Financial News
- 5 December 2012, 12:07
Autumn Statement: Osborne Tightens The Screw
Chancellor George Osborne will warn there are no "miracle cures" as he admits more drastic action is needed to balance Britain's books.
Mr Osborne will confirm in a bleak mini-budget that Whitehall departments are being ordered to find another £5bn in cuts to fund projects aimed at kick-starting the economy.
He is also widely expected to concede that sluggish growth means it will take longer to tackle the deficit and that his key target of having public sector debt falling by 2015-16 may be missed.
Other key measures could include postponing the 3p fuel duty hike due in January, more benefits cuts, a fresh hit on the banks and a raid on the pension pots of higher earners.
The Chancellor's hands are largely tied because of weaker than expected economic growth and high borrowing, which have forced him to extend austerity well beyond 2015.
He has been battling to regain the upper hand since his Budget in March, which was heavily-criticised and led to a string of damaging U-turns over taxes on pasties, caravans and charitable donations.
Delivering his Autumn Statement this afternoon, he will argue that he is "confronting the country's problems, instead of ducking them" as he still seeks to show "we're all in this together".
"The public know that there are no miracle cures. Just the hard work of dealing with our deficit and ensuring Britain wins the global race," he will say.
Mr Osborne will confirm plans to use fresh cuts to fund capital projects in transport, schools, science and skills over the next two years.
They will include £1bn to build or expand up to 100 new academies and free schools over the next two years, with cash directed at areas experiencing a shortage in classroom places.
Departments will be forced to slash spending by 1% in 2013-14 and 2% the following year but health, schools, international aid, HM Revenue and Customs and nuclear decommissioning will be protected.
Treasury sources said the departmental savings amounted to less than the £3bn underspend by departments in the last two years and that the rest was coming from existing budgets.
But Labour claimed the move amounted to an admission that the reduction in infrastructure spending since 2010 had been "a catastrophic mistake" and weakened the economy.
The Chancellor is also expected to target the pension pots of higher earners by slashing the amount of annual tax relief earned on pension contributions from £50,000-a-year to £30,000.
Implementing the full cut could raise as much as £1.8bn for the Government.
A crackdown on people and businesses avoiding or evading tax is also likely, with a £77m boost for HM Revenue and Customs to track down those not paying their fair share.
Further plans to signal approval for up to 30 new gas-powered electricity power stations have already sparked controversy.
Mr Osborne will also float possible tax breaks and regulatory reforms to encourage investment in innovative "fracking" technologies for extracting gas from shale deposits.
what do you think?
Gafyn Williams
And all the while borrowing is actually increasing and the deficit grows.
mark smith
Maybe if Starbucks, amazon and the like paid the correct amount of tax like the rest of us have to instead of the utter pittance they pay then we might reduce the deficit a hell of a lot more, but alas George and his ilk aren't interested in closing down that particular loophole as he and his ilk are probably shareholders!!
Russell6730
How on earth can the electorate take this Gov.seriously when nearly every day we hear of yet another multinational escaping the tax system. We've heard now every few weeks for the past 2years they the Gov. are going to clamp down but they never do.We give millions away in foreign aid mainly to highly industrialised countries who dont need it like India who tell us they don't want it. They get us into costly middle east wars not knowing exactly who we're backing. We cover this land in expensive housing for immigrants yet to arrive and when they do go straight on benefits,All this burden is shouldered mainly by the lowest paid and those saving for retirement.What really hurts is the Labour party by its weak opposition mainly back this stupid strategy
Jeffrey Gwynn
Quite right Russell. Unfortunately the usual rant about ukip or BNP or whoever would not do any good. We need ordinary folk, who aren't worried about their next election win and who have a modicom of brain, to run the country.
heather
Well said Russell totally agree, this country is a shambles, are the MP's going to forgo their luches in Parliament Oysters Cavia etc., no I don't think so. And as for the immigrants and housing don't get me started, would we go to their countries and have benefits for nothing? I think not
Brian Holmes
Are you suggesting Labour would be the party to sort out the mess they created? Gordon Brown did his best to ruin us and he has pretty much succeeded. The relentless swinging between Labour and Con, governmentrs has to stop because neither of those parties are capable of government. The system is broken and needs reformed.
Dr_MonicaKh
Immigrants don't receive half of the tosh mentioned here. The vast majority work a lot harder than I do! If you look at genuine statistics there is a notorious list of 'British' citizens of 'white' race collecting job seekers allowance, committing benefits fraud and what not, and receiving housing benefits. The issue here is everyone isn't paying the right amount of tax per year, and the millions upon millions squandered by governments in unnecessary wars. Wars are very costly.
jimmyjedi1979
The Tories will never see another government in my life time. And to think we will have liebour to look forward to :( must vote differently. Must vote UKIP
bobh_385
Thats right,get us out of that politicians old boys club.The people of Europe have to pay ever increasing amounts in tax,red tape etc just to keep the politicians in the lap of luxury.Everyone is equal but some are more equal than others--where did I hear that?
hollywoodbowden
This country is an absolute joke mark my words with tax rises people struggling to live it will only get worse we will end up a 3rd world country
stevie may
The only political party that will represent the underclass in this country is the Black Block anarchist movement. Reject austerity. Reject faceless capitalism. Eat the politicians and the bankers. Take them all and dig them into the soil of history. . . . And then salt the earth
Name witheld
This comment has been removed for violations of our Terms and Conditions.
jimmyjedi1979
I find it so strange that you are against capitalism, austerity yet you are the biggest cheer leader for the Israelies and the royals. Really bizarre!
stevie may
Just another example of the complexity of the human condition. I have no problem with monarchy because they aren't the ones with true power. Government has that. I have respect for the Jewish people who have suffered more than any other people over the last 3000 years and still survive. . I reject capitalism as much as I reject communism, socialism, fascism and totalitarianism. I'm a democrat Jimmy, who wants a democracy that we fought for in 1939-1945. Not the faceless capitalism that we truely have today, governed by big corporations. All our politicians are slaves and are happy to be run by Mammon. . . I see anarchism as the only viable system to bring about a true, libertarian, liberal secular democracy.
stevie may
True democracy through anarchism. Follow the black flags of the Black Block!
Dr_MonicaKh
And the plight of the ordinary Palestinian man and woman doesn't matter?
stevie may
Yes the plight of the Palestinians is wrong but you have to seperate the Zionist regime from the Jewish people. How many jewish israelis document the crimes of their government and tell the world? How many jewish israelis suffer persecution because they have fallen in love with palestinian israelis? (There are many in Israel). . The state of Israel dosent represent all of the jews in the world, as much as David Cameron dosent speak for all of us
Jonathan Goodwin-Self
Osborne owes £400,000 for the sale of his second house and he has a firm registered in Belize so the 4 million pounds he earns no tax. He promised with Cameron to cut taxes in the manifesto but NO he has put them up. Both of them are Liberal Labour so at the next election all must vote UKIP. He promised to properly increase the state pension by RPI plus 5% but no he does CPI only. If he raises VAT then there could be a civil war.
Grant Berry
We need markets to be free with less government. Cut the size of the state & lower taxes. The two most heavily subsidized and overly regulated industries in the entire economy are health and education. The prices are exploding in both industries, the quality is collapsing, and nobody in the mainstream spotlight can figure out what's wrong. It would be amusing if it wasn't ruining so many lives. If it's broken, then the government probably did it. Cut the size of the state & lower taxes.
Neil C
I think it's about time we the paying public were told the true state of the finance. All we are told is tough times ahead 'how'!! we never created this mess. We all pay over the odds on everything, but the one thing you never hear about is who should be given the kicking for miss management of public money. Tax payers have a right to make sure what they pay into is spent on what it is meant to. Hospitals (pfi's) School aka acadamies (pfi's), goverment contracts have all been written to screw over the tax payer with over eye watering clauses to cancel and costs that run into billions to get out of. All this was signed of by people in goverment without making sure we can pay this back. We have a horrible problem in goverment today on all fronts where they do not serve us but themselves. We the public know longer have a voice in MP's, I wonder why we do not vote outside of these showers of $hit
john
Yes Neil, the PFI scam has resulted in Hospitals being charged over 300 pounds for changing a lightbulb, I bet quite a few ex-politicians made a pretty penny for favours done, they are running the country to enrich themselves, not in the interests of the many.
Brian Holmes
You are absolutely right, Neil. The system is broken beyond repair. (And we don't see any signs of our MPs suffering for the cause at all.)
Gafyn Williams
Iceland showed us the way. But I can't see our lot going as quietly as the corrupt politicians and bankers of their fair isles. They are dug into the blood of Britain like an infestation of tics, draining the country of all that is good and decent for their own selfish need.
john
Stop pretending we still have an empire, stop following the Americans into wars that do no good for the British people. Stop paying the USA for installing their Nuclear weapons on our submarines, the Americans hold the launch codes, they can only be used against an American target. Tax the corporations, if they threaten to leave Great Britain, let them, nationalise their assets.
Brian Holmes
Austerity is killing growth. Another year of this will convince even the most sceptical as the pace of decline accelerates. It's clear that very many countries are not able to service their debts and the problem is unsolvable. In less civilised times violent revolution would already be happening! The powers that be need to start thinking in terms of writing off national debts.
tim harte
To all the working class people who voted Tory or lib dem at the last general election you have got the government you deserve,my mother,a staunch socialist,used to say { the working classes worst enemy is the working class},maybe next time you will vote with your brain !.And please all you Tory and Lib Dem MPs who drone on about the inheritance left by labour remember the whole world was coming in to recession at that time,and your claim to having created the lowest bank rate of all time,lies,the 0.5% rate was made in March 2009,who was in power then !.I know that all politicians find it difficult to differentiate between truth and fiction,but please dont treat the public as idiots,its so easy now to establish facts !!!!
Brian Holmes
One more Labour government should be enough to finish it.
Edgar Beckett
Quite correct up to a point Tim, " the whole world " because the whole world is pursuing the same internationalist policy and it doesn`t work at all well.
Gafyn Williams
I am aware that Labour are not entirely to blame for this current crisis, a breif search of the actual figures and statistics of our defacit - All available online - soon descredit that claim. Yet to think Labour a socialist party these days is a glaring mistake also. The Labour we have now is a Conservative Labour more concerned about the banks and corperations than the people they once represented. What Labour can be blamed for is freeing up the banks regulations, which in our country led to the giant bail outs of Northern Rock etc. They have a leader who has publicly stated that his political role model is Thatcher for Christ sake. And then theres the Shadowy meetings of Bilderburg, where Mandelson, etc are all given their orders by the they represent in parliament, the plutocratic oligarchs. So don't give me the Labour will save us speach.
Gafyn Williams
Should read - by those they really represent in Parliament - Its hard work writing more than the space provided in the phones chat box.
Nigel L
The question everyone wants an explanation about is WHY is overseas aid ring fenced against cuts. No reason is ever given, its our money surely we have the right to know.
Edgar Beckett
And not only in this country but all of Europe ----- ---- Sorry but the Bilderburgers don`t give explainations.
hollywoodbowden
By cutting jobs tho means more people on the dole and not paying tax so he is making the economy worse
Sharon Houghton
Osbourne the people of this country are suffering enough, citizens and children are going without meals no heating or lighting, relying on food banks and charities. Just seen the poor working mothers plight on tv, stop giving hand outs to countries that don't need it and those that squander through corruption. Clamp down on tax dodgers, fiddlers , dodgy mp's. Stop feathering your own nest. How much more can Britain take
David Wragg
We are giving massive aid, which is 'ring-fenced', to corrupt countries while our own people are suffering at home. This morning the Daily Telegraph says we are giving £2bn for 'green' energy to Third World countries, even though we know that wind farms are useless and never recover the carbon cost of their construction. Madness. The people of this country have had enough. Overseas aid should be scrapped and left to individuals and charities.
red_lead
When are we going to hear about cuts in goverment wages goverment exspences and goverment second homes. About time they where delt with if WE ARE ALL IN THIS TOGEATHER. The Rich mp's are looking after there self and there Rich buddies. NOT the people of the UK .
James Dalby
5:17am on 5/12/2012
Whats the chances of VAT rising to 25% just before 2 of the biggest shopping months of the year? What a massive coincidence that will be
peter
9:18am on 5/12/2012
Which 2 months of the year is that then, James? Whats the point anyway, the world is going to end on the 21st December according to the mayan calendar.
Brian Holmes
9:49am on 5/12/2012
If VAT rises to 25% every high street in the country will die. Most of them are half dead already.
Russell6730
9:50am on 5/12/2012
The Mayan calender prediction is about the only hope this Gov.have of getting out the mess they got us in