Autumn statement as-it-happened

Ian Dunt By

09:55 - Hello and welcome to the blog for people who don't understand economics. I'll be bringing you live coverage of the autumn statement today with the unfortunate caveat that economics is like a murderous foreign language to me. I barely understand any of it. It took me two and a half years to understand what the 'paradox of thrift' was. If it wasn't for the fact that every single economic event since May 2010 had affirmed it, it might have been longer. My economic ignorance is no different to any of the other political journalists who pretend to be analysts once or twice a year, of course. They don't understand any of this stuff either. The only difference is I will be honest with you, and you will be able to watch me squirm and sweat as I frantically try to assess what the hell is happening. It's like the movie Hostel, but with numbers and a laptop. I'll be with you throughout the day, including PMQs, the autumn statement, Ed Ball's reply and the political fallout. In the build up to midday I'll bring you the best from the web for your reading pleasure. By 'best of the web' I mean any article which helped me understand what's going on and which may help you too.

10:11 - For something approximating economic analysis have a read of Alex Stevenson's feature on Osborne's straightjacket, where he unhelpfully observes that we are all in considerable trouble. You can also hear his interview with Ed Balls here.

10:19 - I usually like Stephanie Flanders at the BBC. She ruins government economic policy like someone unfussily undoing a ball of string. Today she is dressed as the grim reaper, imparting appalling news. "After two and a half years of austerity, the Office for Budget Responsibility (OBR) is likely to say that the fiscal hole that Mr Osborne promised to eliminate in five years, back in May 2010, is actually bigger now than it was then," she writes. "On his own chosen measure, we will probably find out today that the chancellor has literally nothing to show for nearly three years of austerity."

10:32 - I, like you and everyone you know, don't like Osborne. But it's hard not feel a tinge of sympathy for him. Every headline is a condemnation. This is laughable, because even with my scant economic knowledge and misspent youth I remember that in 2010 most of these newspapers and analysts were supporting his policies to the hilt. Even today, they offer few alternatives, because of course anything other than ceaseless austerity is Communism. Anyway, read 'em and weep chancellor. The Indie says Osborne's going to fire 10,000 civil servants to direct towards building projects like building more free schools. The Statesman says Osborne is cutting the NHS, not the deficit, in direct contradiction to the Tories' pre-election slogan. "In response to a complaint from the shadow health secretary, Andy Burnham, chair of the UK Statistics Authority Andrew Dilnot concludes that, contrary to recent Conservative statements, 'expenditure on the NHS in real terms was lower in 2011-12 than it was in 2009-10'." Even ConHome's Tim Montgomerie seems a little worried. "If Osborne looks back, however, over his two-and-a-half years as chancellor my guess is that his biggest regret will not be bruising encounters with colleagues but the lack of a grand growth strategy from day one," he writes. "And ConHome says this without the benefit of hindsight. We've always backed deficit reduction but have long worried about a lack of growth strategy."

11:07 - OK. Here's the lowdown, made palatable, like the coating on a headache pill: 1) The Osborne-created Office of Budget Responsibility (OBR) will downgrade growth forecasts, which will see the chancellor miss his two key targets. Target one is seeing total government debt fall as a share of GDP by 2015-16. Target two is the five year austerity period. The chancellor didn't say when that would start, so he keeps moving it forward. Today he will probably say it starts now, so in reality he's announcing eight years of austerity.

11:08 - 2) The chancellor might beef up the tax rises because he knows he can't cut much more. The balance is currently 96% cuts for just 4% tax rises, but it'll probably be 20:80 when he's done. Why can't he cut more? Because deep down there's an agreement the cuts are stifling growth. If not, why not crack on? But what do I know? So how will he do it? Chances are, he'll raid the nation's pensions. Osborne can get a cool £2bn by reducing the tax-exempt amount people can pay into their pension pots. That is good politics - it applies a bit of pain to the wealthy rather than just hammering the poor. Or he could cut the level of pension tax relief high earners can claim. What's the downside? Well for a start he's hitting his own supporters. Secondly, it discourages a savings attitude.

11:18 - 3) Interestingly, there could be movement on the mansion tax. Well, the mini-mansion tax. Osborne is apparently open to a new holding charge on properties valued over £2m. That would take some of the heat off the housing market in London, most of it the result of the wealthy from Europe buying up property.

11:21 - 4) Earlier this week, the government seized on a select committee report into Starbucks and Amazon and the like to promote its new funding for HMRC tax-evasion detectives extraordinaires. As I typed that news broke that Starbucks reached a deal with the government over a new level of corporation tax. Alright for some. Try doing that next time you need to pay your income tax. Anyway, there'll be another £154m of funding for HMRC with the expectation that that will pay itself back.

11:29 - 5) What else have we got? The Lib Dems appear to have held Osborne to a deal on welfare. Osborne still plans to cut the welfare bill by another £10bn by 2016, but he won't be able to freeze welfare payments. Instead, there'll probably be a below-inflation rise of about 1%. Fuel duty rises will probably be delayed (at least according to the Sun), so the 3p rise tabled for January probably won't happen.

11:30 - 6) Finally – Osborne is pushing ahead with his pro-gas energy policy, despite complaints from the Lib Dems. Thirty new gas power stations will likely be announced today. For more on the backroom negotiations which led to that read my feature. We're half an hour from PMQs kick-off.

11:48 - Theresa Villiers (Northern Ireland secretary, seemingly brought back from the dead) is batting away the uniquely difficult challenges of Northern Ireland questions. Nigel Dodds typifies these challenges by including the phrase "those of us who have had assassination attempts" in his question. You don't envy Villiers, but by Christ she looks like she's feeling the strain. Her skin has gone past white into transparent.

11:50 - OK, we're a few minutes away now. Clegg is in, looking surprisingly smug. The bags under Villiers' eyes seem to be enlarging by the minute.

12:00 - Cameron is in. He's wearing a red tie, by jove. Clegg has a blue tie.  This means nothing, but there's a subculture of analysing political leaders' tie choices and I wouldn't like to let the side down.

12:02 - And we're off. Danny Alexander, chief secretary to the Treasury, is on the front bench as is Osborne.

12:03 - Julian Lewis (Con, pre-pubescent voice) asks what sanctions to expect if Al-Qaida return after the allies pull out. This debate is so far removed from the reality on the ground they might as well all act out The Sound of Music.

12:05 - Hilarious. In his usual preamble of meetings with ministerial colleagues and others, Cameron says 'duties in my house' instead of 'duties in this House'. The Commons falls around laughing. Osborne pulls a surprised, naughty smile.

12:06 - Miliband is up. Miliband goes in on that NHS statistics misuse. What's today's excuse for the reality of falling investment in the NHS. Cameron is prepared, He says the head of the Office of National Statistics backs him. The chair of the Statistics Authority says the opposite, Miliband argues. "Instead of his usual bluster, why doesn't he change the record?" Cameron won't move. He says there's an increase in every year of this parliament.

12:09 - "Let me give him one more opportunity. He made a solemn promise to the British people. He failed to meet the promise. Come on. Why don't you just admit it." That was Miliband, obviously. Cameron retorts by quoting Burnham in the Statesman. He admits they're not freezing it, they're increasing it. It seems problematic for Burnham, who is shaking his head hard. Miliband seems to be losing this and he really shouldn't be.

12:11 - Miliband moves on. That wasn't good. He wants to go onto income tax cuts for the top rate. "I'm not surprised he wants to get off health. That was the biggest own goal I think I've ever seen." Cameron says the top rate of tax will be higher in every year than it was when Miliband was in the Treasury. Miliband answers his own question, lead saying £107,000 will be saved by the richest. "It's no good the chancellor shouting from a sedentary position. He went along with it." Now Miliband asks why Osborne hasn't balanced the books. Miliband is all over the place here, but failing to land a blow. Now he's in Ball's territory. What's the point of asking these questions now, just before the autumn statement?

12:14 - "How on earth can you deal with a borrowing problem by pledging to borrow more?" Cameron asks. Miliband goes back to the 50p answer. he says he's suggesting the answer to the problem of tax avoidance is to give people a tax cut. Good argument, but it's badly made. "We all remember the posters with his airbrushed face saying 'I'll cut the deficit not the NHS'"," Miliband says. He's done the opposite. Cameron gives a lukewarm answer relying on his usual rhetoric against Labour.

12:16 - Well that was dreadful for Miliband. It doesn't matter today, there will be no coverage, because of the autumn statement dominating everything. But that was bad. I'd put that at Cameron: 2 Miliband: 0.

12:18 - Jim Shannon (DUP, aggressive Michael Fish) wants to know something about Northern Ireland which I didn't understand. Cameron's answer might as well be in ancient Greek. Eleanor Laing (Tory, not to be underestimated) wants confirmation on the changes to rules of succession by gender. Margaret Hodge (Labour, tax avoidance bulldog) says Starbucks are caving in. "Clearly naming and shaming works," she says. Will the PM commit to publishing the names of those companies found by HMRC to have avoided paying their fair share of tax. Cameron says he welcomes her initiative on it. He says he's committed to anything which gets it happening.

12:24 - Robert Buckland (Tory, engorged Harry Potter) wants joined up services for children and problem families. Sheila Gilmore (Lab, Eastenders character) attacks Osborne before he stands up, rather aimlessly.  Just as Miliband got his spanking, by the way, it appears Labour is building a serious poll lead. Today's YouGov poll for the Sun puts Labour 14% above the Tories.

12:27 - Bernard Jenkins (Con, English villain in an 80's Hollywood thriller) talks about special schools in a way that borders on creepy. This is a uniquely boring PMQs. It's so dull it might even make the autumn statement seem exciting.

12:31 - Cameron says we've recovered £4bn in tax revenue on transfer payments. Peter Bone keeps on standing up. Please don't let the Speaker ask him. All he ever does is bang on about his wife or what happens if Cameron dies. Bercow is still granting questions even though it's past 12:33.

12:34 - Last but not least. Ann Clwyd (Lab, backbencher) starts nearly crying as she speaks of nurses who fail to show care and compassion to patients. That was hugely moving. Her husband suffered terrible care. Cameron answers at his best. Compassionate, firm, moderate, balanced.

12:36 - And Osborne's up.

12:36 - "It's taking time but the British economy is healing," Osborne starts and already the laughter begins. Labour mocks as one. The chancellor looks very alone.

12:38 - Osborne sounds less confident than he used to. He insists investment is "flowing into UK gilts". Two years ago we were in the danger zone, now we are a safe haven. This is almost precisely the same as the comments he made a year and a half ago. "Today, we reaffirm our commitment to reducing the deficit," he says, rolling out into 2017/18. He equips Britain by switching from current spending to capital investment.

12:40 - OK, here's the OBR bit. This is crucial.

12:41 - "The weaker than expected growth can be accounted for by over-optimism regarding net trade" the OBR say. That's useful for Osborne as he can say it's all the fault of the eurozone. "These problems will constrain growth for years to come," he reads. OBR forecast the economy will grow by: 1.2% next year. Then 2.0% in 2014; 2.3% in 2015; 2.7% in 2016 and 2.8% in 2017.

12:43- Osborne says the economy is therefore recovering more quickly than many of our neighbours. Apparently they believe we will grow quicker than Germany or France next year. Interesting test. Germany and France, being embedded deeper in the eurozone, are a counter-argument to Tory claims that the eurocrisis is to blame for everything. The OBR clearly doesn't believe that will always be the case.

12:44 - Osborne praises his own employment policies and says we have more people in work than in the eurozone or the US. Osborne is painting a very pretty picture. Vince Cable looks up to heaven, a tortured look on his face.

12:46 - The deficit was at 11.2% when the coalition came to power. Apparently it is still forecast to fall."It will continue to fall each and every year," Osborne insists. That's reliant on the 4G spectrum sell-off. Last year the deficit was 7.9%, this year 6.9%. It will fall to 6.1% next year 5.2%, then 4.2%. Osborne mentions that £70bn from Northern Rock and Bradford and Bingley have gone on the books, which shuts up Labour somewhat. Actually, Labour has gone fairly quiet.

12:50 - "Instead of three years to get our debt falling it's going to take more," Osborne says. He admits he will miss target of debt falling as percentage of GDP by one year. He sounds victorious, but remember that under these forecasts he will have a £73bn deficit at the time of the next election, rather than the £0 he promised. Osborne announced there are no new tax rises in this autumn statement. Tax rises are offset by tax cuts elsewhere.

12:53 - You will struggle to find a greater chasm between the tone of a speaker and the reality of what he is saying. I'm not convinced this is the wisest course. It makes Osborne appear blind. "This government has shown it is possible to return sanity to our public finances while improving services," he says. he will publish reports on market-facing pay and will implement it. The national pay arrangements in the health service and prisons will stay. But schools are set to get more freedom to set oay in line with performance.

12:56 - That was seriously big news. That's the end of national pay bargaining for teachers. The unions will spit blood. Osborne confirms we will stick to the 0.7% on international development, although the budget will be adjusted to reflect the new forecast.

12:58 - The fact this statement is fiscally neutral means we are very much still on Plan A. This is highly political tinkering. Clegg has taken on a supremely Zen look, like George Young on a good day. Perhaps he's past it. It's all just noise for him now.

12:59 - There'll be a Northern Line extension to Battersea power station - Boris will like that. So will the Yanks. There's a new US Embassy opening nearby in 2017. Osborne takes some water. His throat is going already.

13:01 - And now comes the bad news. Cuts to welfare on the way. But now it's aggressive tax avoidance. He says the government has taken more action than any before it. Prosecutions for evasion are up 80%.

13:03 - Osborne says he's closing hundreds of millions of tax loopholes with immediate effect. HMRC won't have it's budget cut - it will get extra spending. "We want a competitive corporate tax system but we expect those corporate taxes to be paid," he says. He thinks he can win an extra £2bn through these measures. Osborne once again justifies his 50p tax cut. Osborne glances up at the Labour benches with real fire in his eyes. "We won't introduce a new tax on property" - he says. it would be intrusive and expensive. Miliband and Balls laugh at him and Clegg. Here comes the pensions announcement. Tax relief on pensions to fall from£ 50k to £40k a year. That's £1bn from big pension pot. The lifetime limit will be reduced to £1.25m. Osborne says he will make the 1% pay its fair share. I think that's the first time he's used the phrase.

13:09 - Speaking on 1%, benefits will rise by 1%, as predicted, just like public sector pay. That's below inflation so it's a real terms cut. That's for three years by the way. A big, big move. On benefits, it applies to JSA, ESA and Income Support.

13:12 - Interesting. Osborne sets a political trap. He says he'll need a welfare uprating bill to enforce changes. The Tories love it. They feel they're on the public's side on this issue, so will enjoy trying to get Labour on the 'wrong' side.

13:13 - It seems Osborne's £10bn savings from welfare, have been dropped to about £3.7bn. More money is being put into the Regional Growth Fund, even though it's generally considered to be ineffective. Osborne seems to back the core of Michael Heseltine's plan to devolve much spending on business, transport and skills etc to local regions.

13:16 - "I am going to increase by tenfold the Annual Investment Allowance in plant and machinery. Instead of £25,000 worth of investment being eligible for 100% relief, £250,000 worth of investment will now qualify."

13:18 - Again Osborne cuts corporation tax. SO that banks don't get the benefit their levy goes up. This is a strange move given the pledge on tax avoidance. Osborne says he knows how hard austerity is for families and a shout of anger comes from a Labour MP. "No you don't."

13:20 - Osborne cancels the fuel tax rise altogether instead of delaying it. No increases on petrol taxes for two and half years now. The Sun will be ecstatic.

13:21 - Anyone with a car and a job is doing well out of this. If you don't have those things it's not so good. The personal tax allowance is rising to £9,440 in April, £235 more than had been planned. "Today we've helped working people," Osborne pronounces loudly. "The public know there are no miracle cures." He is winding up now. Balls is set to strike.

13:23 - "Our economy this year is contracting. Government borrowing revised up every single year. The deficit is not rising," he stutters. Tories laugh.  Then he gets it right. They shouldn't laugh, Balls has a minor stutter. e attacks a "three billion welfare handout to the people who need it least. Let me speak out the full facts to the House. They should listen they might learn something."

13:25 - Our economy has flat lined since the spending review in 2010. Chancellor's achieved 0.6% growth compared to 3.6% in Germany. "Falling behind in the global race," he shouts. "Growth is being downgraded this year, the year after, the year after and the year after that too."

13:27 - Balls seems ever so slightly nervous. Possibly that early problem put him off his game a bit. Ed Miliband looks deeply strange beside him, pulling some very odd faces. "There is more borrowing this year, next year and the year after," Balls says. "He will look in detail when we get the figures because the chancellor failed to give us the cash figures."

13:28 - A rowdy Commons is making it difficult for Balls to plough through.

13:30 - On course? Not wavering? He's not wavering, he's drowning." That was his first joke. This is a really bad moment for Labour. They should be tearing the coalition apart but they're seriously struggling. The content is strong, because the figures are unanswerable, but Balls doesn't have his mojo. Bercow demands a Tory MP calm himself: "Take a pill if necessary. Take up yoga."

13:32 - What happened to expansionary fiscal contraction? Balls asks. I have literally no idea what that means. Sounds like it's not working though. Balls says the scrapping of the fuel duty rise was done "On Labour's advice" even though they voted against it. The Tories laugh hatefully. Labour is silent. Labour looks sullen and defeated. There's no energy from the opposition benches, There's barely any anger even. They seem desperately lethargic.

13:35 - A better period for Balls as he hammers on the top rate tax cut. Cameron looks concerned, Osborne starts checking his noted. Miliband nods and whispers "exactly". Balls says the welfare system should be reformed. They support a fair benefit cap, with a high London level. Here comes the 'but'. The bill is forecast to be higher now. "Welfare to work," he says; "The clue is in the name. You can't have a successful welfare to work programme without the work."

13:39 - Much better from Balls as he cites the struggles faced by nurses given the tax cuts for the rich. "He's not just hitting those looking for work. The majority who lose from his cuts to tax credits are those in work."

13:40 - "It was all a con and the mask has slipped. This chancellor can't say we're all in this together without a smirk on his face". Much improved Balls performance, he's warming up, although there isn't much time left.

13:42 - Terrible section as Balls tries out a Nadine Dorries joke. "He's the chancellor can't someone get him out of here." Yeah I know. That's your majesty's opposition. That's it from him. Balls recovered a bit but it was poor, very poor. "There's only one person in this chamber who is drowning and that's the shadow chancellor. That was the worst reply to an autumn statement I've heard in this House."

13:44 - Osborne is able to continue to pretend that everything is fine and all his plans are working out. Remarkably, Osborne is sounding more reasonable here, despite the poverty of his situation. He starts listing 'impossible Labour positions'.

13:46 - "Only the people in the Brownite cabal" claim all the problems of the country come from 2010 onwards "The reason he has to maintain this completely incredible position is because if he admitted the last government was responsible, he would have to admit he was responsible for these problems." Very clever attack from Osborne. He says Miliband is trapped by having a shadow chancellor who was responsible for the mess in the first place. It's always effective to widen a potential division in your opponent and Osborne has succeeded, to some extent, in achieving that today.

13:48 - And with that, the debate goes to the Commons, with the chair of the Treasury committee starting the questions. David Miliband stands up. That's interesting. "At this time last year the chancellor told me not to worry about youth unemployment," he says. He confidently lists the problems facing the young unemployed. He asks a series of specific points on the work programme. "The right honourable gentleman has interesting and important things to say about youth work programmes. I have to say it was quite a good job advertisement for being shadow chancellor." David Miliband leans back in his seat in disgust, pulling a hatful face at Osborne, as if wiping gum off his shoes. Osborne pushed the Labour destabilisation goal a little too far there.

13:56 - Jon Denham lists the chancellor's achievements. Borrowing up, growth down etc. "In light of that record should he be looking quite so pleased with himself." Denham's approach was more successful than any of the Labour bods who have spoken so far.

14:02 - And with that, I'll bring the live blog to a close. We'll be getting you all the political reaction this afternoon, so you can keep track of how things are panning out for the chancellor. It's unlikely this will unravel in the same manner as his Budget, but you never know. The key news is that the picture is as appalling as we imagined, but Osborne managed to deal with the situation as well as could be expected - in presentational terms. He is in serious trouble, but you wouldn't have known it by the way he carried on today.

14:05 - How were my economics by the way? Not bad. No staggering inadequacies, although I'm still a little dodgy on this expansionary fiscal malarkey Balls was chuntering on about. See you next week for PMQs.
 

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