Budget Press

As reported in The Hull Daily Mail;

“A pledge by Chancellor George Osborne to increase infrastructure spending could signal a long-awaited green light for the £160m Castle Street upgrade in Hull.

In his Budget speech, Mr Osborne announced another £3bn for infrastructure projects from 2015 to stimulate economic growth.

They will be funded from further savings across Whitehall departments.

He said: “By investing in the arteries, we will get growth flowing to every part of the country.” The move immediately raised hopes that a funding deal for the much-delayed Castle Street improvement scheme in Hull city centre could now be a matter of months away.

Construction work on the upgrade, which involves completely designing the Mytongate junction with Ferensway, is currently scheduled to start in 2016.

However, ministers have yet to sign off final funding approval.

Councillor Martin Mancey, cabinet portfolio holder for transport on Hull City Council, said: “I certainly hope this means good news.

“If the Government did not commit to Castle Street after announcing this additional spending, it would be something of a surprise.” Transport Secretary Patrick McLoughlin is due to visit Hull in May to see the congestion problems on the city’s busiest road for himself after meeting MPs and council officials over the issue recently.

Cllr Mancey said: “It would be an even greater surprise if Castle Street was overlooked because of the Secretary of State’s own interest in the scheme.

“From what I know from the number of recent meetings between council officers and officials from the Highways Agency, I am encouraged by the amount of time and effort being put into this by the agency.

“It certainly looks as if they are very committed to getting the scheme ready for actual construction work to start.

“The current timetable has the first spade going into the ground in 2016 but there have been recent indications that if everything goes to plan, it might even get under way late next year. “From our point of view, the sooner they bring it on, the better.”

Haltemprice and Howden MP David Davis said: “What we want to see is the de-bottlenecking of our railways and our road systems and we want underpinning of things such as broadband. “That is what is fundamentally going to cause growth to take off and get us back to 3 per cent levels.” The lack of detail provided by Mr Osborne on which projects might benefit from the extra infrastructure spending was picked up by critics. Hull North Labour MP Diana Johnson said the lack of clarity over the Castle Street scheme was just one of many disappointments.

She said: “There was nothing new to encourage green wind energy private investors, a large share of Lord Heseltine’s city regeneration recommendations are either only partly accepted or rejected and Hull’s caravan industry still faces a 5 per cent VAT increase next month.”

But Lib Dem Business Secretary Vince Cable insisted ministers remained optimistic about German engineering giant Siemens coming to Hull.

He said: “We remain optimistic they will be coming to the region and we have worked on a number of issues to give them long-term certainty.

“We have worked very closely with Hull City Council and we are delivering a good future for offshore renewables.”

Renewables at the Port of Hull has been listed by the Government as one of its “Top 40 Investment Priorites”, although no details of what that involves have yet been released.

Andrew Percy, Conservative MP for Brigg and Goole, highlighted a number of positive measures in the Budget.

He said: “It’s fair to say this is a Budget in very difficult circumstances but I welcome raising the personal allowance to £10,000.

“That is excellent news in a low-wage area like ours. “The fuel announcement is also good news, while a lot of rural pubs in my constituency will be happy about the beer duty escalator being scrapped. “The employment allowance is also good for increasing numbers of small businesses but we still have to accept the most important challenge is growth and that will remain depressed for the next couple of years.”

The Budget also confirmed preferred bidder status for a multi-million-pound carbon capture and storage project linked to the Drax power station near Goole.

It will involve capturing 90 per cent of the carbon dioxide from a new coal-fired plant at Drax before being transported and stored in a saline aquifer beneath the North Sea.

Energy secretary Ed Davey said the Drax scheme and a similar project in Edinburgh had the potential to create a completely new industry. He said: “This moves us a significant step closer to a carbon capture and storage industry – an industry that will help reduce carbon emissions and create thousands of jobs.”

Beer drinkers and brewers also toasted the Chancellor’s move to cut the price of pint and scrap above-inflation beer tax rises.

Matthew Hodgson, who, in 2006, launched Great Newsome Brewery on his family farm in South Frodingham, described the announcement as “fantastic news”.

He said: “The industry has lobbied long and hard to scrap this tax. I was at a beer exhibition in Sheffield last week and there was no mention of it being scrapped there – I’m not sure anybody was expecting it, but it will support businesses like ours, as well as pubs and also ancillary businesses.

“This is the first time since we started the brewery that we are going to have to look at dropping prices rather than increasing them.”

Mike Benner, Camra chief executive, said: “This is a momentous day for Britain’s beer drinkers. “This decision will keep the lid on the cost of a pint down the pub and what could have been the final nail in the coffin for our pubs has been decisively avoided.”

City families are taking proposals ‘with a pinch of salt’ families in Hull have raised concerns over this year’s Budget.

Father-of-two Mark Jardine, 37, felt the budget was positive in parts – but said he is taking Osborne’s proposals “with a pinch of salt”.

Mark, of Etherington Drive, west Hull, has a three-yearold son and a seven-monthold daughter with his wife Laura, 33.

Mark said: “I think we’ll benefit from childcare tax breaks, but we’re not exactly sure how.

“The Budget had no indication of who is going to get what and when – it was very woolly in detail.”

But Mark said he backed Osborne’s plans to give tax breaks to working parents.

He said: “I think it’s great that he’s trying to encourage parents to be in work – especially in such a tough climate.

“Our son is in nursery two days a week and we would want him to be in that learning environment even if one of us didn’t work.”

Mark, a sales administrator at Neill & Brown in Livingstone Road, Hessle, uses a Ford Focus to get to work every day from his west Hull home.

He said: “As a worker and a father, running a car is a massive part of my life.

“It has become especially difficult over the past few years with the price of petrol shooting up.

“It’s nice to know it won’t be shooting up again for a while – especially with road tax costing us so much already.” Mark, who was made redundant twice last year, also backed plans to cut the amount small businesses have to pay in National Insurance – claiming this could “really help to get local people into employment”.

But he expressed doubt that Osborne would keep to his budget.

Mark, who also chairs Hessle Theatre Company, said: “It’s all well and good for the Budget to be promising great things now, but someone else could have taken over Parliament by the time the changes are supposed to be implemented.

“As a family, we’re taking the budget with a pinch of salt.”

Mike McKenzie, 45, of Tanfield Grove, Hull, fears Osborne is just trying to please people.

He said: “All the promises he made are nothing compared to the recession we’re in.

“He also didn’t really address unemployment, which I think is a huge issue in Hull.”

Mike, who has been off work for two years with illness, backed Osborne’s plans to slash income tax for the first £10,000 of workers’ salaries.

He said: “It will help put more money into people’s pockets, which in turn will help the economy.

“But it still doesn’t take into account VAT and other taxes that people have to pay – such as ‘bedroom tax’.”

This is a momentous day for Britain’s beer drinkers Mike Benner, Camra chief executive

This is excellent news in a low-wage area like ours Andrew Percy, MP for Brigg and Goole”

As reported in the Independent;

“Osborne defends his ‘Drown Your Sorrows’ Budget by saying things could be worse

Chancellor George Osborne defended his Budget today, saying the Government had to tackle the nation’s economic problems, which “could be a lot worse”.

Mr Osborne, who promised hope for an “aspiration nation” in his fourth Budget to the Commons yesterday, told ITV1’s Daybreak that he “wanted to be straight with the nation about the problems we face”.

Yesterday he masked an even more gloomy forecast for the economy and deeper spending cuts with populist measures to reduce the duty on beer and petrol and offer help for home-buyers in his Budget today.

The Chancellor rejected calls for a Plan B despite further evidence that his strategy is hurting but not working. The independent Office for Budget Responsibility (OBR) halved its forecast only three months ago that the economy would grow by 1.2 per cent this year to 0.6 per cent and said deficit reduction had “stalled”.

Mr Osborne admitted he would achieve his debt target two years late in 2017-18.  He conceded the recovery was “taking longer than anyone hoped”, saying  he would “level with people about the difficult economic conditions we still face.”  He insisted his “budget for our aspiration nation” would boost economic growth and help families struggling with the cost of living.

The Chancellor’s allies said he had “played a bad hand well” after deliberately trailing a “boring Budget” which turned out to include headline-grabbing initiatives such as:

• cutting the price of beer by 1p a pint from Sunday
• scrapping a planned 3p-a-litre rise in fuel duty due in September
• taking 2.7m people out of income tax by raising the threshold to £10,000 in April next year, 12 months earlier than planned
• cutting £2,000 off the national insurance bill of every company, exempting 450,000 small firms altogether
• providing £3.5bn of “help to buy” government loans to meet 20 per cent of the cost of buying a new-build property
• guaranteeing 20 per cent of a mortgage on any home, to support £130bn of lending                                                                                                                                                         
• a £3bn-a-year boost to infrastructure projects from 2015-16.

The bad new measures needed to fund the giveaways included raising the planned spending cuts in 2015-16 from £10bn to £11.5bn. A 1 per cent cap on public sector pay rises will be extended for another year to save £1bn. Other savings will be announced in June. Treasury sources said further welfare cuts are not expected after the Liberal Democrats opposed them. But Mr Osborne will bring in a new system to cap fast-growing items of spending, including state benefits, which are currently open-ended and unaffected by his austerity measures. At present, only about half of all public spending is subject to strict controls.

Labour accused the Chancellor of ordering ministers to stop their departments spending in the final few months of the current financial year in a desperate attempt to avoid an embarrassing year-on-year rise in borrowing. He escaped that by the skin of his teeth: borrowing will be £121bn in 2011-12 to £120.9bn this year. Without one-off measures being included in the figures, it would have risen to £123.2bn.

Ed Balls, the shadow Chancellor, accused the Government of borrowing £245bn more over the five-year parliament than it planned in 2010. He dismissed the eye-catching measures as “tinkering” when Mr Osborne should have changed course. Mr Balls focused Labour’s attack on living standards, claiming that a family with two children and one earner on £20,000 a year would be £381 a year worse off in 2013-14 and £600 worse off the following  year.

Mr Osborne steered a middle course as he disappointed Conservative right-wingers demanding radical tax cuts to kickstart the economy and Liberal Democrats and Labour politicians urging a rise in borrowing to fund an immediate boost to building projects.

David Davis, the former shadow Home Secretary, was among the Tory MPs who said the Budget should have gone further in cutting business taxes  and warned Britain faced “being stuck with low growth for decades.”

Nick Clegg trumpeted the Lib Dems’ victory in seeing their signature policy of a £10,000 tax threshold being delivered. But Lib Dem activists were angry that the Chancellor had dismissed calls by Vince Cable, the Business Secretary, to “borrow for growth”. Writing on The Independent’s website, Gareth Epps, co-chair of the Social Liberal Forum, said it was “a Budget that gets a lot of little things right, but the big things wrong. Whereas the balance-sheet approach is finally acknowledged to have flopped by mistakenly slashing capital investment, demand remains suppressed and growth restricted.” A survey of Lib Dem members by the Lib Dem Voice website found that only 26 per cent support Mr Osborne’s Plan A.

Carl Emmerson, deputy director of the Institute for Fiscal Studies, said the Chancellor had put off more of the austerity measures needed until after the next general election. “Mr Osborne has again responded to a weakening economic outlook, a worse situation for the public finances, by borrowing a lot more over this parliament, pushing more of the deficit reduction into 2016-17, 2017-18 and beyond,” he said.

Mr Emmerson added: “The hardest hit seem to be those at the very top. The next hardest hit are working age families towards the bottom of the income distribution. Relatively less hard hit are those in the upper middle of the income distribution and, in particular, pensioners who are protected from much of the austerity.””

As reported in The Telegraph;

“Firms spared National Insurance to encourage them to hire

George Osborne said he was delivering a Budget for an “aspiration nation”, after he waived the first £2,000 of National Insurance contributions for all companies.

The Chancellor also said that 450,000 small businesses will not pay any contributions, which go towards paying for benefits such as the state pension.

He is hoping the “employment allowance” will encourage small businesses to take on extra workers, especially those that are starting up.

“It’s a tax off jobs and it’s worth up to £2,000 to every business in the country,” Mr Osborne said.

 “For the person who’s set up their own business, and is thinking about taking on their first employee, a huge barrier will be removed. They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax.”

Mr Osborne described the move as “the largest tax cut in the Budget” in an attempt to increase employment and boost growth.

The changes will take effect in April next year and apply to charities and sports clubs as well as businesses.

Financial experts said small businesses were “key winners”, as they will also benefit from the cut in corporation tax to 20 per cent.

Patrick Haines, of Close Brothers Asset Management, said the measures should help smaller businesses that have been “struggling for years amid complex employment legislation, low bank lending levels and punitive business rates”.

“The reduction in corporation tax to 20 per cent from April 2015 combined with the new employment allowance ensuring a reduction of up to £2,000 in employer National Insurance will undoubtedly ease the pressure on small business owners up and down the country,” he said.

Kevin Nicholson, tax partner at the financial firm PwC, said the Budget had a strong emphasis on making sure Britain was open for business.

“The employment allowance for the first £2,000 of a company’s National Insurance bill will particularly benefit small businesses wanting to take on staff,” he said.

According the Treasury, 98 per cent of the benefit from the tax change will go to small businesses.

Business groups expressed relief that small companies have been helped by the Budget.

John Walker, the chairman of the Federation of Small Businesses, said the cut went “beyond what we were asking for”. “The Chancellor has pulled out all the stops with a wide-ranging package of measures to support small business,” he said.

Richard Baron, head of taxation at the Institute of Directors, said: “As the Chancellor recognised, the private sector has done a huge amount to generate new jobs in tough times.

“This allowance rewards that hard work and helps companies to go even further in alleviating unemployment.”

The move was even welcomed by Ed Balls, the shadow chancellor, who claimed it was originally a Labour idea. “I think the National Insurance cut for small businesses, something we’ve been calling for, is a good thing,” he said.

Despite the grim economic outlook, total employment has remained stronger than many forecasters had expected.

Mr Osborne said his new policy would ensure that strength would continue.

The independent Office for Budget Responsibility estimates that 29.8 million people are in employment this year, rising to 30.5 million by 2017.

David Davis, the senior Tory backbencher, said Mr Osborne had been right to cut National Insurance contributions for small firms, but said the Budget “could have gone further”.

Conservative sources said they hoped to use the tax break for employment as a weapon against Labour at the next general election.

In the 2010 election campaign, the Conservatives focused their attacks on Labour on a plan to increase employer National Insurance contributions, calling the policy “a jobs tax”.”