BLOG: Is this the new Plan A for Osborne?
Any Budget always seems to be summed up by one word. ‘Boring’ might be a reaction from many who think the Chancellor just repeats all the previously leaked new policies.
But this time around George Osborne kept referring to ‘aspiration’ to keep himself in classic Conservative heartland.
He went back to policies about making it easier to get onto the mortgage, or housing ladder – so we moved on from ‘Right to Buy’ to ‘Help to Buy’ as he staked a big bet on kick-starting the economy by kick-starting the housing market .
Along with this, he played to the masses by announcing a General Anti-Avoidance Rule on tax and marked the cards of those who help with tax avoidance.
No surprise there. And he also announced he expects to raise another billion from the likes of the Isle of Man, as a result of tax agreements on previously undeclared assets.
This was very much a budget aimed at the next election in a couple of years’ time.
The fuel duty rise escalator was scrapped, and the beer duty escalator has not been only scrapped but there is now a cut. Good news for lager louts!
The Chancellor’s attempt to get into his stride on the Budget speech was much like his bids to get the economy going – a bit stop start.
Heckling MPs stopped him in his tracks three or four times and it was only the deputy speaker stepping in to call ‘order’ that got things back on track.
So the Chancellor ‘levelled’ with us. Things are still tough, but he wants to get back to rewarding the aspirers – those who want to buy their first house, those who want to get their first job.
All very commendable – but can he do it against a backdrop of cutting the national deficit? – he clearly thinks he can.
It feels a bit like most of the detail of his budget was leaked over the days and weeks running up to today’s speech, and even today London’s Evening Standard newspaper spoiled his thunder by breaking the press embargo.
The Chancellor running through the economic numbers always sounds a little like a fund manager reading the compliance blurb at the end of an investment presentation.
We know markets can go up as well as down, and I think the same is true of the deficit. It can go up as well as down, and it depends on which way you want to interpret the current numbers.
The bottom line is, at the top line, the economy is going to get worse before it gets better – but we probably already knew that.
It was a nice line to commit to sending the money from all those Libor and FSA fines out to the soldiers on the front line. Perhaps they could just send the bankers to face the Taliban instead!
Excellent news on extending the opportunities to invest in Seed EIS and new reliefs to be introduced into social investment, such as the so-called Essex Bond.
This is great news for the underlying social investments, such as housing or childrens’ charities, but potentially opens up a whole new asset class to a wider group of investors.
Getting rid of stamp duty on AIM and other ‘growth markets’, which presumably should include the Plus Market, should suddenly make these markets look a little more interesting, and give an uplift to those parts of the fund market looking at those sector.
A small nugget of relief for Equitable Life policy holders. Those holding with-profits policies taken out before 1992 will get a one-off pay out of £5,000 each because “it’s the right thing to do”, according to the Chancellor.
“Aspiration for a nation”, in Osborne’s words, or a damp squib? Time will tell, but many of these measures have helped kick-start the US economy. Is this the new Plan A – as in A for aspiration? It might just work.