were not included in this presentation because the changes were relatively small. But high earners did best from yesterday’s measures, he says.
More from the briefing.
IFS says 370,000 disabled people will lose an average of £3,500 a year thanks to PIP cuts
— John Ashmore (@smashmorePH) March 17, 2016
But IFS also points out that spending on disability benefits has "almost quadrupled" in the last 20 years
— John Ashmore (@smashmorePH) March 17, 2016
IFS says lifetime ISA policy could turn out to be 'very expensive'
At the IFS briefing Stuart Adam has also said that the lifetime ISA could turn out to be “very expensive”.
IFS says people will transfer savings into Lifetime ISAs to get the £1k a-year top-up. "This could potentially be a very expensive policy."
— Jack Blanchard (@Jack_Blanchard_) March 17, 2016
We wrote more about why this was likely to be the case on our budget blog yesterday.
IFS says increasing tax allowance is 'a giveaway to the better off'
Stuart Adam is currently giving a presentation at the IFS briefing about the distributional impact of the budget.
I will post the key charts as soon as they are available, but he has said that increasing the income tax threshold is “very much a giveaway to the better off”.
"This is very much a giveaway to the better off" - IFS on raising the personal allowance
— John Ashmore (@smashmorePH) March 17, 2016
IFS says 43% of workers now do not earn enough to pay income tax. So raising threshold further "is very much a giveaway to the better-off"
— Jack Blanchard (@Jack_Blanchard_) March 17, 2016
This IFS chart shows how the number of higher rate taxpayers is expected to rise.
Number of higher- and additional-rate taxpayers #Budget2016 - https://t.co/7NXZwCsv08 pic.twitter.com/jBdkpzSGrO
— IFS (@TheIFS) March 17, 2016
The IFS briefing is still going on. Kate Smith has just finished a detailed presentation on the sugar tax (pdf).
Here is a graph that illustrates the point Paul Johnson was making about the sugar tax being irrational, because there is not a standard rate per gram of sugar.
Paul Johnson's budget briefing - Summary
Here are the main points from the opening statement from Paul Johnson, director of the Institute for Fiscal Studies.
- Johnson said austerity was being extended for another year.
In the longer term the public finances are kept on track only by adding yet another year of planned austerity on the spending side. Spending in 2020- 21 will be £10 billion less than planned ...
On these forecasts the Chancellor has now effectively lost the scope to raise public service spending in 2020-21. The OBR has day-to-day spending by central government on public services flat that year, therefore falling as a fraction of national income. Yet another year of austerity pencilled in.
- He accused George Osborne of being “disingenuous” about his tax cuts.
The disingenuousness of the rhetoric on the personal allowance continues. The chancellor boasted yesterday that the increase in it “means another 1.3 million of the lowest paid workers taken out of tax altogether”. No it does not mean that. Taken out of income tax, yes. But not taken out of direct taxes on income. It remains the case that National Insurance Contributions, which are just another tax on earnings, start to be paid once earnings rise above about £8,000.
- He said lower productivity growth could lead to Britain being poorer in the future.
If the OBR is right about [productivity growing more slowly in the future than expected] that we should all be worried. This will lead to lower wages and living standards, not just lower tax revenues for the Treasury.
- He said the sugar tax could lead to the consumption of sugary foods going up.
Only around 17% of added sugar consumed comes from soft drinks – though the proportion in households with children is a little higher. Obviously the soft drinks tax won’t have any impact on the other 80+% of sugar consumption – indeed it might increase it as people move away from soft drinks to other sugary products.
- He said the construction of the sugar tax was illogical.
Tax will be levied at zero pence per gram of sugar for drinks containing 4g of sugar per 100ml, at 35p per 100g of sugar for drinks containing 5g per 100ml, falling to less than 15p per 100g for the most sugary drinks. It’s hard to see the rationale for that.
- He said Osborne had frozen alcohol duty on the drinks most associated with problem drinking.
While duty on wine rose in line with inflation yesterday, duty on beer, spirits and cider was frozen. Spirits and strong cider are the tipples of choice among the heaviest drinkers. Their preference for strong cider at least is largely down to the fact that it bears much lower tax per unit alcohol than any other drink.
- He said one of Osborne’s claim about alcohol duty was “nonsense”.
In a bizarre aside Mr Osborne linked freezing spirits duty to the importance of whisky exports. Duties are not paid on exports. This is rhetorical nonsense.
- He said there was something “rather odd” about the calculations Osborne had used to get his budget forecast into surplus by 2019-20.
- He said Osborne was “running out of wriggle room” in terms of trying to ensure the gets the budget into surplus by the end of the decade.
The problem for the Chancellor though is perhaps less that some of these changes were made, and more that he is running out of wriggle room. His chances of him having a surplus in 2019–20 are only just the right side of 50:50.
- He said that if the public finances deteriorate again, spending will have to be cut or taxes put up.
If there was another downgrade in fiscal forecasts of a similar magnitude and the Chancellor did wish to remain on course to deliver a budget surplus in 2019–20 then this would surely require more real policy change – presumably incorporating at least some permanent tax rises and specific spending cuts. Given the chancellor’s objectives, that would be the appropriate response.
- He said the chancellor’s refusal to increase fuel duty should be “a big worry” for the Treasury.
After six years of freezes (i.e. cuts in real terms) one must begin to wonder whether these duties will ever rise again, especially given current low oil prices. Real duties are now back at levels not seen since the mid 1990s. Add in the effects of improved efficiency and the cost of a driving a mile in a new car is now at easily its lowest level since then. Given that fuel duties bring in a handy £28 billion a year this has to be a big worry for the Treasury. Given that the harm created by driving in terms of increased congestion is rising, as is the harm from carbon emissions created by using petrol, we might also be worried by the economic and environmental cost of continuing with this policy.
Gemma Tetlow is now making a presentation about the public finances.
Johnson says Osborne raised capital gains tax in 2010, and cut it yesterday.
He is the latest in a long line of chancellors who do not know what do to about it, he says.
The Mirror has been quick - it’s got a story up about the IFS briefing already.
Johnson says his increase in the basic rate personal allowance is taking workers out of tax.
But that is wrong, Johnson says. These workers are still paying national insurance.
Johnson says the cost of driving a mile in a new car is easily at its lowest level for 20 years.
He says if the Treasury cannot raise fuel duty now, when can it raise them. That could create potential problems for the public finances, as well as for climate change, he says.
Johnson says he does not know why Osborne pretends cutting whisky duty will help exports, because duty is not paid on exports.
Johnson says the “underlying rationale” of the way the sugar tax is constructed is hard to see.
IFS says sugar tax could lead to people consuming more sugary foods
Johnson says less than one fifth of total sugar consumption comes from sugary drinks. The sugar tax will not have any effect on this other 80% of sugar consumption. It could even increase it, he says.
- IFS says sugar tax could lead to people consuming more sugary foods.
Johnson says the cut in corporation tax is more evidence of the government’s desire to want to make the UK a desirable location for multinational companies.
Overall, the change to corporation tax has been substantial, he says.
IFS head Paul Johnson is reiterating 50-50 chance of Osborne getting finances into surplus by end of decade.
— Katie Allen (@KatieAllenGdn) March 17, 2016
Johnson says Osborne has been able to keep within his surplus rule by shifting spending.
The focus on 2019 is obvious in the numbers, he says.
Johnson says Osborne has broken his welfare cap rule, and his debt rule. The surplus rule is the only one still standing, he says.
Johnson says the sugar tax is the first new “sin” tax for quite some time.
IFS says sugar tax won't have any impact on 80% of sugar consumption
— James Landale (@BBCJLandale) March 17, 2016
Updated
IFS says Osborne now expects austerity to extend for another year, to 2020-21
Johnson says Osborne has now “found” efficiency savings of £3bn that he did not find in November.
And he says austerity has been extended.
- IFS says Osborne now expects austerity to extend for another year, to 2020-21. Spending that year now due to be £10bn less than planned.
IFS briefing on the budget
Paul Johnson, the IFS director, is starting the IFS briefing.
You can watch it here.
He says the £27bn that the OBR found down the back of the sofa in November turned into a £56bn loss.
That is mainly because of assumptions the OBR made about future productivity growth, he says.
That was probably the most important thing the OBR said.
- IFS says fall in estimate of productivity growth could be most important announcement in budget.
The Institute for Fiscal Studies’ briefing on the budget is due to start at 1pm.
You should be able to watch it on a live stream here.
I will be covering it in detail.
Earlier I mentioned the Daily Mail’s take on the budget and its interest in Theresa May’s breasts. (See 9.23am.) Laura Bates has now written about this for Comment is Free (or Opinion, as we now call it.)
Here’s here conclusion.
We can only continue to speculate over how long it will be before women are able to participate in political processes without parts of their bodies being considered more important than the words coming out of their mouths.
Of course, in brighter news, there was one occasion on which an MP stood up to raise precisely these issues in Westminster itself, when Caroline Lucas rose in a “No more Page 3” T-shirt to discuss the objectification of women in the public sphere. The outcome? She was asked to cover up.
The Tories have responded to Lucy Powell’s claim about there being a £560m black hole in the government’s plans to turn all English schools into academies (see 12.22pm), it is reported at PoliticsHome. A Conservative spokesperson said:
These back of the fag-packet estimates are way off the mark. They neglect the significant funding earmarked for academisation at the spending review and make totally inaccurate assumptions about the cost of converting schools to academy status.”
The chancellor’s budget yesterday ensured that the department is fully funded to support the additional costs of delivering a fully-academised school system. The Labour party’s shoddy calculations show we are right to look into improving the teaching of maths to 18.
My colleague Tom Clark has an interesting theory about George Osborne’s budget. He thinks Osborne may be preparing for an early election.
The plan is for a pretty significant loosening of the purse strings, reaching nearly £8bn by the middle of this parliament, and then a seriously sharp contraction – of £14bn – in the immediate run-up to the general election. Vague future cuts would become concrete and specific, and higher taxes would start to bite just before the British public were due to have the scheduled say on their government.
I use the word “scheduled” advisedly, because this bizarre upending of the regular rules of the political cycle begins to make sense only if the chancellor had in mind a rather earlier date with the voters. Let us imagine, for example, that he envisaged a new Conservative leader taking over from David Cameron – who has already promised to go before polling day – some time about 2017, and then doing what Gordon Brown failed to do in 2007, and heading to the country with a confident cry that a new leader required a new mandate.
Even before the budget, there were reasons to imagine that this might be the plan. There is a happy historical precedent – Anthony Eden went to the country after taking over from the ailing Winston Churchill in 1955, and increased his majority – as well as the unhappy contemporary case of Brown bottling it. The opposition is currently hopelessly divided, with Labour’s radical Corbynite membership and a middle of the road parliamentary party so preoccupied with fighting each other that the Conservatives might enjoy a clear run in a national race. Labour’s struggle is unlikely to be settled decisively in the next year or two, but after that things get harder to call, and the opposition could potentially become more of a threat.
What about the Fixed-term Parliaments Act, you ask. Well, as Tom points out, there are ways around that. He explains that in his article. You can read it in full here.
In the Commons John McDonnell has just quoted what Robert Chote, the head of the Office for Budget Responsibility, told Newsnight last night. Chote said that global factors were not primarily to blame for the deteriorating public finances since last autumn; the problem was mainly due to weaker-than-expected domestic economic activity.
Labour says government's academy plans leave a £560m black hole in school budgets
Lucy Powell, the shadow education secretary, claims that there is a £560m black hole in the government’s education plans. It wants all schools in England to become academies. According to Labour, 15,632 schools in England are not yet academies and on average converting to academy status costs £44,837. But the government has just set aside £140m for academisation, leaving a shortfall of £560m, Powell said. She went on:
The chancellor’s plans for education are unravelling. Schools are already facing an eight per cent cut to their budgets, the first time education spending has fallen since the mid-1990s. This half a billion pound black hole in the education budget means that schools will be further out of pocket as a result.
John McDonnell opens budget debate
John McDonnell, the shadow chancellor, is opening today’s budget debate.
He started by saying that the budget was “an admission of abject failure by the chancellor”. Since becoming chancellor, George Osborne has “missed every major target he has set himself”, McDonnell said.
Richest households gain £225 from Osborne's income tax cuts - and the poorest just £10, thinktank says
Here are the key points from the Resolution Foundation’s budget analysis (pdf).
- The Resolution Foundation says the richest 20% of households will gain £225 on average from the income tax cuts announced yesterday, while the poorest 20% will get just £10 on average.
- It says by 2020 the poorest 20% of households will lose an average of £550 from the tax and benefit changes announced since the election, while the richest 20% will gain £250.
Alternative figures show that the poorest half of households will lose £375 by 2020, while the richest will gain £235, from all Osborne’s post-election policies.
Taking a longer view, the latest income tax changes further skew the distributional impact of policies announced since the 2015 election. After accounting both for previous announcements (relating to the National Living Wage, benefit freezes and cuts to Universal Credit and the tax credit system) and for those from the Budget that we can reasonably model (including the income tax threshold changes, a further reduction in the rate of Capital Gains Tax from next month and another freeze in the fuel duty) we find that households in the bottom half of the income distribution face being worse off in 2020-21 than they would have been in the absence of any policy changes.
We estimate their average loss to be £375 (or 1.8 per cent of their net income). In contrast, we estimate average gains of £235 (or 0.5 per cent of their net income) among households in the top half.
- It says the £2.5bn tax cuts announced yesterday “cannot be justified”.
- It says the Conservative’s manifesto commitment to raise the basic rate tax allowance to £12,500, and the higher rate threshold to £50,000, by 2020 will cost another £2.5bn, with a third of the gains going to the richest 10%.
The scale of cash consolidation needed in this pre-election year will be made even tougher by the commitment to raise the Personal Tax Allowance (PTA) to £12,500 and Higher Rate Threshold (HRT) to £50,000 by the end of the parliament. The foundation estimates that these tax cuts will cost a further £2.5bn by 2020-21, with a third of the gains going to the richest ten per cent of households.
- It says that the government will have to raise taxes or cut spending by £32bn in 2019 - and that it is very hard to imagine this actually happening before an election. This is from Matt Whittaker, the Resolution Foundation’s chief economist:
However by increasing spending through expensive and poorly targeted tax cuts, the chancellor has created a herculean task of reducing borrowing by £32bn in a pre-election year. It is hard to see a government seeking to build a pre-election feelgood factor delivering a consolidation comparable to that seen during the Chancellor’s first two years in office.
Updated
Here is the Resolution Foundation’s 22-page budget analysis in full (pdf).
I will post more on it shortly.
Osborne will have to raise taxes or cut spending by £32bn in 2019, says thinktank
A string of giveaways in the next couple of years will increase government borrowing above his previous forecasts and force him to find £32bn of tax rises and spending cuts in the last year of the parliament.
The thinktank said the decision to offer tax cuts to wealthier groups in the form of higher tax thresholds and lower capital gains tax was “misguided” when official forecasts showed there was a £56bn black hole in the government’s finances.
“By increasing spending through expensive and poorly targeted tax cuts, the chancellor has created a Herculean task of reducing borrowing by £32bn in a pre-election year. It is hard to see a government seeking to build a pre-election feelgood factor delivering a consolidation comparable to that seen during the chancellor’s first two years in office.
Updated
Labour and the Tories have agreed a deal over Short money cuts, Bryant indicates
Ministers seem to have backed down on the plans to slash “Short money”, the money that goes to opposition parties to fund their work in parliament.
The original plans generated furious protests when they were published last month.
In a joint response to the government’s consultation the opposition parties offered to accept some changes that would cut the amount spent on Short money, but opposed the initial plan that would have seen Labour losing £1.3m immediately.
In business questions Chris Bryant, the shadow leader of the Commons, indicated that a deal had been done. Responding to the news that MPs will vote on changes next Wednesday he said:
Our usual channel discussions have been very productive and I thank the leader for the part that he has played in them. I’m hopeful that the House will be able to welcome the package when it is finally published.
My colleague Roy Greenslade has posted a good blog with a round-up of the Fleet Street reaction to George Osborne’s budget.
IFS says UK faces 'genuinely big' cuts or tax rises if economy deteriorates again
In his interviews this morning George Osborne played down the prospect of his having to impose further cuts, or increase taxes, in the future. (See 9.23am.)
But on the Today programme earlier Paul Johnson, the Institute for Fiscal Studies’s director, said that Osborne only had a 50/50 chance of achieving his goal of getting the budget into surplus by the end of the decade and that, if the economy deteriorated again, “genuinely big” cuts or tax rises would be necessary. Johnsons said:
Within [Osborne’s] very tight rule he will probably get away with this this time round. But there’s only about a 50-50 shot that he’s going to get there.
If things change again, if the OBR downgrades its forecasts again, I don’t think he will be able to get away with anything like this. I think he will be forced to put some proper tax increases in or possibly find some yet further proper spending cuts.
I think this is going to be the last chance he gets to move things around like this without doing anything genuinely big to the public finances.
Morgan publishes education white paper
Nicky Morgan, the education secretary, has published the “Educational Excellence Everywhere” white paper. It contains plans to turn every school in England into an academy, but also to address under-performance in schools, particularly in the north.
Here is the 128-page white paper (pdf). And here is a written ministerial statement about it. (I haven’t seen a press notice yet.) In the statement Morgan says:
The excellence our reforms has unlocked in some parts of our schools system has not yet spread across the whole country. For example, 11 of the 16 English local authorities that have fewer than 60% of children attending good/outstanding schools, lower than national levels of GCSE attainment and where pupils make less than national levels of expected progress are in the North of England. Of the 173 failing secondary schools in the country, 130 are in the North and Midlands and 43 are in the South ...
We believe that the fastest and most sustainable way for schools to improve is for government to trust this country’s most effective education leaders on the front line, holding them to account for unapologetically high standards for every child, but letting them determine how to reach them. This system will respond to performance, extending the reach of the most successful leaders and acting promptly by intervening where performance is not good enough. It will also ensure they have the necessary tools to seize the opportunities provided by greater autonomy.
This chart from the white paper helps to support Morgan’s claim that schools in the north are more likely to have problems. It shows the proportion of pupils in secondary schools with good or outstanding leadership and management in England. The yellow bits on the map are places where 100% of pupils are in schools with good leadership. The darker it gets, the worse the figures are.
John McDonnell's morning interviews - Summary
John McDonnell, the shadow chancellor, has also been doing a round of interviews this morning. Here are the key points he’s been making.
I’ve taken some of the quotes from the Press Association, from PoliticsHome and from the BBC’s budget reaction blog.
- McDonnell said he was “really angry” about how unfair the budget was.
The budget was so unfair. What I was really angry about, and this came up last week, is that George Osborne has cut capital gains tax, and that actually is a cut in tax to the 5%, the wealthiest people in this country. And who has he taken the money from? People with disabilities, and I think that’s unacceptable.
- He said 80% of the cuts were falling on women.
- He said Labour would probably support the plans for a lifetime ISA, but that the party wanted to study the detail.
We want to do anything that will encourage savings, but at the same time we have to recognise that the large number of people, almost 50%, actually have no savings whatsoever - young people in particular. There’s issues about how that effects the pensions industry, so we’ll look at the detail of that.
- He said he was worried about the impact the cut in business rates would have on council funding.
There’s a worry now that government is cutting grant to local councils, withdrawing all grant eventually, forcing them to rely on local business rates, and if they’re cutting business rates at the same time, that means that you’re actually destabilising local government funding.
- He said Labour supported increasing the basic rate tax allowance.
- He refused to be drawn on how large state spending should be as a proportion of GDP. Asked about this, he replied:
We would develop the role of the state in which develops our economy efficiently and effectively. It will be on the basis of what works and we will develop our policies on the basis of consideration of what works.
My view is that we will develop this state on the basis of what we need. As soon as you have a figure like that, you set yourself up to either fail or fail the needs of the economy.
George Osborne's morning interviews - Summary
Here are the main points from George Osborne’s morning interviews.
- Osborne said that Britain was on the verge of getting agreement from Brussels to allow it to abolish the so-called “tampon tax” - 5% VAT on tampons. (See 8.40am.)
- He refused to rule out further cuts. Asked if further cuts might be necessary on the Today programme, he replied:
I’ve never shied away from saying that if the country can’t afford something, we’ve got to take action. And we’ve got to cut our cloth accordingly.
But he also played down the prospect of cuts, or tax rises, being necessary. In an interview with BBC Breakfast he said his current plans should deliver a budget surplus.
We have got to hold to the course that we have set out.
I have set out the plans in the budget and then a completely independent body which everybody respects - the Office for Budget Responsibility - has looked at those plans and it says, ‘If you hold to the course, you deliver those plans. If the economy grows as expected, then we will have a surplus towards the end of the parliament’. We wouldn’t need anything extra like more spending cuts or more tax increases.
- He defended his decision to cut the Personal Independent Payment (PIP), a disability payment. The government was responding to an independent report which recommended changes to ensure that the benefit was focused on those who needed most help, he said. And he said that overall the money going to disabled people was going up.
- He played down the controversy about Daily Mail coverage of the budget focusing on Theresa May’s cleavage. An article for Mail Online yesterday carried the headline “Boom and Bust” alongside a pictures of the home secretary watching the budget speech in a low-cut top. Everyday Sexism criticised the report, although the Mail does not seem bothered; today’s paper carries four separate pictures of May in her top on page three. Asked by LBC if he had provided the “boom” while May provided the “bust”, Osborne replied:
I did see those photos. All I can say is I think it is something to do with the camera lens and the angle.
Updated
Here is some Twitter comment on George Osborne’s Today interview.
From the Gaurdian’s Nicholas Watt
One of less certain post budget performances @BBCr4today. Wondering if @George_Osborne thinks initial instinct right: shd have taken for sec
— Nicholas Watt (@nicholaswatt) March 17, 2016
By “for sec”, he means the foreign secretary post.
From the Sun’s Tom Newton Dunn
John Humphrys not really laying a finger on George Osborne yet. Needs to get on to sugar tax and his dead cat on table motive #BBCR4today
— Tom Newton Dunn (@tnewtondunn) March 17, 2016
While we’re on the subject of the tampon tax, it is worth recalling, for anyone who has not heard it before, the story about how Gordon Brown cut VAT on tampons from 17.5% to 5% in 2000 - but did not mention it in his budget speech because he found the prospect of talking about sanitary products in the Commons too embarrasing.
Damian McBride, his former spin doctor, thinks it is the only example of a chancellor implementing a budget tax cut but not announcing it in his speech to MPs. Instead it was announced in the documents published by the Treasury on budget day.
What Osborne said about the tampon tax
This is what George Osborne said about Britain being on the verge of getting Brussels agreement to scrap the tampon tax.
I said we would get agreement that we could reduce this rate to zero. And I think we are on the verge of getting that international agreement ... I think we are going to get that agreement in the next few days, we hope. And people will see two crucial things about this government. First of all, we are a strong voice in the world and we get what we ask for because we are at the top table. And, second, we do the right thing by our country.
The question came up because a Labour MP, Paula Sherriff, has tabled an amendment to the finance bill to abolish the 5% VAT raised on women’s sanitary products. At the moment the government cannot reduce it to zero because of the EU’s rules about VAT, and the government faces defeat because this is an issue where Labour MPs will unite with Tory backbenchers (some of whom may not feel strongly about tampons, but certainly do feel very strongly about the EU.)
Osborne says Britain on verge of getting Brussels agreement to scrap tampon tax
Q: A Labour MP has tabled an amendment to the finance bill to cut the tampon tax to zero. If that goes through, will you remove the tampon tax?
Osborne says he understands people’s anger about this.
He says he has ensured all the money from VAT on tampons goes to women’s charities.
He says the government is committed to getting an agreement in Brussels that will allow us to reduce the tampon tax to zero. He says Britain is “on the verge” of getting that agreement. He says he expects an announcement “within the next few days”.
- Osborne says Britain on verge of getting Brussels agreement to scrap tampon tax.
And that’s it. The interview is over.
I will post a summary soon.
Osborne says the government needs to do more to tackle productivity.
Productivity is an economist’s term for what is achieved by the talents and efforts of the British people.
He says today’s education white paper will help.
All Western countries face the same challenge, he says.
Q: A boss on this programme yesterday said our biggest export to the rest of the world was fresh air (because of the trade deficit, and containers leaving the UK empty).
Osborne says the car industry has been a major success story.
Q: We think the French are idle. But they are more productive. They achieve more by Thursday than we do by the end of the week.
Osborne says he accepts productivity is a challenge.
He says he is talking from the Pennines, where he is visiting a school.
Osborne refuses to rule out further cuts
Q: But we could be facing greater cuts?
Osborne says he has never shied away from saying if the country can’t afford something, it has to cut its cloth accordingly.
Q: So the answer is yes.
Osborne says under Labour the government was not prepared for the recession.
- Osborne refuses to rule out further cuts.
Q: Most people think you will need a miracle to get the budget into surplus.
Not quite, says Osborne.
Q: Okay, but the OBR says the chance is 50/50.
Osborne says that is what the OBR has always said.
The budget surplus is necessary so as a country we are living within our means.
Q: So is that an absolute commitment?
Osborne says the commitment applies “in normal times”.
Q: So it’s not a firm commitment. You have not quite fiddled but adjusted the figures. Is there a commitment to reach a surplus.
Osborne says there is a commitment “in normal times”.
Q: So no is the answer.
Osborne says obviously in a recession you have to alter your plans. That is a sensible, flexible, common sense approach.
Q: You made three commitments to the nation. You have failed to achieve two of them, and it looks as if you will fail on the third. What do you have to do to get the sack?
Osborne says the people can chuck out a government if they don’t like it.
People know there are problems around the world. They want to know how the government will respond.
He is not pretending he has abolished boom and bust.
Q: But you haven’t?
Osborne says he has cut spending. People complain about this on the Today programme every day.
Borrowing has gone down, he says
Q: But you are not meeting your target of getting debt down as a proportion of GDP.
Osborne says he said that in the budget. Economic conditions have deteriorated in recent months. That is why he adjusted his plans.
These sound like abstract rules.
But this is really about economic security, he says.
George Osborne's Today interview
George Osborne is on Today. John Humphrys is interviewing him.
Osborne says he has achieved a lot of what he set out to achieve.
Q: But you set yourself three targets, and you have failed to meet two of them.
Osborne says he set out his targets. They are in a charter. He is trying to repair the public finances.
Q: You said you were going to do these things. And you have failed to achieve two out of three.
Osborne says he subjected himself to independent scrutiny. No chancellor has done this before.
When he became chancellor, the government was borrowing £1 for every £4 it spent. Now it is £1 for every £14.
He says he does not hide from setting out the challenges the country faces.
The day after the budget is normally the day when the toughest scrutiny takes place, and George Osborne is doing a round of interviews. He is about to appear on the Today programme and I will be covering that in detail, before picking up on what he has said in all the other ones.
Later we’ve got the much-anticipated Institute for Fiscal Studies briefing on the budget.
Here’s the Guardian’s overnight budget splash.
Here is the agenda for the day.
8.10am: George Osborne’s Today interview.
Around 11.30am: MPs resume debate on the budget.
1pm: The Institute for Fiscal Studies holds its post-budget briefing.
2pm: Nicky Morgan, the education secretary, gives a speech on the education white paper.
I will mostly be focusing on budget matters today but I will also be covering the breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web. I will post a summary at lunchtime and another in the afternoon.
If you want to follow me or contact me on Twitter, I’m on @AndrewSparrow.
I try to monitor the comments BTL but normally I find it impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer direct questions, although sometimes I miss them or don’t have time. Alternatively you could post a question to me on Twitter.
If you think there are any voices that I’m leaving out, particularly political figures or organisations giving alternative views of the stories I’m covering, do please flag them up below the line (include “Andrew” in the post). I can’t promise to include everything, but I do try to be open to as wide a range of perspectives as possible.
