George Osborne prepares to lead members of the Treasury team out of 11 Downing Street to face the media before the Budget. Photograph: Getty Images.
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George Osborne shamelessly courts the pensioner vote

The Chancellor's offer to the over-65s is rational but crude politics: they vote more than any other age group.

There is a simple explanation for the lengthy section devoted to supporting savers and pensioners at the end of George Osborne's Budget speech: they vote. In 2010, 76 per cent of the over-65s turned out, more than any other age group. If the Tories are to edge Labour in a close election next year, winning the support of this group will be crucial.

For years since the coalition was formed, Conservative MPs have been calling for the Chancellor to provide relief to the pensioners (a significant number of whom have defected to UKIP) whose savings have been hit by the "monetary activism" (ultra-low interest rates and quantitative easing) he regards as necessary to support the recovery.

Today, he acted. He announced the abolition of the 10 per cent tax band on savings (taking at swipe at Labour by adding "when I abolish a 10p rate, I don't secretly turn it into a 20p rate") and the doubling of the zero pence band to £5,000, the launch of a new pensioner bond paying market rates, the removal of tax restrictions on how pensioners drawdown their savings pots, and a new "Right to Advice" for those retiring on defined contribution pensions. All of these measures were designed to match Osborne's rhetorical commitment to those who have "worked hard" and "saved" throughout their lives. His decision to exclude the state pension from the new cap on welfare spending is another show of support for this group. 

Many will rightly question his priorities. It is pensioners who have suffered the least during the long squeeze, with their benefits shielded from austerity, while the young have suffered the most. But Osborne's decision to favour the former over the latter is rational, if crude, politics. 

It is worth noting, however, that today's measures could well be a prelude to a Conservative pledge to means-test universal pensioner benefits, such as Winter Fuel Payments, free bus passes and free TV licences, in 2015. While the state pension has been excluded from the welfare cap, these payments have not. Osborne's "Budget for savers" may well be aimed at providing the Tories with the protective cover they need to execute this U-turn. 

George Eaton is political editor of the New Statesman.

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Theresa May confirms Brexit Britain out of the single market – 8 other things we learnt

The Prime Minister dropped the Brexit bombshell that we're out of the single market, and more. 

Theresa May confirmed suspicions that the UK will leave the single market after Brexit in a major speech on her objectives.

The Prime Minister said the Brexit vote was a clear message about controlling immigration, and “that is what we will deliver” – but this meant the UK could not continue following the rules of the single market

She said: I want to be clear. What I am proposing cannot mean membership of the  single market. European leaders have said many times that membership means accepting the “four freedoms” of goods, capital, services and people.

"And being out of the EU but a member of the single market would mean complying with the EU’s rules and regulations that implement those freedoms, without having a vote on what those rules and regulations are."

May also repeated that maintaining the open land border between Northern Ireland and the Republic of Ireland would be a priority, and that she wanted trade deals with the rest of the world.

But leaving the single market wasn’t the only Brexit bombshell May dropped. Here is what we learnt:

1. The single market may be replaced by a European free trade deal

The Prime Minister has ruled out a single market, but is hoping for a deal to replace it. She said: “As a priority we will pursue a bold and ambitious free trade agreement with our neighbours in Europe."

2. No more European Court of Justice

May said Brexit will end the jurisdiction of the European Court of Justice in Britain, and that “laws will be interpreted by judges not in Luxembourg but in courts across this country”.

3. Parliament will get a vote on the Brexit deal

Most MPs already expected to get a vote – as their peers in the European Parliament would get one. May confirmed this, saying: "I can confirm today that the government will put the final deal that is agreed between the UK and the EU to a vote in both Houses of Parliament, before it comes into force.."

4. EU citizens still face uncertainty

May has always been clear she wants to confirm EU citizens’ right to remain in the UK, but only if British citizens receive the same guarantee in other EU countries.

She made no further guarantees, saying: "I have told other EU leaders that we could give people the certainty they want straight away, and reach such a deal now. Many of them favour such an agreement - one or two others do not"

5. She will try to stay in the customs union

May explicitly said the UK will have to leave the EU single market, but she was far more nuanced on the customs union, which negotiates trade deals on behalf of the EU member states.

She does not want Britain to share the EU’s common commercial policy, or be bound by common external tariffs, but does want to “have a customs agreement with the EU”. This could mean the UK becoming “an associate member of the customs union”. 

6. Some payments may continue

May said that Britain voted to stop large contributions to the EU, but she stopped short of ruling them out altogether. There may be payments that are “appropriate”, she said, if there are programmes the UK wants to be part of.  

7. Brexit could be in phases

The PM said several times she wanted to reassure businesses – who are increasingly unhappy about the uncertainty ahead. She wants the negotiators avoid a “cliff edge”, but also avoid “permanent political purgatory” (something Brexiteers fear). 

May suggested a deal could be done by the time the two-year process of Article 50 ends, and this could be followed by a “phased process of implementation”.

It’s worth bearing in mind at this point that two years in EU deal-making time is extremely speedy.

8. The UK’s nuclear option: Corporate tax haven

The Chancellor Philip Hammond has already floated the idea that a disgruntled Britain could slash corporate tax in order to attract unscrupulous multinationals to its shores.

May said that the UK would be prepared to crash out without an agreement, saying “no deal for Britain is better than a bad deal for Britain”. 

In such a situation, Britain "would have the freedom to set the competitive tax rates and embrace the policies that would attract the world’s best companies and biggest investors to Britain". In other words, become an offshore tax haven. 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.