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Pre-Budget report

The key points from this year's crucial pre-Budget report delivered to MPs in the House of Commons.

  • 1530 GMT Alistair Darling is invited by the Speaker to deliver his pre-Budget report.

  • Darling said he wanted to take fair and responsible steps to support people and businesses and put Britain in position to take of advantage of the recovery.

  • He wanted to ensure sound public finances in the medium term to ensure Britain lives within its means

  • The chancellor gave an assessment of the state of the global economy

  • "This is an unprecedented global crisis," he told MPs. The root of the problem was a failure in the global financial system. Restoring financial stability was crucial - and that had to be done internationally

  • Internationally and domestically regulation had to be improved

  • In Britain unemployment was still 2m below the levels of the 1990s when the Tories were in power

  • "We did fix the many roofs that needed fixing - the roofs of hospitals and schools throughout the United Kingdom," Darling said

  • The chancellor said inflation was expected to continue to fall allowing the Bank of England to cut interest rates to a 50 year low

  • Darling then turned to the economic forecasts

  • UK GDP contracted by half a percent in the three months to September. It will contract further next year and output would continue to fall for the first two quarters of 2009 before beginning to recover

  • Britain would have between one and half and two percent growth in 2010, the chancellor predicted

  • The government believed there was a choice - the sink or swim approach [of the Tories] or Labour's way which was to table a package of measures to support people through these difficult times. The pre-Budget report represented a substantial fiscal loosening, Darling said

  • Britain was experiencing significantly lower tax revenues because of the downturn - as was happening in the rest of the world. Tax take on stamp duty alone was down 40 per cent

  • Borrowing would rise to 8 per cent of GDP before falling back down again. By 2016 Britain would be again only borrowing to invest

  • Britain's debt would still be lower than other countries, the chancellor insisted

  • Allowing borrowing to rise was right for Britain

  • Darling said investment in public services would continue

  • £3bn of capital spending for 2010/11 would be brought forward to this year to renovate infrastructure, improve schools and put people people to work

  • The temporary £120 allowance for people who lost out as a result of ending the 10 per cent income tax rate would be made permanent

  • Darling said he would cut VAT from 17.5 per cent to 15 per cent from December 1, 2008 until the beginning of 2010. Equivalent to a 12.5 per cent boost shot in the arm of the economy

  • The chancellor said from there would be an increase in half of a per cent on National Insurance - but the threshold would be raised. No-one earning under £20,000 would pay any more

  • There would be a new higher rate of tax - 45 per cent on those earning more than £150,000

  • Those earning between £100,000 and 140,000 would have their personal allowance reduced, and it would be abolished for those earning more than £140,000

  • There were a number of measures that were targeted at small and medium-sized firms

  • Darling said he was monitoring commitments by banks to ensure they treated businesses fairly

  • The government was offering credit through a small business finance scheme to help with short term cash flow problems

  • Companies would be allowed to offset current losses of up to £50,000 against taxes paid in the past three years - tax would be repaid

  • Air passenger duty would be reformed into a new four band system whereby those travelling further would pay more

  • The chancellor said the most pressing problem for many families was in meeting their energy bills. Unjustified discrepancies in different billing methods would be tackled, said the chancellor

  • The government was going to keep the pressure on energy companies to produce a proportion of their power from renewable sources

  • Steps were being looked at to help ensure the availability of more mortgage products

  • Repossession should be a last resort, families worried about finances should be able to get free debt advice and the chancellor announced a number of measures including new mortgage support for people in work

  • The chancellor also announced new cash to build social housing

  • The chancellor said he would phase in new duty rates for cars

  • In a bid to encourage saving a savings gateway would be set up where the government would add 50p to every £1 saved by low wage earners

  • Pensioners on modest incomes - pension credit would go up from £124 to £130 a week

  • Every pensioner would get a payment of £60 on top of the annual £10 pounds bonus - £70 that would also go to disabled children.

  • Mr Darling finished his statement at 1620

  • Responding Shadow Chancellor George Osborne said Mr Darling was going to double the national debt to £1 trillion an "unexploded tax bombshell". The lie that boom and bust had ended had been comprehensively nailed the Tory politician argued.

    "In the end all Labour chancellors run out of money. All Labour governments bring the country to the verge of bankruptcy," he said

  • Fiscal stimulus only worked when there were strong public finances

  • The pre-Budget report was the greatest failure of public policy in a generation, Osborne said.

  • For the Lib Dems, Vince Cable welcomed some of the chancellor's measures. A serious tax cut concentrated on the low paid was needed. Rather than cutting VAT there should be a cut on income tax for the least well off

  • He added the government was big on rhetoric but not on action

Ben Davies trained as a journalist after taking most of the 1990s off. Prior to joining the New Statesman he spent five years working as a politics reporter for the BBC News website. He lives in North London.
Getty/Julia Rampen
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View from Paisley: How the Conservatives are wooing Labour's Scottish heartlands

Not so long ago, Conservative activists in Paisley could expect doors slammed in their faces. A referendum has changed that.

Tony Lawler, a Labour activist, was recently knocking on doors in the Scottish town of Paisley, when he came across a disgruntled resident. “I’m really disappointed in Douglas Alexander,” the potential voter complained. “I haven’t seen him. He used to be in Morrisons.”

Douglas Alexander, of course, has gone. He was the longstanding Labour MP and onetime International Development secretary who lost his seat in 2015 to a 20-year-old rival, the Scottish National Party’s Mhairi Black. He does not plan to stand again. But when I visit Paisley, a short train ride from Glasgow, I find that memories of him linger on. 

Two years after Alexander’s defeat, I meet Lawler and other local Labour activists in Morrisons, where Alexander used to hold his surgeries. As checkouts beep and trolley wheels roll over linoleum, they point to an empty table in the corner of this hallowed ground: “He used to sit just there.”

In 2015, the SNP’s victory in this former manufacturing town seemed to epitomise the earthquake in Scottish politics. But as the Labour activists know too well, no political fortress is undefeatable. And in Paisley, the home of one of the oldest workers’ festivals in the world, the party with the most to gain is one that previously never dared to canvass in the high street – the Conservative party. 

The town the Brexiteers forgot

In 1988, the historian Sylvia Clarke reflected on Paisley’s lost industries, wondering what was next for the former weaving towns. “Paisley as a tourist centre?” she wondered, in Paisley: A History. “Paisley as a place for visitors to come to, rather than a send-out of goods and emigrants?” 

For all Paisley’s industrial decline, it’s a pretty place. The town is in the running for the 2021 City of Culture, and has the second biggest number of listed buildings after Edinburgh. When I visit in the middle of April, blossom floats on the trees, and a river meanders through a neighbourhood of old, stone houses. It takes a moment to notice weeds tightening their grasp on the window frames. When I try the door of the ancient Paisley Abbey, it’s locked.

Perhaps if Paisley had been located the other side of the border, in Sunderland or Northumbria, it would be voting Leave and flirting with Ukip. But in the most deprived areas here, Labour activists tell me the EU referendum tally was still almost 50-50, and overall the town voted Remain.

There is a view that Brexit is an English concern. “We haven’t picked up anything about the EU referendum,” says Lawler of his doorstep conversations. “What people are talking about is the independence referendum, Jeremy Corbyn and the kids’ ward.” Scotland’s health secretary, Shona Robison, is due to make a decision on whether the specialist ward should be moved to a large hospital in the First Minister’s Glasgow constituency, against the wishes of many Paisley residents. The hospital in question is nicknamed “the Death Star”.  

Another concern, reminiscent of small towns across the UK, is the decline of the high street. When I walk down the historical shopping area Causeyside Street, I find mother and daughter Kate and Linda Hancy packing up what remains of The Pattern Café and Gift Shop. The wallpaper is a glorious Paisley print, but the scented candles are in boxes and a spray soap bottle hangs from a chair. After two years of trying, they are closing down.  

“People just don’t have money to spend,” Kate says. “A lot of people have been on the same wage for more than five years.”

Linda chimes in: “The cost of living going up but wages aren’t the same. I work in a supermarket, and people come in and say ‘How did I spend this much money?’ A lot of people are paying by credit cards.”

The Hancys voted to remain in the UK, and the EU. Although they knew Alexander, they have never met Mhairi Black, and feel devolution, if anything, has made politicians less accountable. “Why are we picking 1,2,3,4,” demands Kate, referring to Holyrood's voting system, which rejected first past the post. “Why can’t we pick one like we used to?”

Without the EU to blame, the most obvious culprits for Paisley town centre’s decline are the out-of-town shopping centres, where cinemas are opening just as historical ones in town close their doors.

Gavin Simpson, owner of Feel the Groove, a new record shop, remembers the 1980s, when a new release would have shoppers queuing round the block. However, he believes the town is over the worst. (As we speak, a customer comes in to reserve such a record and cheerfully warns Gavin that “even if I ask for my money back, don’t give it to me.”)

One thriving business is the longstanding butchers, Wm Phelps. Manager James Peacock tells me it is down to the trustworthy Scottish produce, which is carefully tracked and labelled. But the business has also embraced globalisation.  After noticing a large number of South African customers, Peacock began selling boerewors and biltong.

The other referendum campaign

If Paisley has been spared the divisions of the EU referendum campaign, its “buddies” – as residents are known – are still reeling with the repercussions of an earlier referendum, that on Scotland in the UK. In 2014, the town voted for independence, although the county overall opted to stay in the UK. 

The town is home to a particularly brash strain of indyreffers, including the “Smith Commission burners”, three SNP councillors who gathered in front of the council headquarters to burn a copy of the report setting out new powers for Scotland. One of them, Mags MacLaren, went on to manage Black’s constituency office.

But if the Paisley independence movement has been well covered, less is known about its opposite - the rise of pro-unionism. 

Of the three mainstream parties opposed to independence, it is the Scottish Conservatives, with their unconventional leader Ruth Davidson, who have most effectively capitalised on the pro-union message. In the 2016 Scottish Parliament elections, the Tory Jackson Carlaw captured the West of Scotland constituency of Eastwood, which had been held by Labour since its creation. 

In Holyrood, the Scottish Tories benefit from proportional representation, which allows voters to choose a constituency MSP but also rank parties. 

According to Paul Masterton, the Tory candidate for East Renfrewshire, and the secretary of the Renfrewshire and Inverclyde Scottish Conservative Association, the Conservatives are now getting huge numbers of first preference votes, including in neighbourhoods like the suburb of Ralston, where both Black and Masterton are from. So who are these voters? Masterton describes them as “New Labour voters who were happy with Tony Blair and Gordon Brown but didn’t like Jeremy Corbyn and get tied up into knots by [Scottish Labour leader] Kezia Dugdale flipflopping on the union stance".

The 2016 election saw the Scottish Conservatives surge to second place in Scotland – a superb comeback for a party once ridiculed as being rarer than pandas. The next electoral test is the local council elections. In Paisley, even Labour activists acknowledged the Conservatives were likely to be the most notable winners.

“For a long time we simply didn’t go out in Paisley," says Masterton. "We were written off and we allowed ourselves to be written off.”

But the referendum has changed this. “What I found was that last May, people weren’t shutting the door in your face," he adds. "Once you started the conversation they were far more receptive to that.” 

Like the Labour activists, Masterton argues that the constitutional question matters more than Brexit. “When Theresa May said ‘now is not the time’, I think a lot of people across Paisley did a small quiet fist pump,” he says of a second independence referendum.  

Ironically, after the early election is called, the Scottish Conservatives do everything they can to mention the prospect. “Don't mention the 'i' word,” crows a recent press release about the “SNP indyref ban”. Davidson tweets: “Nicola doesn't want to stand on her record. She knows the country doesn't want her #indyref2.” A Panelbase survey commissioned by The Sunday Times Scotland published shortly after the early election was announced finds support for the Conservatives at Scotland at 33 per cent, 18 percentage points higher than in 2015. 

What you stand for

For now, Paisley remains a Scottish National Party stronghold. George Adams, the MSP with an office off the high street, proves elusive – Labour activists confirm his reputation as a hardworking local. Black’s aide turns down my request for an interview for similar reasons, but I bump into her that evening at a protest against cutting child tax credits in Glasgow’s George Square.

Black, an admirer of the left-wing Labour figure Tony Benn, once said she feels "it is the Labour party that left me". I ask her if she, like her Labour predecessor, holds surgeries in supermarkets. Black says she’d considered it, but given the sensitivity of some of the issues, such as benefit problems, she thought her constituents might appreciate a more private space. “The main thing that crosses the door in my offices is Universal Credit changes,” she explains. She says she has raised her concerns about the children’s ward.

As for the independence debate, she argues that the Scottish government have been “incredibly compromising” since Brexit, but adds: “A lot of folk want another chance at the question.”

Black is standing for re-election. With a majority of more than 5,000, and neither of her previous challengers in the running, she’s likely to keep her seat, even if buddies' discontent over local issues rumbles on. 

Still, as I have discovered, the 2014 referendum continues to reverberate in towns like Paisley. It has divided friends and neighbours on constitutional lines, galvanised new strains of politics, and brought a Labour heavyweight crashing down, with no appetite to return. 

The Tories believe their unionist message is enough to flip seats like East Renfrewshire, once Conservative, then Labour, and now an SNP marginal. As the SNP's shine wears off, could Paisley, with its long tradition of the left, one day follow? It no longer feels implausible. “The one thing about the Scottish Conservatives - and this is true whatever you like us or not,” says Masterton. “You know what we stand for.”

 

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

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