George Osborne's autumn statement 2011: live coverage
Full coverage of the chancellor's autumn statement, including analysis and reaction to the 12.30pm speech
10.44am: The torrent of leaks from the Treasury in recent days means that we already know about many of the measures that will be announced in the autumn statement. Here's a run-down:
Infrastructure investment This will be a key part of Osborne statement, as he attempts to kickstart growth in the UK. Under the 30bn plan, commercial pension funds will provide funding for more than 500 public sector projects - with another 5bn of funding coming from Whitehall underspend.
A plan for credit easing was pre-announced back in early October. It is likely to involve the government underwriting bank lending, to encourage them to offer more generous loans to small firms, and could be worth up to 40bn.
A 300m boost for small businesses. This will include extending the current holiday on business rates by another year, and a new 'angel' investment scheme to bring capital to new ventures.
A new bank levy The chancellor is likely to increase the bank levy to ensure that the sector will continue to provide 2.5bn to the Treasury despite having cut their balance sheets (the tax is levied against the value of the debts on their books)
Tax credits Some will be frozen at the higher income end to fund other commitments. The freeze on tax credits (for which 90% of households are eligible), could save 1bn, but hit working families the hardest
250m worth of support will be given to energy-intensive companies - a move already criticised as environmentally unfriendly and a boost to some of Britain's richest firms
Education 600m over the next three years, expected to fund another 100 free schools
Housing 400m fund to enable housebuilders to build up to 16,000 new homes, plus extra funding to refurbish abandoned houses
Unemployment 1bn youth contract, providing at least 410,000 work places for 18- to 24-year-olds. Deputy prime minister Nick Clegg has said it will provide "hope" to young people, after youth unemployment crashed through the 1m barrier.
Fuel duty The chancellor is expected to defer a 3p rise in fuel duty which was scheduled to come in next January, after fierce lobbying by Tory backbenchers
Transport Rail fares rises will be restricted to 6% on average in January rather than 8%. The move came as a surprise to the industry, which was poised to announce new inflation-busting rises.
10.26am: When the chancellor delivers his budget, the leader of the opposition responds. But today, because it's the autumn statement, Ed Balls, the shadow chancellor, will reply to Osborne. The relationship between the two has become one of the most interesting in modern politics. They are both powerful, intellectually self-confident, small-p political strategists eclipsed by leaders with warmer public personalities. They have staked their reputations on rival approaches to deficit reduction. But they actually s! eem to g et on. At the weekend we saw them being genuinely polite about each other on Andrew Marr's sofa. And, in an interview with the Independent on Sunday, Balls said he could always have a conversation with Osborne "in a friendly way".
The Ashcroft research I mentioned earlier (see 8.58am) might explain why they get on. The public view them in a similar way. In a poll, people were asked to choose from 15 words or phrases they associated with the two men. For both men, the top four phrases were the same: smug, out of his depth, arrogant and out of touch.
Here's the chart for Osborne.
And here's the chart for Balls. AS
10.02am: George Osborne is expected to replay his favourite soundbite today, that his fiscal plans have made Britain a 'safe haven' from the panic raging in the eurozone. Is it true? The latest prices in the bond markets would appear to support the chancellor, with Britain's borrowing costs still slightly below those of Germany.
Bloomberg data shows that the yield (or interest rate) on UK 10-year gilts is trading around 2.25% today.
For Germany, the equivalent Bund is changing hands at a yield of just over 2.3%.
Those prices should reflect the price that either country would have to pay to issue fresh debt, so the Treasury should be reassured that the UK yield is close to its record low. Critics, though, point out that low yields are a sign of economic malaise (else investors would find somewhere better to put their money). GW
9.51am: There are two polls aro! und this morning. For the record, here they are.
YouGov for the Sun
Labour: 39% (up 9 since the general election)
Conservatives: 37% (no change)
Lib Dems: 9% (down 15)
Labour lead: 2 points
Government approval: -24
Labour: 39%
Conservatives: 37%
Lib Dems: 10%
Labour lead: 2 points
The Independent have splashed on the ComRes findings showing that an overwhelming majority of voters (69%) think the government should slow the pace of its spending cuts in order to boost growth. But the same poll shows that, although this is Labour's policy, voters by a clear margin do not think that Ed Miliband and Ed Balls would do a better job of sorting out the economy than David Cameron and George Osborne. The YouGov poll has some questions on the economy (pdf) which paint a similar picture. Asked if they like the way cuts are being implemented, voters will say no. But asked if the cuts as a whole are necessary, voters will say yes. AS
9.36am: Nick Clegg has given a soundbite to BBC News about the autumn statement.
He said it would do three things.
Firstly, it keeps us safe, it keeps us safe from the debt storm and the market turmoil in Europe and elsewhere. We are going to be upfront with people about the difficult challenges we face. This coalition government will continue to lead to provide the country with the stability we need.
Secondly, it will make sure that even as we take these difficult decisio! ns we do so as fairly as possible. We will be giving support to the poorest, to those who lost their job through no fault of their own, more childcare to help thousands and thousands of families, more support to get young people into work..
And, third and finally, it will set out a plan to get building, to build the homes, the houses, the roads, the broadband infrastructure we need for a strong and prosperous Britain. Those are the three things this autumn statement will do.
9.17am: City analysts believe that George Osborne will be forced to admit to a "black hole" totaling tens of billions of pounds in Britain's public finances. The OBR is expected to slash growth forecasts for at least the next couple of years, which will scupper the chancellor's goal of eliminating the structural deficit by the end of the parliament. The Financial Times (subscription) has calculated that this weaker growth (which results in lower tax receipts) means Britain will still be labouring under the burden of a 30bn structural deficit in 2014-15, not the 6bn structural surplus targeted by Osborne for that fiscal year.
According to Howard Archer, economist at IHS Global Insight:
The chancellor's fiscal targets further out now look unattainable under the current public spending and revenue plans, given likely extended weak economic activity.
It's not exactly a disaster for Osborne - read the small print, and the target is to "balance the cyclically-adjusted current budget by the end of a rolling, five-year period", so he can argue that he has not failed his own test. But it will mean that further austerity measures will probably be needed into the next parliament to tame the deficit, making a pre-election giveaway budget even harder to achieve.
And the short-term picture could be even bleaker -- Michael Saunders, UK economist at Citi, reckons the structural! deficit could be 50bn larger than planned in 2013. The kind of black hole that devours every
bit of optimism in its path? GW
9.15am: Plans to provide 5bn of public sector funding to stave off recession will hurt the poorest in society the most, charities for low-income families have warned. Our colleague Jill Insley has the full story.
8.58am: Len McCluskey thinks the voters want to hear reassurance, not gloom, from George Osborne today, but a study of public opinion commissioned by Lord Ashcroft, the former Conservative deputy chairman, suggests the opposite. Ashcroft published his research, which combines polling with focus group work, at the weekend, and it's worth reading (pdf). Ashcroft thinks voters will respond well to "honest gloom" because they won't believe anything more sunny.
George Osborne can take comfort from two things as he prepares to deliver a gruesome autumn statement to the voters. First, they will be more impressed to hear honest gloom than they would be by a cheerful assessment that seems to deny the evidence of their own eyes. Second, nobody believes there is very much he, or any government, could do today to overcome the economic crisis ...
If the Chancellor's message seems unpalatable, it will at least have the merit of being, for voters, believable. Over-claiming on the economy would not just be unconvincing, it would reinforce persistent perceptions that he and his party are out of touch with life as it is lived by most people.
According to Ashcroft's reseach, participants in focus groups were also not impressed by Labour's five-point plan for growth. They had not heard of it and, even when it was explained to them, they were sceptical. "When explained, some participan! ts thoug ht some of the five proposals had some merit, but as with government growth initiatives sounded small given the crisis," the report says. "They did not need to be taken seriously because they were not likely ever to be implemented, and sounded as though they would cost money, further underlining suspicions that Labour were not serious about the deficit." AS
8.45am: Like Ed Miliband, Len McCluskey, the Unite general secretary, wants George Osborne to use his autumn statement to announce a change of course. In an article, McCluskey says Osborne should offer the electorate optimism, not pessimism.
Unite has always argued that the call for cuts is misguided. The only way to recover our economy is for the government to embark on a programme of growth, similar in scope and intelligence to that pursued by the post-war government ...
George Osborne should realise the public are not interested in fiscal pyrotechnics. They want reassurance. They want to know that you can create real jobs, that these will be stable, and will allow people a dignified working life. They want to stop the fear heaped on top of fear, with the attacks on earnings and job stability.
This country needs leadership, not Private Fraser claiming "we're doomed". The fear this government is spreading may be crucial to its plan to roll back our state and to destroy the social architecture which has sustained this country since 1945, but as analyst after analyst states, it isn't working. Time to change tack, and fast.
8.38am: On the Today programme this morning Colin Ellis, a former Bank of England economist and now head of research at the British Private Equity and Venture Capital Association, said that George Osborne could not blame the eurozone crisis for Britain's sluggish growth. The quote is from PoliticsHome.
[Blaming the eurozone] certainly stacks up in terms of where we are now and the uncertainty effecting the economy now but the problem is in terms of what we have seen last year it doesn't stack up at all. Actually in the 12 months to September of this year we have only seen the economy grow by 0.5% which is the about to 2% lower than we would expect in a normal year. The big reason for that isn't the eurozone crisis, the big reason is we haven't seen the rebalancing in the UK economy that we had hoped.
8.36am: Ed Miliband, the Labour leader, has been on ITV Daybreak this morning. He said he would like to hear George Osborne use his autumn statement to announce that he was changing course.
I think what we are going to see today is unemployment is up, growth is down and borrowing, which was the test the government set itself, is on the way up too. That is why I hope the chancellor, in the interests of the nation, will change course today. He will say 'Actually, we haven't got it right, we took a gamble, it hasn't worked. Let's change course, let's find a different way forward'.
On days like this, my inbox normally gets clogged up with emails from betting companies publicising their silly budget bets. But I'm sure none of them will be willing to take money on a bet that Osborne's won't be saying: "Let's change course." AS
8.28am: Good morning. I'm Graeme Wearden. Two economic questions will dominate the autumn statement: how badly has Britain's growth slowed, and is George Osborne still on track to hit his "fiscal mandate" (eliminating the structural deficit and delivering a balanced budget, excluding capital expenditure, by 2015-16)?
Both questions will actually be answered by the independent Office of
Budget Responsibility. Osborne will announce its latest forecasts in the statement, with the OBR itself releasing a detailed Econom! ic and F iscal Outlook after the chancellor finishes speaking.
The new forecasts could give Osborne one of his more uncomfortable moments since becoming chancellor 18 months ago. The GDP predictions in March's budget must be revised down Britain will not post growth anywhere close to 2.5% in 2012. Instead, the gloomy outlook will probably show that the UK economic recovery has come badly unstuck.
Critically, the OBR will also rule on whether the government is likely to hit its fiscal targets (both for balancing the budget, and a "supplementary" target for Britain's debt-to-GDP ratio to be falling by 2015-16). The OBR outlook report will also include detailed projections for unemployment, inflation and the credit market. The chancellor can (and surely will) point to the debt crisis across the Channel for holding Britain back.
Still, the more disappointing the figures, the greater the concern that Osborne's fiscal consolidation programme has floundered. And for the City, that could put Britain's reputation as a relative safe-haven under scrutiny. GW
8.23am: "I'd start with the gloom - and build up to the doom." That's the cartoon in today's Times, depicting an adviser to George Osborne. When Osborne became chancellor, he wanted autumn statements to be low-key affairs. Gordon Brown had turned the traditional autumn statement into the pre-budget report, a mini budget that allowed him to indulge in parliamentary grandstanding. Osborne's plan was to save his big announcements for the spring budget, and to revert to the convention of using the autumn statement as a policy-lite update on the state of the national finances. But, with the economy stalling, Osborne embarked on a Whitehall scramble for ideas - almost any ideas - that might kickstart growth. Today we're going to hear them. This is as big as a budget.
I'm Andrew Sparrow (AS) and I'll be writing the live blog today with my colleague Graeme Wearden (GW). We'll use ini! tials to show who's writing what; if there are no initials on a post, that'll be because we think it probably doesn't matter. Broadly, I'll be writing about the politics and Graeme will be writing about the economics. There are two key timings that you need to know.
12.30pm: Osborne delivers his statement in the Commons. That's expected to last for about an hour. After he has spoken, Ed Balls, the shadow chancellor, will respond and then other MPs will get the chance to question Osborne. The whole session should finish at around 2.30pm.
3pm: Robert Chote, chairman of the Office for Budget Responsibility, holds a press conference. Osborne will mention the OBR's new growth forecasts in his statement, and the OBR's report will be published as soon as Osborne sits down, but the press conference will be important because the OBR's figures are likely to be the key story of the day. According to Nick Robinson on the BBC, government sources who have seen them describe them as "shocking".
It's never easy being chancellor when you have to deliver bad news. Osborne claimed yesterday that the public supported the government's economic strategy, and polling figures suggest that there are some grounds for thinking that's true. But today's he's going to have to find a new political narrative on growth. We've already had two, quite different, ones from the Conservatives.
1. Sharing the proceeds of growth. After David Cameron became Tory leader, he and Osborne based their strategy on the assumption that Britain would continue to grow richer year by year. The Tories would "share the proceeds of growth" - ie, continue to fund public services, but save a bit of money for tax cuts.
2. Postponing growth. After the 2010 election, Osborne told the electorate to prepare for two or three years of economic pain. He assumed that grow! th would safely by back on track by 2015, and (although he never said this) that the Conservatives could win a second term on the back of pre-election tax cuts.
Now there's a new backdrop.
3. Er, what growth? Today's figures will suggest that the recovery will be much harder than anyone thought.
I'll be following today's announcements in detail. But, in political terms, the real test is whether Osborne can persuade voters that the government is doing the right thing in such a bleak economic climate. AS
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