We’re all in this together
The last autumn statement before an election and at the end of a five-year period in which the government has been persistently hit as being the friend of the rich and big business provides a great chance to do just the opposite. The much-heralded ‘Google Tax’ will see a 25 per cent rate attached to all diverted profits from multi-national companies. This is a truly unilateral measure from Osborne on tax avoidance – and from someone who has usually hidden behind the need for multi-lateralism. This, combined with larger contributions from ‘non-doms’ and the restriction of the amount of profit banks can protect from tax, are all important political gestures from the Chancellor in the face of accusations by journalists that however the figures are massaged, the UK’s spending habits are continuing to be heavily reliant on credit. Even the OBR’s revised figures suggest it will take almost the whole of the next Parliament to pay off our debts. But Osborne carefully and – for now at least – cleverly skirted around this particular elephant in the room (let’s see if that lasts into tomorrow’s newspapers), making it clear that he has done his best to make Britain the best place in the world to do business (and to make money) – but that it’s ‘no more Mr Nice Guy’.
Betting the house
In the week where the man who introduced the ‘slab’ system for stamp duty retired from parliament, the Chancellor saw fit to retire the widely criticised policy. In a clear piece of electioneering to appeal to first-time buyers and those in regions outside of London, but also in a nod to the core Tory values of aspiration and property-ownership, the Chancellor told us that stamp duty will be cut for 98% of people who pay it. This amounts to a tax cut that will cost the Treasury £800m a year. It’s a big gamble for Osborne and certainly not his most fiscally responsible – only heightened by coming on top of other ‘unfunded tax cuts’ announced in the Budget – but it is politically very savvy in helping the aspirational, and actively making richer people purchasing the more expensive properties pay more. In a clever direct response to Labour’s Mansion Tax, Osborne’s reform will only come into play for people who can afford to purchase more expensive properties, rather than those whose property value happens to have risen significantly during the past ten years but who aren’t necessarily (cash) rich enough to pay the tax. It is a tax break for the many and arguably a form of Mansion Tax for the few.
Doing it for the kids
The last few months have seen a deluge of think-pieces suggesting that prospects for under-25s in this country are dire – and previous fiscal statements from the Government have done little to make anyone think differently, with their consistent focus on making life easier for the ever-reliable grey vote. Osborne did his best to counter that today, announcing the provision of student loans for master’s students – a vital intervention as the jobs market becomes more competitive and bachelor’s degrees more commonplace, but also with ending the ‘jobs tax’ of National Insurance contributions for all apprentices under-25. It’s hard to argue that this isn’t a policy that will ultimately benefit young people across the spectrum of talents and abilities. The Chancellor didn’t forget the young parents either, bringing to an end air passenger duty for all under 16s by 2016 and – with easily his best gag of the day – ensuring that children’s TV programmes such as Wallace and Gromit (the first of whom he likened to the Leader of the Opposition) will continue to be made in the UK by extending the creative industries tax relief to the industry.
The King in the North
In perhaps the most pre-briefed measure of all time (the Chancellor has been on a never-ending hi-vis tour of the north since he took the job), Osborne underlined his commitment to the creation of a ‘northern powerhouse’ – a key measure in seeing off Labour’s claims that only London has seen anything approaching a recovery. HS3, huge road investments, an end to the ghastly Pacer trains, a sovereign wealth fund for shale gas, an elected mayor and substantial funding for science and technology are all on the menu as part of a huge programme to ‘rebalance the economy’. With the North now seeing employment rise faster than the rest of the UK, Osborne is perhaps eyeing the powerhouse as his most significant achievement as Chancellor. Of course, we mustn’t forget Northern Ireland at this point – which was singled out for the devolution of corporation tax powers in another nicely-timed move to gently grease the palms of the DUP as potential coalition negotiations approach in May.
Stealing Labour’s clothes
The Tories have been dancing to the tune of others for too long, not sticking to the songs they know best, namely those about the economy. Cameron’s immigration speech last week was meant to address the ‘UKIP’ problem, but the Chancellor’s performance today was aimed firmly at the Labour party. We always knew that George Osborne was arguably the most ‘political’ Chancellor in history, but this Autumn Statement was a brazen attempt to set out the pre-election challenges for an opposition struggling to produce any real narrative. Osborne gave us an NHS spending pledge, a mansion tax (disguised as a cut in stamp duty for 98 per cent of homebuyers), a business rates review, a corporate tax avoidance clampdown, a fresh attack on the banks, and there were further details for the ‘Northern Powerhouse’ to northern (marginal) voters. These could all have come from the mouth of Miliband but Osborne’s political gravitas gives them a gloss and sense of reality that the hapless opposition leader cannot. Osborne knows the Tories’ biggest problem remains their ‘party of the rich’ label and here he has neatly linked policy with PR (the headlines will be favourable) to address it. Let’s see how Labour responds.
Picture Credit: The Guardian