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What to expect from George Osborne's autumn statement
The chancellor George Osborne is preparing to deliver his autumn statement to the House of Commons.
He'll use the speech to review the state of the UK economy, to outline ongoing efforts to tackle the deficit, and to discuss what the government is doing to encourage growth and investment.
The Treasury has already said that the autumn statement is not due to contain any new policy announcements and will be merely an update of growth forecasts and existing policies.
The chancellor will also be revealing the latest economic forecasts from the independent Office for Budget Responsibility (OBR).
He is expected to confirm that growth will be lower and borrowing much higher than planned. In the budget in March, the OBR cut its growth forecast for 2011 to 1.7% and its 2012 forecast to 2.5%. It is expected to cut both again to around 1%.
The chancellor will deliver his speech at 12.30pm. Follow live coverage of the build-up here on MSN UK Money.
Meanwhile here are some of the things George Osborne may or may not be considering:
1) Abandoning the 50p top rate of income tax
While this would find favour with many Tory backbench MPs and business leaders, it almost certainly won't happen. Russell Lynch, writing in the Evening Standard explains why: "There is no way George Osborne would open up the Conservative's most vulnerable flank - its status as the rich man's party - while the economy is hovering over the danger zone. Besides, for all the fury that the 50p income tax rate engenders among the nation's wealthy, it's difficult to find the smoking gun which definitely proves it's killing the economy."
Mr Osborne has already given himself some room for manoeuvre on this issue. He's announced he won't make a decision on the future of the 50p tax rate until Revenue & Customs (the tax office) has concluded an investigation into how much it has raised. This report isn't due until next year.
2) Cutting corporation tax to 15%
The Institute of Directors (IoD) is lobbying for this to be done by 2020. "A 15% corporation tax would act like a magnet, boosting domestic business and attracting global capital into the UK," argues Simon Walker, the IoD director-general. Mr Osborne has already said that the tax rate will be reduced from the present 26% to 23% by 2014. If he announced a further reduction, it would be something of a surprise and warmly welcomed by the business community.
3) Cutting VAT
Despite much support for this measure, not least from the Labour Party which has made it one of its five points in an action plan for growth, Mr Osborne will be unlikely to want to be seen reversing this policy so soon. VAT went up from 17.5% to 20% at the start of this year. Were it to be cut, the chancellor would need to explain from where the equivalent sum of money would come.
4) Reducing pension contribution tax relief
This currently amounts to nearly £30 billion a year in lost revenues for the government.
The accountancy firm PricewaterhouseCoopers has calculated that the money raised could fund an increase in the income tax threshold so that only those earning over £50,000 a year would have to pay the 40% rate.
CityWire reports that Revenue & Customs has estimated that increasing the threshold by 20% would remove one million people from this tax band and save taxpayers £700m over the next year. "This course of action would also help offset the reduction of child benefits to higher rate tax-payers," they add, "and leave enough money to raise the personal allowance closer to the coalitions target of £10,000."
5) Introducing a National Insurance Contributions (NICs) holiday for small business
Labour is proposing something similar: a one-year national insurance tax break for every small firm which takes on extra workers, helping small businesses to grow and create jobs. This might dissuade Mr Osborne from introducing such any such measure, for fear of looking as if he is adopting Labour policies.
6) Bringing forward spending on infrastructure projects
This is one thing that will be included. A multi-billion pound investment programme is to be announced, with most of the money expected to come from the big British pension funds and Chinese investment. An additional £5bn will be paid for by further cuts in the present spending round. Various road schemes around Britain and rail lines in Newcastle and between Manchester and Leeds are thought to be among 40 projects earmarked for help as part of what is being called the National Infrastructure Plan.
But writing for the online journal Public Finance, Patrick Nolan, chief economist at the Reform think thak, argues that: "Increased capital spending is unlikely to significantly and rapidly increase employment as modern infrastructure projects are less labour intensive and the labour that they employ is often skilled. The days of building infrastructure with 'picks and shovels' are long gone. The employment created is not likely to match the areas where unemployment is currently highest."
7) Introducing 'credit easing'
This is another thing that is definitely going to be included. It was first announced by the chancellor during this year's Tory party conference. 'Credit easing' is a process whereby the government borrows sums of money in financial markets and then directs that money towards companies in need of funding. It's being promoted as a way to underwrite loans to small businesses who are struggling to get credit. But there is a fear that the process, by increasing Britain's national debt in the short term, may mean the UK's credit rating is in danger of a downgrade.
8) Proposing to relax employment laws to make it easier to sack workers
This has been met with opposition from both parties within the coalition government. It looks like any such measure would be limited in scope. The business secretary Vince Cable has already stated that he does not want to create an environment in which employees would be afraid of their employers.
9) Introducing measures to help create jobs for young people with no or few qualifications
The government has already proposed establishing a new "£1bn jobs fund" that will help companies invest in training for new staff. It is likely this will be reiterated by Mr Osborne in his statement, perhaps with some additional intiatives.
10) Helping buyers of new homes to borrow up to 95% of their value
The prime minister has announced some details of a mortgage indemnity scheme, in which it is intended the government will underwrite part of the risk to lenders. David Cameron has said that the scheme could help up to 100,000 people in England. Mr Osborne will be expected to expand upon this in his statement.
11) Exempting struggling businesses from energy taxes
The Telegraph has reported that the chancellor is planning to offer help to British companies under pressure because "new green taxes are raising energy bills to very high levels... It is understood that the Treasury is looking at giving the most help on energy bills to industries that use a lot of electricity, including aluminium, steel and chemical production."
Jeremy Nicholson of the Energy Intensive Users Group - which represents major industrial firms - is quoted as saying said other industries also needed help. "We've heard encouraging noises from the Treasury on the biggest energy users but there has been resistance within the Department for Energy and Climate Change to helping other industries like glass and paper. Just helping the most affected won't be enough."
12) Freezing fuel duty
There are two rises in fuel duty scheduled for next year: one in January, postponed from April of this year, and one in August that was originally due in April 2012. There has been some speculation that the chancellor will delay these rises once again. A survey conducted among members of the AA suggested that rises in fuel duty would lead to people cutting back on food shopping and household goods. But any delay would mean the chancellor would have to find the equivalent sum of money from elsewhere, and at a time when train fares are already set to rise.
And last but not least...
13) Expressing a wish to reduce 'the burden of red tape'
No budget or financial statement would be complete without this all-too-familiar proposal.
The BBC's economics editor Stephanie Flanders sums up the autumn statement with the gloomy, if realistic, assessment that: "The bottom line is that [the] statement is not going to be fun for the government or, I'm afraid, for all of us... It's not going to be fun for George Osborne because he is going to have to announce substantially higher borrowing numbers through to the end of the parliament, even though the borrowing figures so far this year have been broadly as forecast."
She adds: "The bad news for all of us is that the OBR (Office for Budget Responsibility) thinks the economy has got less room for manoeuvre as well. If the OBR has followed the same methods it has used in the past, it will have informed the Treasury that the UK now has less room to grow over the next few years, even though growth in the past year has been so much slower than forecast."
However the Liverpool Daily Post offers a timely reminder. "It's important to remember that governments of all hues have a track record of issuing dire prognostications the week before a budget or autumn statement," it says, "only for the statement itself to turn out to be a lot less drastic.
"It's all about expectations management. If we fear the worst, but the worst doesn't happen, then the media and the public blow a sigh of relief, rather than get upset about more moderate proposals."
We'll all find out who's right and who's wrong when the chancellor gets to his feet in the Commons at 12.30pm.
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Agreed Robert - it shold be targeted at permanent UK resident young people as much as possible, and companies should be dissuaded from employing brand new arrivals if they can help it.
I also think that we need to start producing and exporting more in this country, rather than high cost importing. We're a country rich in resources, and we need to re-open manufacturing.
What pishes me off, is when I was at work, I received my salary every month, the Government taxed me on the money I had learnt by working for that month, then I went to the garage and put fuel in my car, I was TAXED AGAIN on the money I had ALREADY paid TAX on, then I go buy something with the money I have ALREADY paid TAX on and get charged 20% V.A.T. TAX,TAX.TAX and more TAX on the money that I had paid TAX on in the first place...... Then the government wonder why people work for cash in hand.
The fuel duty should scraped and the cost of fuel should go down by 10 pence at the very
least. This government are killing the people of this country with tax upon tax, stop given
to others and give to the people at home. The cold weather payment he has taken from the old
people shows he is out of touch with the needs of the old people. These are the people who will get rid of these M. Ps who are only interested in filling their boots, and to hell with the
ordinary folk who have fought and died for this country.
making cuts does not get a country out of recession . Spending gets an economy going .
For example ...cuting 5000 jobs means 5000 less people paying tax; 5000 more people claiming benefits and 5000 less people spending .
cuts never save a country in a recession . It 's bad economics.
Once again, fat cats getting richer and the little people getting poorer. Pluss its now going to be easier for the big companies to sack us...
Maybe if we stopped dishing out OUR money to other countries and stopped handing every so called refugee a wad of cash, housing and all the rest of the benefits that we tax payers have contibuted to then we could look after our own people.
Sewing up the pockets of our politicians would help as well.
I am a male of 58 years of age, at present in receipt of Employment Support Allowance, E.S.A., due to an incident at work, I was head of security at a main High Street store, I was run over trying to apprehend a shoplifter, I received a fractured knee, which had to be replaced......Total knee replacement. and psychological problems due to this guy attempting to kill me.
I am certificated by my G.P., Unfit for work, however, I believe this decision, in the future ,will be taken away from my G.P.
Due to me receiving E.S.A. I am elegible for my rent to be paid, I have been with my landlord for 10 years, I live in a one bedroom flat, by myself.
I received a letter from my housing department in my City saying that starting next May my housing benefit is being reduced by £3.47p per week. so that is they are not going to pay £3.47 per week of my rent, they also say in the letter I may have to move...........where to, A bedsit , and why should I have to move?
As I have said I am 58 years of age, I wore the Queens uniform, Paid into the systems that were in place all through my employment , now I need support, having been injured carrying out my duties, I, along with others in our country, are being kicked in the teeth by this government.
Hammond, defence minister has said that IT WILL cost £3,000,000 to replace the ammunition that was used in Libya which this country will have to pay, whilst people like me, the sick, the elderly, the poor and the unemployed are having our benefits cut, while the rich bankers rub their hands together.
SHAME ON YOU CAMERON AND YOUR CRONIES.
When you are out of office, NOT IF , as you are on your way out, the better this country will become.
Under Daved Cameron and Osborne there is no morale code when it comes to the poor. Charity should begin at home but if it did there would be no opportunity to steal from charities. White colour crime is rampant under Cameron and Osborne and of course Nick Clegg is no better.
We need more production but this government is not interested it's the return of Maggie, but worse if that's possible? Forgemaster,Bombardies two sorces of employment both killed off by this bloody shower. They stopped apprenticeships last time now they talk about having them back.
"The bottom line is that [the] statement is not going to be fun for the government or, I'm afraid, for all of us... It's not going to be fun for George Osborne because he is going to have to announce substantially higher borrowing numbers through to the end of the parliament, even though the borrowing figures so far this year have been broadly as forecast."
Why is it not going to be fun for Mr. Osbourne? After all it just a job to him which includes a nice hefty wage, so why should he be worried? He won't lose everything he's work for!
Who says time travel is impossible? Another recession, a public workers strike in the next few
days with the threat of more strikes to come. Welcome back to the 70's and 80's.
He will sell this country and everything in it, including the people, to the highest bidder. Nothing he will do will be patriotic, democratic, justified, fair or decent and definitely never for the real workers and taxpayers of this country.
Roll on the next election - Camoron, Clegghead & Milipratt will be history.
Anyone who even contemplates voting for Lib/Lab/Cons ever again is insane!!
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- Planned rise in rail fares to be reduced
- Increase in university places
- Cancellation of 2p fuel duty rise
- Cap on business rates
- Tax breaks for married couples
- Free school meals for infant school children
- Loans to "unblock" housebuilding in some cities