Osborne’s 2014 Autumn Statement in a nutshell.

The Autumn Statement is an annual speech given by the Chancellor of the Exchequer to update the British public about the government’s plans for the economy, including spending, budgets and taxation. The current Chancellor is George Osborne. Most of the changes announced here will go into effect in April 2015.

Economy.

  • Public sector spending cuts of up to £80 billion.

Tax.

  • No income tax for people making £10,600 or less a year, an increase of £100.
  • 40% tax rate will be raised to $42,385, an increase of £520.
  • Replace ‘slab’ level stamp duty with a graduated rate that increases the more your transaction is worth.
  • Children’s TV shows will be able to claim a 25% refund on production spending.
  • Air Passenger Duty will be abolished for children.
  • Corporations will face a reduction to 50% in the amount of carried-forward losses they can use to avoid corporation tax.
  • A new “diverted profit tax” or “Google tax” will be introduced on corporations that shift their profits to places where it cannot be taxed.

VAT.

  • Search-and-rescue air ambulances and hospices will be able to claim refunds on VAT purchases.

National Insurance.

  • Businesses will only have to pay NI contributions for apprentices that are 25+ and earning over £805 a week.
  • Businesses will not have to pay any NI contributions for employees under 21.

Savings.

  • Tax-free ISA limit will be raised to £15,240, an increase of £240.
  • Spouses will be able to inherit tax-free ISAs if the current holder dies.

Health.

  • NHS spending to increase by £2 billion through departmental cuts.

Devolution.

  • Agreement has been reached with Wales about handing over control of their business tax rates to them.
  • Agreement is being reached with Northern Ireland about handing over control of their corporation tax rates to them.

Education.

  • A £10,000 postgraduate loan fund will be made available to UK citizens, depending on income.

Space exploration.

  • The UK has been chosen as the lead funder for the European Space Agency’s ExoMars mission and will put forward £47.7 million to fund the project.

My analysis.

Minor tinkering with a broken system has been a favourite of the two main political parties for as long as I’ve been alive. In announcing small raises to income tax thresholds and personal allowance, Osborne’s hope is that it may placate some of the ordinary working-class people who have been totally screwed over by the Tory-led Coalition government. I think he’s wrong.

Granted, it’s unusual for a Tory government to take on corporations or even bring to light mention of tax avoidance, since they’re so in bed with big businesses and multinationals. But the measures announced here are measly compared to radical left-wing proposals such as a Robin Hood Tax or a full clamp-down on corporate tax avoidance, which could bring in an extra £34-£129 billion a year into the budget. Imagine all the things to be done with an extra £34 billion a year (at least), and yet none of the main political parties will touch measures that come close to bringing in a fraction of that.

Where the postgraduate loans proposal is concerned, £10,000 is better than nothing, but this is akin to papering over the cracks of an issue that runs deep. The psychological damage done by the fee rise and the near-impossibility of funding an MA that isn’t science or maths-based cannot be undone by offering students 10 grand towards a seriously expensive venture. Postgraduate courses should be funded the same way as undergraduate courses, but again the Tories won’t touch those sorts of proposals with a ten foot barge pole.

The announced spending cuts are the most foul of all the proposals listed above. This will affect all of our public services, and some departments like the police may see spending cuts of up to 55%. This will threaten jobs, cut vital services and move us closer to the Thatcherite dog-eat-dog society that the Tories so lovingly yearn for. The way to balance the books is not to punish those who didn’t unbalance them in the first place.

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