Live coverage of George Osborne’s Budget speech as it happens.
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Budget 2014: Round-up
- Housing: £150m will be made available to help fund self-building of homes. Help to Buy will be extended to 2020. A new garden city will be built at Ebbsfleet. Mr Osborne has instructed the Bank of England to be aware of a potential housing bubble developing. Proposals will be developed for extending the Gospel Oak to Barking Line to Barking Riverside, and to ensure that any public investment unlocks the construction of up to 11,000 new homes. Proposals to be examined for the Brent Cross regeneration scheme, subject to value for money and affordability. Mr Osborne says over 200,000 new homes will be built as a result of these policies.
- Transport: A £270m guarantee for the Mersey Gateway project was confirmed. Extra spending was confirmed for road and flood repairs, including increased powers for the Welsh government to get on with repairing and upgrading the M4. £200m made available for repairing potholes.
- Flood defences: Funding increased by £140m over 2014-15 and 2015-16 to repair and maintain flood defences.
- Skills: Grants to small businesses will be extended to create an additional 100,000 apprentices, with degree-level apprenticeships created too.
- Growth: Office for Budget Responsibility growth forecasts: 2.7 per cent in 2014/15, 2.3 per cent in 2015/16, 2.6 per cent in 2016/17, 2.6 per cent in 2017/18 and 2.5 per cent in 2018/19. All of these have been revised upwards from the autumn statement.
- Deficit: OBR deficit forecasts: 6.6 per cent of GDP in 2013/14, 5.5 per cent in 2014/15, 4.2 per cent in 2015/16, 2.4 per cent in 2016/17, 0.8 per cent in 2017/18 and a 0.2 per cent surplus in 2018/19.
- Energy prices: A £7bn package to cut energy bills for British manufacters will be introduced. The Carbon Price Rategoogle will be cut to £18/tonne of CO2 for the rest of the decade, saving a mid-sized manufacturer £15,000 on energy bills. There will be an extension to the energy compensation scheme for energy-intensive industries (this could encompass manufacturing industries like stell and concrete, perhaps) to 2019, and electricity from combined heat and power plants will be exempted from Carbon Price Floor. Mr Osborne also announced almost £1bn-worth of compensation to protect energy-intensive firms from higher prices resulting from the Renewables Obligation and small scale Feed-in Tariffs. This scheme will begin in 2016-17 subject to state aid clearance.
- Business tax: Class 2 National Insurance Contributions will be turned into self-assessment, while young workers under 21 will be taken out of employee national insurance altogether.
- Investing: The annual investment allowance will be doubled to £500,000 and extended to 2015. This means almost 100 per cent of businesses will pay no tax on investment.
- Planning: A new Planning Court will be launched on 6 April 2014 to fast-track disputes, including big construction projects
- Science: Government will provide £42m over five years for the Alan Turing Institute for big data; £74m over five years for a cell therapy manufacturing centre and a graphene innovation cente; and £106m over five years for around 20 additional centres for doctoral training.
- Public spending: The £1bn departmental underspend will be made permanent.
- Stamp duty: A clampdown on tax avoidance, including an increased budget for HMRC and stamp duty of 15 per cent to be imposed on people buying residential homes through a corporate envelope.
- Church repairs: £20m of funding will be provided for a grant fund to help cathedral repairs, as well as funding for the 800th anniversary of the signing of the Magna Carta.
- Fuel duty: The planned rise in fuel duty for September will be cancelled.
- Exports: Available lending for export finance is doubled to £3bn, with interest rates on those loans cut by a third. This makes it the “most competitive export financing in Europe”.
- Personal tax: The basic rate tax allowance will rise to £10,500 from next year, while the higher-rate threshold will also rise to £41,865. Married couples’ allowance will rise in line with the basic rate allowance.
- Other duties: Alcohol duty will rise with inflation (with the alcohol duty escalator scrapped), duty on Scotch whisky will be frozen, beer duty will be cut by 1 per cent (that’s 1p per pint), the cigarette duty escalator will be extended into the next parliament, duty on fixed-odds betting terminals will rise to 25 per cent, and bingo duty will halved from 20 per cent to 10 per cent. All long-haul flights will pay the same air passenger duty as those to the USA and private flights will also be covered by APD.
- Pensions and savings: Some pretty radical changes to these. ISAs will be simplified and made more generoous, with cash and stocks ISAs merged into one new kind of ISA and the annual saving limit increased to £15,000. Junior ISA limits will rise to £4,000. A pensioner bond will be launched, paying market rates, and premium bonds will be made more generous. Defined pensions contributions will be made more flexible, with the income requirement for flexible drawdown to be cut and the amount you can take as a lump sum doubled. All tax restrictions on how pensioners access their money will be abolished, meaning no-one will have to buy an annuity - although those who still wish to do so will be able to shop around. Everyone retiring on a defined contribution pension will have to be offered face-to-face advice when they retire. Pensioners withdrawing money will pay normal tax rates, as opposed to the current “punitive” 55 per cent rate. And, in a final reveal, Mr Osborne announced that the 10 per cent rate on savings will be abolished altogether.
15:00: Time for this liveblog to come to an end. It was an intriguing Budget, although one without any earth-shattering announcements for the construction industry. We got confirmation of some things we already knew, like the extension to Help to Buy and the UK Guarantee for the Mersey Gateway scheme, while funding was announced for smaller projects like a number of new science centres and a fund for cathedral repairs.
The headline-grabbing news came in changes to personal savings and pensions, but there was also some solid funding announced for new housing, as well as infrastructure repairs and upgrades.
All of our content, including news stories, analysis and expert opinion, can be found on our dedicated Budget 2014 page here.
Thanks for reading.
14:54: Here’s a piece from the Construction Products Association’s Noble Francis, titled Budget 2014: the good, the bad and the Ebbsfleet.
14:47: The CBI says the annual investment allowance increase will benefit medium-sized firms:
14:43: Tory housing minister Kris Hopkins has just tweeted to say: “Today’s Budget will get Britain building and help aspiring homeowners onto the property ladder.”
14:39: A couple of tweets from the chancellor:
14:35: Sky News economics editor has this to say on Mr Osborne’s radical pensions changes:
14:33: The Federation of Master Builders has welcomed the funding to support small housebuilders:
14:31: A few tweets - first, some comment from KPMG’s Richard Threlfall here, via our news editor Tom Fitzpatrick:
14:16: Reaction is coming in from across the construction industry and you can see all of the responses here. Included so far are comments from UK Contractor’s Group, UK Green Building Council, EC Harris, Atkins, NHBC, PwC, and more. We’ll keep updating the page as we get more.
14:17: Some stories coming in now from the Construction News team: first, a look at the energy, roads and rail announcements made in the Budget speech.
14:14: The chancellor announced that he had just agreed a guarantee of £270m for the Mersey Gateway scheme. We reported last year that the Treasury was set to underwite half the cost of the £600m project under the UK Guarantees scheme.
14:08: We’ve got a round-up of all the Budget announcements that affect the construction industry here.
13:43: Ed Miliband’s speech comes to an end. Not many responses to specific policies announced in the Budget, but an attack on the coalition’s general policies on taxation, housebuilding and welfare.
13:43: “There are more Etonians writing the manifesto than there are women in the Cabinet,” says Mr Miliband.
13:42: The deputy speaker has had to intervene a number of times already, in comparison to the relative quiet enjoyed by Osborne. Miliband is challenging Osborne and the PM over a potential lowering of the 45p tax rate to 40p in the next Parliament.
13:38: Manufacturing output, construction output and infrastructure investment are all down under Osborne, says Mr Miliband. The government has overseen the lowest levels of housebuilding since the 1920s.
13:36: A swipe at Liberal Democrat leader Nick Clegg - Mr Miliband says he has been there “every step of the way”, voting for Tory policies.
13:32: Mr Miliband goes straight on the attack over living standards, saying that they have fallen “sharply and steeply” for most people. He says they have fallen for 44 out of 45 months under David Cameron.
13:31: That brings Mr Osborne’s speech to an end, who emphasises that his Budget and the government is behind “hard-working people”. Leader of the Opposition and Labour Party leader Ed Miliband will now respond.
13:27: The final announcement relating to savers is that the 10 per cent tax on all of these savings will be abolished completely - “reduced to a 0 per cent rate”.
13:26: This is the most fundamental change to pension taxation since it was introduced in 1921, he says. These are certainly quite far-reaching and radical changes to pension taxation and other tax allowances.
13:25: The third point to “help savers”, is a change to defined contribution pension schemes.
The income requirement for flexible drawdown to be cut, the amount you can take as a lump sum to be doubled, and all tax restrictions on how pensioners have access to their pension pots will be lifted. This means no caps, no draw-down limits, so “no-one will have to buy an annuity”. Pensioners taking money out of their pensions will be able to do say at normal tax rates, not at the current “punitive” 55 per cent rate.
“We will trust the people” to manage their own finances, says Mr Osborne.
13:22: A new pensioner bond will be launched “paying market-leading rates”, says Mr Osborne. This will be available to all those over 65 with interest rates to be set in the autumn. Up to £10,000 can be saved in each bond.
13:21: Cash and stocks ISAs will be merged into one kind of ISA, Mr Osborne announces. This will be simpler and more generous, with the saving limit raised to £15,000. Junior ISA saving limits will go up to £4,000.
13:20: Savers have had a “particularly hard time in recent years”, says Mr Osborne. One of our economy’s weaknesses is that we borrow too much and save too little.
13:19: Next, the chancellor moves to personal income tax. He announces the heavily-trailed rise in the tax-free threshold to £10,500, and that the higher-rate threshold will also rise.
Tax cuts for those on low and middle incomes - “help for hard-working people”.
13:16: A cut in bingo duty - who had that on their Budget Bingo card? Also cuts and freezes to alcohol duty.
13:12: Looking at the USA, Mr Osborne says we must cut our energy costs in order to promote manufacturing - their energy costs are far lower.
A £7bn package to cut energy bills for British manufacters will be introduced. The Carbon Price Rate will be cut to £18/tonne of CO2 for the rest of the decade, saving a mid-sized manufacturer £15,000 on energy bills.
He announces an extension to the energy compensation scheme for energy-intensive industries to 2019, and electricity from combined heat and power plants will be exempted from Carbon Price Floor. He also announces almost £1bn-worth of compensation to protect energy-intensive firms from green levies.
This is all delivered without a cut to investment in renewable energy, says Mr Osborne.
13:11: The investment allowance of £250,000 will be doubled to £500,000 and extended to 2015. Almost 100 per cent of businesses will receive this allowance, paying no up-front tax when investing, he says. “So when we say we’ll get Britain investing, we mean it,” he says.
13:08: Corporation tax will fall to 21 per cent, he says, with it reaching 20 per cent next year. Under-21s will be taken out of job tax altogether then, too.
13:07: Modern infrastructure is part of a leading economy, Mr Osborne says. And so is modern industry, so he announces new centres of industry and science, including for graphene.
An Alan Turing Institute will be created so that Britain can lead the way in “big data”.
Grants to small businesses will be extended to create an additional 100,000 apprentices, with degree-level apprenticeships created too.
13:06: Mr Osborne says he supports the case for high-speed rail, and has just approved a £270m guarantee for the Mersey Gateway scheme. He will also approve new power for the Welsh Government so they can get on with upgrading infrastructure like the M4. He also announces around £200m will be made available to repair potholes.
13:04: The chanceller says that “housebuilding is up 23 per cent, but it’s not enough.” There will be reforms to planning, and £0.5bn of finance will be offered to small housebuilders. He also announces £150m of finance to help people build their own homes, as well as continuining funding of the regeneration of poor-condition housing estates.
Help to Buy will also be extended to 2020 to ensure 120,000 new homes built. Barking, Riverside regeneration at Brent Cross, and first new garden city “in a generation” at Ebbsfleet.
13:00: Britain has to “up its game on exports”, says the chancellor. He says that often you can only win the contract if you’re backed by competitive export finance. Available lending is doubled to £3bn, with interest rates on those loans cut by a third. This makes it the “most competitive export financing in Europe”.
12:57: The chancellor mentions that we will be soon be celebrating the 800th anniversary of the signing of the Magna Carta - stating that the tale of a King John, a weak leader who took power by betraying his brother and thanks to the support of a bunch of unruly barons, is unthinkable today. Ed Miliband does not look overly impressed.
12:53: Loud jeers from across the floor as Mr Osborne says that the government’s decisions in this Parliament have ensured that the rich have made the biggest contribution to reducing the deficit. He rolls out the old catchphrase: “We’re all in this together”.
He says that income inequality is at its lowest level for 28 years - and lower than under Labour.
He announced that he will increase HMRC’s budget to tackle non-compliance over tax, expand tax on residential properties over £2m to those worth £500,000, and that people will not be able to avoid paying stamp duty by purchasing property through a “corporate envelope”.
12:52: The chancellor moves on to the welfare cap now. Only state pension and cyclical unemployment benefits are excluded, he says.
“Never again should we allow the costs of the welfare system to spiral out of control,” he says.
12:50: Osborne confirms that austerity is far from over. There will be cuts in the next Parliament, too, he says - part of his strategy to “fix the roof while the sun is shining”.
12:49: He also says that he has asked the Bank of England to be particularly aware of the potential of a bubble developing in the housing market.
12:47: The chancellor talks about plans to introduce a new 12-sided pound coin. This will be less subject to counterfeiting, he says, helping build “a resilient economy”.
12:46: This “credible growth plan” means the government can better support businesses, says Mr Osborne.
12:44: On the deficit, the chancellor outlines how the OBR predicits it to fall, to the point where there will be no deficit by 2018/19. The surplus in that year will be £5bn.
The deficit is forecast to be 6.6 per cent this year, 5.5 per cent next year, then 4.2 per cent, 2.4 per cent, then 0.8 per cent in 2017/18.
12:41: Onto jobs. Mr Osborne says the OBR predicts that employment will rise significantly and that earnings will grow this year and in every year of its forecast. And for the first time in 35 years, we have a higher employment rate than the USA.
12:39: The OBR expects Britain’s economy to grow larger than at the point at which it “collapsed” in 2008. We’re growing faster than Germany, the US and Japan - no other developed economy is growing as fast, says Mr Osborne.
12:36: The chancellor turns to today’s forecasts from the Office for Budget Responsibility.
A year ago, the economy was forecast to grow by 0.6 per cent, but the OBR confirms it grew by three times as much.
The growth forecasts rise again - at the autumn statement growth for 2014/15 was forecast at 2.4 per cent, but it has been revised upwards again to 2.7 per cent. It’s then 2.3 per cent in 2015/16, 2.6 per cent in 2016/17, then 2.5 per cent in 2017/18.
12:35: Investment and exports are up, Mr Osborne says, but we are still behind and he will back businesses that export. Manufacturing is up, he adds, but it halved under the last government so today he backs all manufacturers and regions of the country.
12:34: George Osborne begins his speech. He says that the recovery is going to plan, but “the job is far from done”. This is a Budget for “building a resilient economy”.
12:33: The deputy speaker takes his seat, as is customary, to oversee Mr Osborne’s Budget speech and the following response and debate.
12:32: The House is getting pretty rowdy now as we approach the end of PMQs. Huge cheers from the Tory benches as Mr Cameron says that we’ve reached the end without a single Labour MP mentioning today’s jobs figures.
12:23: A question now on flooding - will help be extended to areas affected before December 2013? The PM says that defences will be put in place for Redcar (in the questioning MP’s constituency), and that there may well be more that the government can do.
12:15: Ed Miliband again for his next three questions. He asks about mental health services - so no questions directly related to the Budget from the Labour leader, although he does question how NHS budgets are being spent with regards to mental health. He’s saving them for his response to the speech - it’s customary for the Leader of the Opposition to respond immediately afterwards, with shadow chancellor Ed Balls giving his view during the Budget debates later on.
12:11: Another question on the jobs figures, mentioning how jobs are increasing in the North-east. The PM says this highlights that there is growth outside of London, and that “we ought to do everything we can on backing industry and backing apprenticeships to make sure that continues”, in order to ensure a balanced recovery.
12:10: Ed Miliband’s first three questions focus on the crisis in Ukraine.
The next question from Julian Huppert, a Liberal Democrat MP, asks about the increase to the tax-free threshold. He questions why the PM has changed his mind to back such a good Lib Dem policy. Cameron, of course, disputes this reading and says: “I very much look forward to hearing what the chancellor has to say on this.”
12:04: The first question for the PM is on today’s jobs figures. He says that employment is up and that unemployment is down - in particular youth unemployment has gone down. He also says that jobs are increasing 10 times as fast in the private sector as they are being lost in the public sector.
11:59: We’ll have 30 minutes of Prime Minister’s Questions before the Budget speech itself starts at around 12:30.
11:55: Some images of George Osborne leaving Downing Street. First, the traditional pose of the chancellor holding up the red box, from the BBC:
Meanwhile, Sky News political editor Adam Boulton attempted to take a selfie with the chancellor and his team in the background. You can judge the results for yourself:
11:48: Labour leader Ed Miliband has tweeted an image from a new Labour Party advertising campaign which states that the “cost-of-living crisis” should be the “top priority” for this Budget.
11:44: Some more pre-Budget reading for you: Construction Products Association economist Kallum Pickering has written a piece for us explaining what construction can expect from this year’s Budget.
And Richard Laudy, head of infrastructure at Pinsent Masons, asks: what can George Osborne can learn from Australia to deliver on infrastructure?
11:35: The Office for National Statistics has released new jobs figures today, too. They reveal that average weekly earnings within the construction industry have seen the largest growth since the end of 2007.
11:32: Ahead of today’s speech, former Labour transport minister Andrew Adonis tells us that the planning quango proposed by the chancellor to oversee Ebbsfleet’s new garden city should have the power to buy sites through compulsory purchase orders. This will help speed up housebuilding, he says. Full story here.
11:22: George Osborne has been tweeting this morning, giving us a sneak preview of the new 12-sided pound coin:
10:59: Good morning, and welcome to Construction News’ coverage of the 2014 Budget. We’ll have full coverage of the speech from 12.30 as well as Labour leader Ed Miliband’s response.
As is the way with the Budget and Autumn Statement these days, Mr Osborne has already made some announcements, including an extension to Help to Buy until 2020 and a new £200m garden city to be built at Ebbsfleet. We don’t expect too many big suprises from the speech itself that will affect construction.