What did you make of today's Budget?
David Green: The Budget failed to end Coalition policies that obstruct economic growth. In particular, ‘green’ policies are forcing up the cost of electricity and endangering major industries including steel, ceramics and chemicals. Economic self-harm will not make any difference to global warming. UK emissions are less than 2% of the world total. Whether carbon emissions are a serious problem or the result of a global-warming scare story, closing down our two main aluminium smelters (in Anglesey and Lynemouth) has not reduced global emissions. Thousands of jobs have gone and aluminium is simply being made in other countries.
The Budget should have cut taxes on ‘the rich’. It is accepted by all the main political parties that the energy and initiative of our small and medium enterprises is vital to economic recovery, and they got some encouragement today. However, over 80% of business start-ups are funded by personal savings. Only a little over 10% comes from banks. If we want to reinvigorate entrepreneurship, we need to allow individuals to become wealthy. Heavy taxation has squeezed out middle-class wealth. There are not enough people with the spare cash to back businesses. When we have flourished in the past we have had a large economically independent middle class. Raising the tax threshold to £10,000 is useful, but the Government should have cut the higher rate of income tax to 40% and increased the threshold so that no one who earns under £100,000 pays it.
Robert Halfon MP: This was a cost of living Budget. It has put fuel in the tank of the British economy. Families in my constituency of Harlow will be especially glad that the Chancellor has listened once again, and helped millions of car-owners and businesses who are struggling to fill up their family car. This matters not just because of the economic case, but because of social justice. Fuel duty is a toxic tax. It is shockingly regressive. It hits the poorest Brits the hardest. It is crushing the incomes of the lowest paid, and people outside of London in particular. That's why the Chancellor's historic three and a half year freeze on fuel duty – which is a cut in real terms – has been so important. This Budget proves that Conservative Ministers like George Osborne and Sajid Javid are doing everything possible to keep petrol and diesel prices down.
Jill Kirby: With his growth, debt and deficit targets all way off course, the Chancellor had to convince us that this Budget really will make a difference to our troubled economy. Cutting corporation tax, employer’s NI and accelerating the £10,000 tax personal allowance are all good, non-gimmicky measures to boost growth. But I’m perturbed by the Chancellor's increasingly broad hints that he's going to let inflation take care of the country's debt problem. Rather than take radical steps to get public sector net debt under control, George Osborne acknowledged it will remain on a rising path for years to come. At the same time, we’re told that the government will take advantage of its ability to borrow cheaply by guaranteeing home loans for those who can’t raise a deposit. George, you've told us that the way to get out of debt is not to borrow more. Yet this “dramatic way” to help homebuyers sounds to me like another form of debt. Presumably it’s to be paid off by house price inflation. But we've been down that path before, and it didn’t end well.
Aside from my concerns about the Chancellor’s monetary activism, I’m pretty disappointed (although not surprised) that the Conservative pledge to recognise marriage in the tax system has now clearly been postponed beyond the next election. One-earner families have been told that trying to look after your own children (rather than put them in daycare) is not “the right thing to do”. Now they learn that childcare will be tax free from 2015, but a mum (or dad) who sacrifices earnings to look after young children will get no tax break at all, not even to the extent of transferring some of their unusable personal allowance. For all those families struggling hard to make ends meet while they try to do the best by their children, this is a bitter blow.
Andrew Lilico: As I listened to George Osborne speaking, I couldn’t help but wonder what he said that Alistair Darling couldn’t have said. His main measures were a plan for the government to guarantee a huge £130 billion of mortgages, a change to the Bank of England remit, and a cut to Employers’ national insurance. His key announcement was that the deficit is going to fall even more slowly – much as it has not materially fallen in 2012/13 versus 2011/12, it is now scheduled to barely fall in 2013/14 versus 2012/13.
The £130bn mortgage guarantee scheme is yet another deeply misconceived attempt by the Government to subsidise mortgage lending, presumably in the hope of stimulating a housing construction boom to get growth going. The last thing Britain wants is to duplicate the errors of Fannie Mae and Freddie Mac.
The change to the inflation remit does little more than set out explicitly what we already knew: that the Chancellor thinks it’s fine for inflation to be as far above the 2% target as the Bank of England likes, for as long as it likes; insofar as it adds anything it appears to be an attempt to commit that interest rates won’t even rise when there’s a recovery – even worse for inflation.
A cut to employers’ national insurance is a good scheme, usefully balance against measures elsewhere. If only it had been done in 2010, first thing, it might have made a difference. Now? Too late, too late – I fear it is too late.
Ruth Porter: The Chancellor rightly concentrated on three key themes – aspiration, simplifications and making Britain an attractive proposition for investment. He failed, however, to properly see these through.
The limited tax cuts are welcome, as is the simplification to corporation tax. The reality, however, is that there remains a need for substantial supply side reform across planning, childcare and energy if costs are to be brought down.
One of the key lessons to be learnt from this recession is that the government should not be underwriting the housing market. The announcements made by the Chancellor today on housing are storing up big trouble for the future and are unlikely to make a meaningful difference to the chronic housing affordability crisis we have in the UK.
David Skelton: The “Boddington’s Budget” will go down well with hard-working people up and down the country. A further fuel duty freeze and a cut in the cost of a pint are popular announcements, which will be welcomed by hard-pressed people, as well as long-struggling pubs.
Below the headlines there are some other interesting measures. Reforming public sector pay to reward success, rather than purely how long you've been in the job, will go a long way to increasing productivity. A cut to national insurance contributions for small business will help would-be entrepreneurs. And measures to help boost growth outside of the South East, including with an industrial strategy, are very welcome.
The growth and debt figures were disappointing. We need to get the banks lending to business, to create more private sector jobs, so it isn't particularly helpful to offset the cut in corporation tax with an additional bank levy.
More also needs to be done to encourage house building. Although measures to help first time buyers are welcome, the Government is still on track to preside over the lowest level of house building since the 1920s. More radical planning reforms, combined with the introduction of measures such as self-build, should be introduced to get Britain building.
George Trefgarne: Judging by the positive reaction of house-builders’ share prices on the stock exchange, we can expect a new building boom following the Budget. Interest rates will stay, in the chancellor’s words, “lower for longer” as he is tinkering with the Bank of England’s inflation target. And the Help to Buy scheme is a major innovation which introduces generous subsidies not just for first time buyers but for almost everyone.
Owning your own home is of course a classic Conservative policy. But it would be a mistake to see this latest wheeze as a re-run of the 1930s, when Tory chancellor Neville Chamberlain encouraged a housing boom to bring a successful recovery. On that occasion it was a private sector phenomenon funded by the healthy and growing balance sheets of the building societies.
Today, the banks and lenders remain in disarray. The Osborne version is therefore more like the promise by Harold Macmillan to construct 300,000 homes a year as housing minister in 1950s. Throughout his life Macmillan was an enthusiast for Government intervention in the economy and he relied heavily on the public sector, via Treasury subsidies to local authorities, to fulfil his housing promise. He had to do something because millions of homes were destroyed in the Blitz and many families were living in slums.
In the aftermath of the financial crisis, George Osborne is himself doing a SuperMac via his own taxpayer funded grants and guarantees, worth some £4.1bn over the next three years. Macmillan was famously soon able to claim that “We have never had it so good,” but as Prime Minister he took his economic interference too far. It culminated in a surge in inflation which was difficult to tame for nearly three decades. Let us hope Mr Osborne is not following a similar path.