Budget 2013: Osborne vows to drive UK growth
By Hannah Kuchler, Financial Times
George Osborne, the British chancellor, has vowed his “absolute determination” to ensure his Budget drives economic growth, despite the Office for Budget Responsibility forecasting it will have little impact on UK gross domestic product.
Speaking on Thursday (21) morning, the day after his Budget speech, Mr Osborne said he was “very happy” to accept the OBR wanted to see how his interventions panned out, but he was determined to make them work.
Mr Osborne stressed the importance of monetary policy, saying the OBR had not analysed the impact of the expanded remit for the Bank of England’s Monetary Policy Committee.
He insisted the UK was making progress despite the worse than expected global economic situation, as it had reduced the deficit as a percentage of GDP and created more than a million private sector jobs.
“Progress is not as fast as I would have liked but the weather has got worse – it is a very tough economic situation out there, not just in the UK but in the whole world,” he told the BBC’s Today programme.
The chancellor also rejected that there was something suspicious in the drop in departmental spending towards the end of the financial year, saying it used to be “rather strange” that ministries rushed to spend their budget in the last months of the year
He said the Treasury had been “very, very tough” about reducing spending and that some payments to international bodies had simply not been paid earlier than they were due – rather than being delayed to meet targets.
Mr Osborne also defended the housing package announced on Thursday that will offer government guarantees for mortgages, saying the market was not functioning properly.
He said he wanted to help people move up the housing ladder but did not want to “return to the days of 125 per cent Northern Rock mortgages”.
The chancellor said he was giving power to the BoE’s Financial Policy Committee to “turn off the tap” after three years, which he said was a “really important part of the fiscal credibility of the scheme”.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Ed Balls, shadow chancellor, said only the rich would be better off after the Budget. Referring to the chancellor taking a penny off a pint of beer, he said the average family losing child tax credits “will need to drink 50,000 pints a year in order to be compensated by the beer freeze”.
“He told us two years ago he would get the economy growing, get rising living standards and get the deficit down,” he said.
“Borrowing is up, the national debt is rising, the economy is absolutely flat and everybody in our country is worse off year by year, apart from the rich. It’s not working.”
Speaking at business department questions on Thursday, Chuka Umunna, shadow business secretary, said the Budget would not help struggling businesses as none of the policies would be delivered this year.
But Vince Cable, business secretary, said it would help companies, pointing to increases in capital investment, research and development projects in conjunction with the private sector and the regional growth fund.
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2013 BUDGET: Highlights and quotes
Published: 20 March, 2013from builders merchants news
Updated: 21/03/2013 12:44pm
The Government has unveiled a raft of measures to boost infrastructure, support the housing market and cut the deficit in its Budget, which was announced today.
Government department underspends will be used to fund infrastructure projects in plans unveiled by the Chancellor George Osborne in his Budget speech. Mr Osborne told parliament that government departments are expected to underspend by more than £11bn this year.
He said: “By using our extra savings from government departments, we will boost our infrastructure plans by £3bn a year from 2015-16. That’s £15bn of extra capital spending over the next decade.”
Public sector debt is forecast to increase from 75.9 percent this year to 85.6 percent in 2016/17 before slipping back to 84.8 percent the next year. Borrowing will be around £61bn higher than originally predicted by the Office for Budget Responsibility over the next six years, decreasing steadily from £114bn this year, £108bn in 2014/15, then £97bn, £87bn, £61bn, £42bn by 2020.
Mr Osborne added: “Both next year and the year after, we will reduce resource departmental expenditure limits by the equivalent to a 1 percent reduction for most departments.” However, local government allocations are pre-set and will not be affected.
Mr Osborne announced he would limit public sector pay increases by an average of 1percent in 2015-16. While he has no control over local government pay, the allocation of cash from central government for pay rises will be limited. He said: “Local government and devolved administration budgets will be adjusted accordingly in the spending round.”
Local government workers will also face the extra burden of increased National Insurance contributions toward their pensions – although they will be rewarded with a larger pension on retirement.
As local government continues to face further cuts to budgets to staff, Mr Osborne pointed out: “For every job lost in the public sector, six jobs have been created in the private.”
Other measures in the Budget included:
a commitment to Hezza’s single pot funding for regeneration
a commitment to apprenticeships
income tax personal allowance raised to £10,000
support for childcare
help to buy homes
plans to build 15,000 more homes
cancelling the fuel duty increase
scrapping the beer duty escalator, and taking a ‘penny off a pint’
clamping down on tax avoidance measures.
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