The New Statesman's cost neutral rabbit.
Show Hide image

Budget 2015: What to expect from George Osborne's last budget of the coalition

George Osborne will say the UK faces a "critical choice" at the election when he delivers his Budget today – but what do we know so far?

Depending on the election result in May, today could be Osborne's final Budget. Unsurprisingly, Twitter is clear of any patronising adverts highlighting the changes to beer and bingo taxes - the things working people enjoy, of course. But the newspapers this morning are swelling with leaks, announcements and juicy rumours. Here's a round up, for anyone (including us) too excited to wait:

Inheritance tax

In plans leaked to the Guardian, Osborne has drawn up blueprints that would allow parents to pass a main property worth up to £1m to their children without paying inheritance tax. This would reduce the inheritance tax bill on properties worth up to £2m by £140,000 with the Treasury concluding that the scheme would “most likely benefit high income and wealthier households.” Quelle surprise.

Power-generating lagoon

Helen Lewis spotted the first shameless reannouncement of today’s Budget: the world’s largest power-generating lagoon, in South Wales. Negotiations will be started on funding a £1bn initiative to produce electricity from turbines in Swansea Bay.

Personal Tax Allowance

Raising the personal allowance to £11,000 – giving 27m people a £200 tax cut. But as Tim Wigmore has reported, raising the tax allowance has already reached its limits for helping the poorest families. Once the personal allowance had reached £10,500, three million people had been taken out of income tax altogether.

Death of the tax return

The Telegraph has splashed this morning on the “death of the annual tax return”. It is expected that Osborne will use the Budget to announce a cut in unnecessary HMRC “red tape” Tax returns, the paper reports, “have been long considered an unnecessary burden for millions of people”.

A new shiny coin

This “long-term economic plan” is certainly under way: a new shiny 12-sided (!) pound coin will be unveiled. Featuring the “four symbols” of the UK: a rose, leek, thistle and shamrock. Sorry? The Chancellor announced the plans at the Budget in 2014 to replace the £1 coin because it has been increasingly vulnerable to counterfeit.
 

Photo: Twitter

Postgraduate Loans

Loans of up to £25,000 for PhD students from disadvantaged backgrounds in an attempt to convince more people to take up postgraduate research.

Savings Tax

The Independent believe they’ve found the biggest “rabbit” in today’s Budget: they say the Chancellor will abolish tax on income from savings for millions in a move to woo pensioners and “hard-working” people. In last year's Budget, Osborne announced that that 10 per cent tax on saving for people on low incomes will be abolished next month. This change will help an estimated 1.5m savers, many of them pensioners, according to the Indy.

Welfare

According to reports in the Daily Mail, the Chancellor will be announcing a welfare cap as he sets out more than £12bn in benefit cuts... and guess who will be affected the most? Read on... 

Young people

At the bottom of the list for a reason. No “goodies” or happy “rabbits” for the under-25s it seems. In fact, they are set to lose the right to housing and unemployment benefits if they refuse offers of work, training or education. It seems the controversial Tory grandee, Lord Tebbitt, whose ambition it is to make young unemployed people pull up ragwort for benefits, might be gleeful at the Budget today. 

Ashley Cowburn writes about politics and is the winner of the Anthony Howard Award 2014. He tweets @ashcowburn

 

 

Photo: Getty Images
Show Hide image

Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.