Financial News

  • 6 December 2013, 14:37

Autumn Statement: 'The Plan Is Working'

Chancellor George Osborne has told the country "Britain's economic plan is working but the job is not done".

Making his Autumn Statement, Mr Osborne delivered good news for the economy with a freeze in fuel duty as well as help for young people seeking work and for small businesses.

Mr Osborne announced revised figures that doubled growth forecasts for this year. Borrowing is down to just £2,500 for every household, he said, and the country's debt was £18bn lower than forecast in March.

But he warned of "more difficult decisions", setting the tone for a statement that would contain little respite from the tough austerity measures of previous years.

 "The hard work of the British people is paying off and we will not squander their efforts," he said.

Mr Osborne said Britain was growing faster than any other major economy as he announced that the Office for Budget Responsibility (OBR) had more than doubled its growth forecast for this year from 0.6% to 1.4%.

He said that instead of forecasting growth of 1.8% for 2014 they were now predicting 2.5% and, similarly, the forecasts for growth for the next four years had been increased.

However, he stressed that the country could not stop fighting for its recovery as a reassessment by the Office for National Statistics showed that the 2008/9 recession had been worse than thought - with £112bn wiped off the British economy. 

The statement had been so widely trailed that it contained few surprises. Mr Osborne outlined a number of smaller measures to target the cost-of-living crisis but concentrated on a continued and strong recovery.

Key measures included:

:: Pensions to be increased by £2.95 a week from April - with state pension age raised to 68 by the mid 2030s.

:: The 2p rise in fuel duty next year is cancelled.

:: £1,000 off bills for all small high street retailers in an attempt to revitalise town centres.

:: £50 off annual energy bills by rolling back green levies.

:: Tax breaks worth £200 for married couples who will be able to transfer personal allowances.

:: A new capital gains tax for foreign investors aimed at preventing a property bubble in London and the South-East.

:: £375bn of planned public and private investments in infrastructure projects to 2030 and beyond.

:: Free school meals for children up to the age of seven.

:: Job seekers aged 18 to 21 without basic maths or English to be forced to agree to training or lose benefits.

:: A 2% cap on business rates and an extension of the rate relief scheme for small businesses

:: Employer national insurance contributions for under 21s removed

:: An extra 20,000 higher apprenticeships to be offered in 2014/15

:: £11m space technology centre named after "God particle" scientist Peter Higgs to be built in Edinburgh. 

Mr Osborne announced that while the NHS would be protected from spending cuts, welfare spending would be capped.

He said: "Welfare budgets were completely out of control when we came to office and the number of households where no-one had ever worked nearly doubled.

"We have taken very difficult decisions to bring benefit bills down - and saved £19bn a year for the taxpayer. We need to maintain that discipline."

Mr Osborne also said that the budget of Britain's spies would be protected amid public disquiet over the reach of the intelligence services.

Shadow Chancellor Ed Balls accused Mr Osborne of being "out of touch" and said he had done nothing to improve living standards.

He said "living standards are not rising, they are falling year after year, after year", and pointed out that working people were £1,600-a-year worse off now than they were when the coalition came to power in 2010.

Reaction to Mr Osborne's statement was mixed, while small business groups welcomed many of the measures others said little had been done to help households struggling with debt.

Mark Serwotka, leader of the Public and Commercial Services union, said: "This is not an economic plan, it's austerity for austerity's sake, as the Tories - propped up by the Lib Dems - look to reshape our society for years to come and make the poor, sick and unemployed pay for the greed and recklessness of wealthy elites."

However, John Allan, chairman of the Federation of Small Businesses, said: "The statement is a sobering reminder about the scale of the deficit the country faces and the tough choices which need to be made. We therefore welcome the use of what spare resources the Chancellor could find to focus tax cuts on encouraging firms to take on younger workers, which must be an overriding priority."