What do we already know about today's Budget?

Today's Budget is one of the most leaky ever. Here is a breakdown of the measures already trailed.

You would be forgiven for thinking that George Osborne's Budget speech today is simply a formality, given the amount of material that has already been leaked. Here is a summary of what has already been trailed, in what must be one of the most leaked Budgets ever.

50p tax

It looks nearly certain that the Chancellor will scrap the top rate of tax, which applies to those earning over £150,000. Rather than abolishing it outright, it will be reduced from 50p in the pound to 45p. This lays the groundwork for getting rid of it entirely next year, and reverting to 40p as the highest rate of tax.

Tax avoidance clampdown

To offset this tax cut for the rich, Osborne has promised to "come down like a ton of bricks" on those who avoid stamp duty. The annual charge on non-domiciled residents will also be upped from £30,000 to £50,000. It's worth noting that the higher rate was floated last year but did not materialise. In today's FT, Martin Taylor says we should not expect this tax clampdown to work.

Stamp duty

In a small victory for the Lib Dems, who have long been lobbying for some form of property tax, stamp duty is to be raised from 5 per cent to 7 per cent on properties worth more than £2m. This measure should raise £2.2bn to help fund the increase in the income tax threshold.

Raising the income tax threshold

Osborne will accelerate plans to raise the income tax threshold to £10,000. This move, heavily touted by the Liberal Democrats, will apply to all 23 million basic tax-rate payers and many higher earners, too. Osborne is likely to announce a large short-term increase, with plans to reach the £10,000 mark by April 2014, long before it was scheduled.

Regional pay deals

Public sector workers in poorer areas of the country will be paid lower salaries - in some cases, as early as next month. Osborne will argue that the public sector should be more like the private sector and reflect local economies, but critics say it will accentuate the economic divide between north and south. It was unclear whether the new rates would apply only to new staff or to existing staff as well. The Treasury insisted that no current employee would suffer a pay cut - rather, rates would be adjusted over time.

Sunday trading hours

The Chancellor will force through emergency legislation lifting the six-hour limit on opening hours for larger stores, in a bid to boost the economy. The restrictions will be lifted on eight weekends over the summer, to coincide with the Olympics and Paralympics. This could open the door for the restrictions to be scrapped altogether.

Tax transparency

Taxpayers will be given a breakdown of where their tax money is going, from the NHS, to defence, to unemployment benefits.

TV tax breaks

The government will launch a consultation on tax breaks for high-budget British television dramas, such as the wildly successful Downton Abbey.

Royal Mail privatisation

In a radical move, the government will take on all the assets and liabilities of the Royal Mail's pension fund, taking responsibility for paying postal workers' pensions for decades to come. This will open the door for the privatisation of the postal service: the pension fund, which has a shortfall of £9.5m, would make it impossible to attract a private sector buyer.

Planning laws to be relaxed

Osborne has said he is "deeply frustrated" with the slowness of the planning process, and will announce new legislation to make it easier to build in the countryside. This will clear the way for more homes and infrastructure to be built - but it may further undermine the coalition's claim to be "the greenest government ever". Regulations protecting wildlife are expected to be scrapped as part of this drive.

International aid

It looks as if the commitment to spend 0.7 per cent of GDP on international aid will be maintained.

 

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.