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Osborne: Britain will be back in the black within five years

By Western Morning News  |  Posted: December 06, 2013

By Graeme Demianyk, WMN London Editor, Twitter: @GraemeDemianyk

  • Chancellor of the Exchequer George Osborne delivers his Autumn Statement to MPs in the House of Commons, yesterday

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George Osborne has boasted the British economy is growing at twice the rate expected just nine months ago, and faster than any other major country.

Delivering his Autumn Statement, the Chancellor said Britain was set to be back in the black by 2018/19 – but warned the job was "not yet done" and pledged "a recovery for all".

To Tory cheers, he declared: "Britain's moving again; let's keep going."

But Shadow Chancellor Ed Balls accused Mr Osborne of being in "complete denial" and told the Commons living standards for families were falling "year on year on year".

The Chancellor believes improving economic data justifies his austerity plan, but he made plain the tough medicine would continue.

The most controversial new measure to tackle the nation's debt mountain was to tell those under the age of 50 they will have to work into their seventies before drawing down the state pension.

Unions warned young people are facing the prospect of working "until they drop" under the new retirement age plans.

People now in their 40s will not now get the state pension until they are 68, while those in their 30s will have to wait another year until they are 69.

And the young jobless should lose benefits as he ordered a fresh round of £3billion in spending cuts over three years.

Ben Bradshaw, Labour MP for Exeter, said: "Everyone understands that because we're living longer we'll have to work later, but what worries me about this Government is that all of the burden is being placed on young people who will now not only have to work till 70 but have student debts and can't get on the property ladder. We're creating real generational injustice."

The autumn statement, a half-yearly update of tax and spending plans, are based on the economic projections provided by the independent Office for Budget Responsibility.

Mr Osborne warned higher growth, lower borrowing and falling unemployment would be "squandered" if he does not stick to his austerity programme.

In March, the OBR forecast growth of 0.6% in 2013 and 1.8% in 2014. But yesterday it dramatically upgraded the figures for this year to 1.4%, the highest in-year increase since 1999 and making the British economy the fastest growing in the developed world. It also predicted the UK budget deficit would be eradicated in 2018/19 for the first time in 18 years.

Other key announcements included scrapping the planned 2p a litre fuel tax rise; an extra £1 billion of cuts from the budgets of government departments for each of the next three years; and a cap on total government welfare spending to start in 2015.

Giveaways confirmed included a tax break for married couples from 2015, trumpeted by the Conservatives, and free school meals for all infant age school pupils, a flagship Liberal Democrat policy.

George Eustice, Conservative MP for Camborne and Redruth and a Government minister, said: "It is clear the economy is recovering and that George Osborne's plan is working but it is also clear that whilst a lot has been achieved there is still more to do.

"I particularly welcomed the further freeze in fuel duty that is so important for households and businesses in Cornwall as well as the scrapping of employers' National Insurance for under-21s and helping 16 and 17-year-olds to find apprenticeships. Young people need a break in life and getting that first job is absolutely critical but can be very difficult."

Andrew George, Liberal Democrat MP for St Ives, said: "This was three-quarters a Liberal Democrat autumn statement. It shows what can be achieved if parties come together to provide political stability, in the national interest.

"There's plenty of room to have strong disagreements on detail – and I'll make sure that the Liberal Democrats continue to stick up for the underdog. But the broad direction has to be the right one."

Plan for 2p-a-litre fuel tax rise to be scrapped

The pressure on hard-pressed rural motorists has been eased slightly as Chancellor George Osborne scrapped a 2p-a-litre fuel tax rise.

Mr Osborne had first announced at this autumn’s Conservative Party conference that the 2014 rise would be cancelled – but only if this was financially possible.

Countryside residents in the region are more reliant on a car than urban counterparts given the parlous state of rural public transport.

The freeze was among a slew of measures to tackle the so-called “cost of living crisis”.

Among the heavily trailed “giveaways” were an income tax allowance transfer for married and civil partnership couples worth £200 a year, free school meals for infants to save around £400 a year, and reform of energy bills to knock almost £50 off.

Mel Stride, Conservative MP for Central Devon, said: “This was an important statement for my constituents, especially the freeze in fuel duty which will save £11 every time my constituents fill up compared with what it would have been under Labour plans. In remote rural areas fuel prices really matter.”

In the House of Commons, Oliver Colvile, Conservative MP for Plymouth Sutton and Devonport, welcomed the Chancellor’s pledge to spare councils from another round of Whitehall budget cuts, and said it was reminder to local authorities that they “no longer need to increase council tax”.

Mr Osborne replied: “If his council does not deliver a council tax freeze, he can ask Labour why it is putting up the cost of living for his constituents.”

But Alison Seabeck, Labour MP for Plymouth Moor View, said: “The Chancellor spoke of economic recovery and improved predictions for future growth, however this simply is not being felt by thousands of Plymouth families who are experiencing higher prices to heat their homes, stagnant wages and have a Chancellor who fails to stand up for them, and sides with the rich.”

At a glance:

Forecast for 2013 economic growth upgraded from 0.6% to 1.4%, and for 2014 from 1.8% to 2.4%.

The OBR forecast of growth for the four years from 2015 has been forecast at 2.2%, 2.6%, 2.7% and 2.7%.

Employment will rise by 400,000 in 2013, says Office for Budget Responsibility (OBR). Unemployment forecast to fall from 7.6% this year to 7% in 2015, and 5.6% by 2018.

Public sector net borrowing is forecast to be 5.6% in 2014, then 4.4%, 2.7% and 1.2% in subsequent years, with a small surplus by 2018/19.

The Government will borrow £111 billion this year – £9 billion less than predicted in March. Borrowing to fall to £96 billion next year, then £79 billion, £51 billion and £23 billion in following years.

Debt is forecast at 75.5% of GDP this year, rising to 78.3% next year, and 80% in 2015, before falling to 79.9% in 2016, then 78.4% and 75.9% in following years.PENSIONS

State pension to rise by £2.95 a week from next April.

Pensioners to get chance to make voluntary national insurance contributions to boost retirement income.

New principle that people spend a third of adult life in retirement implies increase in state pension age to 68 in mid-2030s, 69 in late 2040s.

A package of measures to tackle tax avoidance, evasion, fraud and error is expected to raise more than £9 billion over next five years.

Capital gains tax will be imposed on non-residents who sell residential property in the UK from April 2015.

A new £1,000 transferable tax allowance for married couples from April 2015 will be “just a start”.

Rolling back green levies will take an average £50 off energy bills.

Planned petrol tax rise of 2p/litre next year is scrapped.

Employer national insurance contributions for staff under 21 to be removed.

Infrastructure plan includes agreement with Hitachi on next nuclear power station in Anglesey, deal with insurance industry to invest £25 billion and support for long-term investment in offshore wind.

The Chancellor announced commitment to invest in quantum technology, tax allowance halving taxes on early profits in shale gas, and a new science centre in Edinburgh University named after the discoverer of the Higgs-boson particle.

New loans worth £1 billion will be made available to unblock housing developments, including in Manchester and Leeds.

Expansion of free school meals to all schoolchildren in reception, year 1 and year 2.

Jobseekers 18-21 without basic maths/English must train in these or lose benefits.

Job seekers aged 18 to 21 will be required to start a traineeship, work experience or community work after six months or lose their benefits.

HM Revenue and Customs will fund employers directly for apprenticeships with an extra 20,000 higher apprenticeships over next two years.

An additional 30,000 student places will be offered next year, with the cap on student numbers abolished in 2015.

BUSINESS

Export finance capacity for UK businesses will be doubled to £50 billion to help firms break into emerging markets.

The small business rate relief scheme will be extended for one year from April 2014. Inflation increase in business rates will be capped at 2% from April 2014.

New reoccupation relief will encourage the use of vacant town centre shops.

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13 comments

  • Fatalist  |  December 08 2013, 1:52PM

    Since New Labour did not evolve until the Tory party lost government office, after a number of successive terms, I fail to see how there could possibly have been "13 years of a Tory government that masqueraded as New Labour" - because New Labour didn't exist at that time. For myself I'd be rather more suspicious of when Gordon Brown (having ignored Bank of England and FSA warnings about the levels of personal debt in the UK, which were being voiced since the late 1990's) decided to change the way the Bank of England had always been held accountable, and transferred that role to the Financial Services Authority. Of course it was back in the Thatcher era that the UK Government first tinkered with the authority of the Bank of England. In any event, argument won't solve things now. The mess which this country is in (and in context I cite what is described on the link I gave earlier) is majorly attributable to lax government foresight and controls on borrowing over the whole of the last 30 years, coupled with what are exponentially increasing, and impossible to maintain, demands on the public purse to fund pensions and healthcare of a population that's living longer than ever.

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  • nickthompson  |  December 08 2013, 12:31PM

    Doitdreckley: "Labour's mistake was not reversing the deregulation of the Thatcher years" Exactly my point. Why would they, as I said in my last comment, we had 13 years of a Tory government masquerading as New Labour.

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  • nickthompson  |  December 07 2013, 9:29PM

    barumbcfc: Not to sure what your definition of Socialism is, it surely cannot mean the likes of Blair, Brown, and the like, you are more Socialist than those, we all remember a government renaming itself New Labour who for 13 long years carried out Tory policies whilst masquerading as Labour, indeed in many ways more Tory than the present shambles, one would be hard pushed to squeeze a cigarette paper between all three major parties, I believe the result of the next general election is a forgone conclusion, disillusioned voter's will vote UKIP, which will result in all three major parties losing votes to them, which in the final count will see the return of a Tory (Tory) Labour (Tory) Lib/Dem ( Tory or Labour Tory) government.

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  • Doitdreckley  |  December 07 2013, 9:24PM

    I don't disagree about what you say about Brown selling the gold reserves or the fact that Labour's mistake was not reversing the deregulation of the Thatcher years. But the Tories have a history if spending other peoples money including privatisations of public assets paid for by the taxpayer for years.

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  • barumbcfc  |  December 07 2013, 8:44PM

    Doitdreckley I don't consider I'm loosing the argument,the argument being new labour and Gordon brown in particular was in no way responsible for any of the gigantuan debt we found ourselves in 2008. Even David milliband has admitted to making mistakes with the economy in the lead up to the crash But for you to maintain new labour were in no way responsible for plunging this country with enormous Debt is plainly absurd !!!! I suggest you check your facts brown made major changes to banking regulation in his first budget, You must remember it was the one when he sold off the nations gold reserves for a pittance Loosing us billions of pounds in the process. Oh my there I go again dropping in a red or is it a blue herring either way I certainly don't Agree I'm loosing the argument. One Tory I could not stand was Maggie thatcher but one of her favourite sayings was "Socialism only works until other peoples money runs out" and in 2008 she was spot on.

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  • Doitdreckley  |  December 07 2013, 7:41PM

    It was Thatcher that deregulated the banks and the city in the late 80s which created a crisis of debt, which took 20 years to come to a head. I happen to think the old dear in Rochdale was right but of course that is not what we are talking about, but if you are on the Right on these boards and loosing the argument chuck in a red herring!

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  • Fatalist  |  December 07 2013, 8:27AM

    Moneyweek have a very, very, interesting view of the present day UK economy. The whole flimsy "recovery" is based on low interest rates subsisting in the long term, when it is highly unlikely that interest rates will stay low... take a look at their thinking... here... http://tinyurl.com/ptjluae

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  • barumbcfc  |  December 06 2013, 10:51PM

    Doitdreckly Irresponsible lending was nowt to do with Gordon brown deregulating the banks in one of the first thing He done when occupying 11 Downing Street then. Good grief what planet where you living on if you think the horrendous deficit this country got in was in no way down to Gordon brown. Next you'll be telling me that little old labour woman in Rochdale was indeed a bigot "browns" words Not mine,for daring to say mass immigration without the infrastructure was wrong. At least the damage undoubtably caused by messers Blair,brown,ball and milliband is being put right Now.

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  • Doitdreckley  |  December 06 2013, 9:56PM

    The economic collapse of 2008 was caused by irresponsible lending leading to personal debt. Gordon Brown reaped the whirlwind in the same way as John McCain at the hands of Obama. The terrible irony is that the "recovery" is based on consumer spending, people spending their savings on foreign goods and more debt. All things that Tories pure Heath would have been horrified by.

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  • barumbcfc  |  December 06 2013, 9:40PM

    Mmmmm "josdave" Nowt to do with new labour and especially the scotch idiot Gordon brown then.

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