UK

Budget 2013: George Osborne's 'Small Beer' Budget Fails To Impress

20/03/2013 13:41 GMT | Updated 20/03/2013 17:43 GMT

It was billed as a do-or-die moment for George Osborne - but the 2013 budget turned out to be small beer.

The Chancellor had precious little wiggle-room, and was keen to avoid a repeat of last year's pasty tax debacle.

Many of the interesting points had been briefed out in advance, and all of the key points were inadvertently leaked by the Evening Standard well before Osborne's speech.

They included good news for drivers and drinkers, and some nasty economic forecasts.

The Commons reached fever pitch as MPs became increasingly raucous. Deputy Speaker Lindsay Hoyle repeatedly intervened, urging calm, while Osborne almost lost his voice as he struggled to make himself heard over the din.

But despite the excitement inside the Chamber, there were few headline-grabbing announcements.

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TUC General Secretary Frances O'Grady said: "We face a jobs, growth and living standards crisis, yet today's proposals are small beer that do little more than tinker at the edges.

Osborne said he was delivering a budget "that wants to be prosperous, solvent and free".

The growth forecasts were downgraded and the rigid austerity programme will be ramped up by £1.5billion more than previously planned.

And there was no mention of the loss of Britain's AAA credit rating. Labour hit back, branding Osborne a "down-graded Chancellor".

Key measures included:

  • Taking a "penny off the pint" and scrapping the controversial beer tax escalator

  • Cancelling the 3p rise in fuel duty scheduled for September

  • The income tax allowance will rise to £10,000 by April 2014

The single-tier pension will be brought forward to 2016, and there will be more National Insurance help for small businesses.

There will also be more help for first-time buyers, with the government committing billions as deposit guarantees.

Osborne told MPs the deficit was down by a third to 7.4%, down from 11.2% of GDP in 2009/10.

But it came against a backdrop of terrible economic forecasts, and after a rise in unemployment.

The economy is expected to grow by just 0.6% this year, not 1.2% as expected, Osborne revealed. Growth of 1.8% is expected in 2014, and 2.3% in 2015.

The Office for Budget Responsibility forecast for global economic growth was revised down and for world trade revised down "sharply", he said. The Chancellor said the problems in Cyprus were "further evidence that the crisis is not over and the situation remains very worrying".

Despite the reduced output forecast, the OBR believes the UK would avoid a second quarter of negative growth and triple dip recession.

More jobs would be created in 2013 than the previous year, he said, and he claimed private sector job losses were outweighing job losses in the public sector.

Wearing a sky-blue tie, Osborne fought to make himself heard over jeering Labour MPs as he said: "Together with the British people we are slowly but surely fixing the country's economic problems."

Hoyle shouted to try to calm the House down, warning it was becoming a "circus".

Despite the progress made, Osborne said "there is much more to do."

He admitted: "It is taking longer than anyone hoped."

At one stage the Chancellor had to take a lengthy pause to recover his voice.

His announcement came after huge embarrassment for the Treasury when the Evening Standard inadvertently revealed the key parts of the budget.

The paper's front page, which reached Twitter well before Osborne took to his feet at 12.30pm, included details of the beer tax cut, the scrapping of the planned fuel duty rise and the slower economic growth.

The rise in the income tax allowance and £3 billion of Whitehall spending cuts were also revealed.

The paper's editor apologised, and said a member of staff had been suspended.

The 1% cap on public sector pay was extended by a year to 2015/16.

Some of the measures would be tough, Osborne admitted, but he said: "If we didn't take them, what is a difficult situation for them and for the whole country would be much worse."

As previously reported, an extra £3 billion of infrastructure spending - paid for by more spending cuts - was announced, and the government is accepting Lord Heseltine's recommendation on how to deliver growth across Britain.

Osborne pointed to Tuesday's announcement of the go-ahead for a new nuclear plant, and added: “Shale gas is part of the future. And we will make it happen.”

Earlier, there was bad news for the government as official figures had shown unemployment rising by 7,000 to 2.52 million.

Responding, Labour leader Ed Miliband said Osborne was "the wrong man, in the wrong place at the worst possible time for the country."