Autumn Statement 2015

Today Chancellor George Osborne delivered his Autumn Statement and Spending Review. Housing, tax credits and the NHS were all on the agenda, but what were the key takeaways?

  1. The run up...

    Before it all kicked off, there were rumours George Osborne would kick back on planned welfare cuts. There were also rumblings that he would slash his budget surplus.
  2. Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland, predicted both u-turns.
  3. In the days before it emerged that housing would be a big focus, which sent shares in house builders rallying. Persimmon plc and Taylor Wimpey were the biggest risers this morning.
  4. The big day...

    This morning Osborne tweeted a tantalising image of the spending review.
  5. Opposition leader Jeremy Corybn had also tweeted early: 'We hope Tories have listened.'
  6. Well...with a speech that took Osborne little over an hour to deliver, it appears they did.

    The breakdown

  7. Growth and surplus

    Osborne began his speech by confirming that the Government would deliver their surplus. 'Britain's debts will fall each year of this Parliament and the £12 billion welfare savings will be delivered, crucially, in full', he said. Deficit in 2015/16 is set to be £73.5bn, falling each year to deliver a £10.1bn surplus in 2019/20, £0.1bn more than previously announced.
    The surplus is now projected to reach £14.7bn in 2020/21. It was here that Osborne gave his first nod to the north, stating that the UK's north has grown faster than the south since the last budget. GDP forecast at 2.4% in 2015, revised up to 2.4% (2.3%) in 2016 and 2.5% (2.4%) in 2017, 2.4% in 2018 and 2.3% (2.4% in July) in 2019 and 2020, as illustrated by Citywire.
  8. Growth, Osborne said, was not fuelled by an 'irresponsible banking boom.' Head of research Guy Foster tweeted the following graph on consumer borrowing:
  9. U-turn on tax credits
  10. The biggest news to come out of the Autumn Statement was the Government's u-turn on tax credit cuts. The Chancellor announced to Parliament that the taper on the in-work benefits would stay the same, effectively cancelling the largest part of the cuts. This u-turn raised the question of how Government would fund the planned £12bn cuts to social security as announced in the Conservatives’ manifesto. The Chancellor said he was able to do this because of improved public finances and low interest rates. Guy Foster said there would be help from lower bond yields.
  11. The u-turn prompted the BBC's Robert Peston to ponder whether Osborne will admit he may have been wrong...
  12. State pension

    The base state pension is to rise to £119.30 a week next year. A new single tier pension has been set for new pensioners at £155.60.
    Apart from this, all was fairly quiet on the pensions front. Pensions correspondent for the Financial Times, Josephine Cumbo, confirmed we'll hear about pensions tax relief next year.
  13. Housing and stamping down on buy-to-lets

    Right after the news that several Victorian prisons are to close, including Holloway women's prison, Osborne confirmed that the space will be used to build new homes. He will double the housing budget to £2bn a year. 'Homes that are affordable to rent and to buy as well,' he said.
    Crucially, he stamped down on buy-to-lets and second homes. Stamp duty will be 3 percent higher on sales of second homes, raising almost £1bn by 2021. The money raised will be reinvested back in places like London and Cornwall - places he said where residents are being priced out of home ownership. Under plans, 400,000 new homes will be built, and laws on planning and land usage relaxed. This new regime could also cover the tax credit u-turn, Brewin Dolphin said.
  14. Capital Gains Tax (CGT)

    CGT will have to be paid within 30 days of selling a residential property, an acceleration from today and in place from 2019. This is part of the Government's plans to get every business using a digital tax account by the end of Parliament.
  15. Business rates

    The Department of Business's budget has been slashed by 17 percent. Small business rate relief has been extended another year.
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