Budget 2013: did you see it? What did you like/not like?

[SarahMumsnet]

Morning everyone,

George Osborne will be standing up to give his 2013 Budget at 12.30pm today. With the UK experiencing its longest period of economic stagnation for a century, and the public squeezed between rising fuel costs rise, falling welfare payments and flat-lining wages, the country will be giving him its full attention. In terms of family finances it's possible that the most significant announcement for most of us has been made already: the government outlined its plans for the Tax-Free Childcare Scheme yesterday (read all about it here). But inevitably there'll be plenty more to come - look out for announcements on fuel tax, first time buyers and alcohol (dear to your hearts, we know ... )


Here's a link to the BBC's live stream; for those of you at work who can't see it, we'll post the key announcements as they happen; do tell us what they mean for you.

And for those looking for an at-a-glance rundown of what's been said, we're delighted to welcome back Mark Dampier, head of research at independent financial advisers Hargreaves and Lansdowne, who'll be sending us his bullet-point version of the Budget as soon as possible after Osborne sits down. And Will Hadwen, rights adviser at charity Working Families, which offers advice on advice on employment rights, benefits and tax credits for working parents, will be giving us a breakdown of what the Budget means from their point of view.

Off we go ...

[noddyholder]

Jeez he is gambling on a house price boom again. This gives temp boost to the economy via sales of household goods and employing tradesmen. By the time it is implemented and people have over borrowed again the figures will look better but in reality it is a disaster waiting to happen

[mam29]

Just read lauren keunsburg blog economics editor of itn saw her twitter updates.

The scheme is obviously designed for people who want to buy a house but are struggling to get the cash together for the kind of massive deposits many lenders currently demand.

They have, as you would expect made some exclusions, so professional investors can not use the scheme for buy-to-let mortgages, and potential buyers must be able to afford the loan realistically, so interest only deals will not be part of it. But what Treasury officials had to admit tonight, when we put the question to them, is that they have not ruled out the taxpayer underwriting the mortgages of the well off who want to buy second homes. The Department for Communities is clear however, their shared equity scheme is specifically, and explicitly only available for people buying and owning one home. But the Treasury plan, the Mortgage Guarantee, right now has no such condition.


so it could fund people trading up
or 2nd holiday homes even

its not about helping worthy individuals as its not targeted.

wealthy can benefit.

massive blow to people who felt in time housing would fall to reasonable levels,

[MrAnchovy]

@HorryIsUpduffed
The nanny point is surely that if you directly employ your nanny (not through an agent or if she is self-employed) and currently pay employers' NI etc then you count as a micro-business and ought to benefit.

No you don't, you count as a small employer which is a totally different thing. A business is an enterprise carried on with a view to profit and is taxed on those profits; the proposal is to relieve from that tax up to £2,000 of Employers NI. Employing a nanny is not carrying on a business with a view to profit and there is therefore no tax against which to relieve the NI.

[aquashiv]

I would not employ this man to clean my drains let alone run the country. I am sick to the very core that he is allowed to continue in this job.

[margot1962]

Labour introduced the minimum wage, which was so important. Their brief is to be on the side of the workers (as opposed to the aristocracy or establshment or millionaires or banks or big business). All the things we take for granted: free education, NHS, social services were introduced by the Labour party. Everyone should do a little research before they vote...:)

[poppydoppy]

We need to make the country more attractive for big companies and the super rich to set up businesses here, instead of opening the flood gates for low level workers.
We need to stop the benefits culture that has plagued this country for years before the country goes to the dogs.

[LexyMa]

ah yes, the trickle down theory. Where in the world does that really demonstrably work?

but to take your point seriously, poppy, I think that the change in corporation tax from high 20s% to 21/20 now is trying to do exactly that, encourage business. The continued existence of IR35, although controversial, also helps a sector in which the UK has proven talent

[MoreBeta]

Wealth does not trickle down where their is a surplus of workers. This is especially true for relatively unskilled workers and those with skills only suited to working in declining manufacturing industry.

The problem is that immigtration of unskilled labour constantly undermines the ability of the incumbent unskilled workforce to negotiate higher wages.

The historic precendent for this was seen in the USA in the late 19th and early 20th Century when waves of desperately poor immigrants turned up constantly for years and the incomes of earlier immigrants continued to fall. Their living standards did not improve. The owners of manufacturing businesses who were able to exploit these waves of low paid immigrants grew very rich though by exporting goods to the Old World.

This is happening in Europe with waves of immigrants from Eastern Europe moving to take jobs in Western European countries. It is also happening in China with waves of peasants from Western China moving to the coastal provinces to work in manufacturing to supply export markets. It is happening in the US with South American labour flooding across the US border or US firms just shutting factories in the US and opening them in places like Mexico/Brazil. The net result is unskilled and semi skilled workers are constantly having to bid their wages down to compete or even just get a job across the Western world and youth unemployment is skyrocketing.

This is why UKIP is becoming so spopular. It is not racist to say that uncontrolled immigration is causing huge economic consequences for people on low wages while the owners and controllers of capital have seen their incomes and wealth surge in recent years as they have been able to take advantage of flat or falling wages of workers.

It is these basic economic facts that this budget did not address.

[HorryIsUpduffed]

MrAnchovy Oh I see. Which seems a shame but I suppose "making it cheaper for people to have a nanny" wouldn't be a great headline...

[Xenia]

On NI and nannies if you look at cdn.hm-treasury.gov.uk/budget2013_complete.pdf and hm-treasury pages they say businesses and charities.
I do not see why creating work for domestic servants should not be in the same category and may be as Cameron supposedly wants the female vote there could not be some lobbying to include nannies in the scheme too - after all they pay tax and the state wants more people working and more tax paid.

Most people who work full time need childcare which costs about £14k per child in London so about £30k if you have a couple of children at nursery or with a nanny out of taxed income nothing like the pathetic £1200 per child to be given to those with children under 5.

Anyway the housing thing will be interesting. On R4 this morning Osborne was asked about the second home point and he inferred all the details have not yet been worked out.

It certainly looks like low interest rates and house prices will be propped up for a goodly long time with no crash in prospect although the scheme is for a limited period only. 3 years I think after which the Bank of England will decide if it carries or something like that.

[boxershorts]

Budget Thatcheresqu and pointless. Cameron shud change chancellors

[LexyMa]

That's interesting, MoreBeta, and very well summarised, thank you.

However, elements of that system are ripe for key pieces of corrective action which the government could easily put into place:

"immigtration of unskilled labour constantly undermines the ability of the incumbent unskilled workforce to negotiate higher wages."

• isn't the answer either a faster-growing NMW, or specific living wage per region (which, if cheaper in non-London conurbations might also improve business-led regeneration there)
  
• also (and much more lefty?), capped ratios of director-to-shopfloor pay, with senior bonuses also more tightly controlled perhaps by shareholder vote, so that within at least a corporate unit there is a better sharing of the profit of that business.
  

"uncontrolled immigration is causing huge economic consequences for people on low wages while the owners and controllers of capital have seen their incomes and wealth surge in recent years as they have been able to take advantage of flat or falling wages of workers."

Again, this concentration of wealth in a few hands can't be an ideal outcome even in a very hands-off capitalist system.

• Some intervention to ensure that immigration is both legitimate and optimised against the available jobs/skills required surely helps balance this flow. Isn't this what Australia does?
  
• I can see that the free movement across Europe has a huge effect and it is tempting (UKIP style) to want to just get out. However, the UK's problem is surely that our working age population don't seem to have the language skills or adventurous nature to go in significant numbers in the reverse direction (even if wages were comparable). The UK also offers high standards of state-delivered services but without our interpretation of the EU construct is somehow less able than other EU member states to restrict who can access them (I know little about this, so would be resting on tabloid-level info if I went further in discussion of 'health tourism' for example)
  
• The only problem you are then left with is illegal immigration and the undercutting effects of black market labour, which isn't a tax/NMW/benefits problem, but an enforcement issue.

[MrAnchovy]

Hmmm, now more details have been released it seems that the £2,000 employers NI rebate will in fact be exactly that, NOT an offset against business taxation. By default this would therefore apply to all employers, including employers of domestic servants or carers. But the Treasury document states that it is only intended for "businesses and charities"; it is not clear how they will achieve this.

Is this another "pasty tax" fiasco in the making?

[megandraper]

Fingers crossed on the nanny front.

Personally I think the NICs rebate should definitely apply to carers for the sick/disabled, whether or not it does to nannies.

[MoreBeta]

Lexy - the questions you have asked are about what an academic would call 'political economy' and really is what the job of politicians is all about or should be about. Balancing the economic, social and political issues for the benefit of all.

An economist purely looking at the economics would say that the UK economy as a whole will benefit from cheap labour flooding in as it will become more competitive and hence bringing higher economic growth. More especially if we focus on the things that we have a comparative advantage in already like banking and finance, legal services, high tech manufacturing (eg Formula 1 racing cars around Oxfordshire) , luxury goods (eg whisky, fashion) certain aspects of film making and production, education, pharmaceutical research, oil & gas, mining, construction.

Problem is that not every person in the economy benefits from the type of economic growth we have experienced in the last 10 - 15 years. Only an elite group in th eprivate sector really benefit along with higher grade civil servants who are paid out of the taxes that these industries produce.

A higher NMW would benefit those on lower grades in the public sector and would also benefit those that can keep their job in the private sector. Some people argue that it might though destroy other jobs that private employers cannot afford to pay above current NMW levels. The danger is that we destroy jobs with a higher NMW. Higher NMW would also draw in even more immigrants.

I do think we need to close the UK borders to anyone who is not in the highest skill and highest paid jobs (ie like Aus/NZ and Canada).

I dont like pay caps and wage controls but I do think that freely allowing skilled people to come in to compete down the pay of those in top jobs (which are frankly out of control) while keeping out those who would drive down pay of people at the bottom would be a good thing.

If we could close borders to low skill or semi skilled immigrant workers but kept it open for high skill workers then we might well have a case for raising NMW and indeed wages might be bid up at the bottom anyway with less competition from immigrants. This would help close the gap between top and bottom of the pay scale - which is in real danger of violently rupturing society if we dont do something.

It is the job of politicians to balance the politics and economics of this. The incumbent political parties are not doing that but UKIP have a message that is increasingly people like and want to hear - especially among what was the old 'working class'.

Labour are just as frightened of UKIP as the Coalition parties and they should be.

[Xenia]

Mr A I was looking at that too. I suspect ehy have not drafted it yet. So perhaps parents with nannies need to keep quiet so it stays under the radar and they get their £2k a year sum rather than asking if it applies to those using nannies, most of whom contrary to popular misconceptions are not in any sense "rich" and plenty of women pay almost all their salary to cover the nanny cost.

[megandraper]

Good point Xenia. I think I will shut up now!

[MrAnchovy]

Xenia I wish that were the case, but the way they chose to describe the measure as applying to "businesses and charities" instead of "employers" looks deliberate to me.

But this was obviously a late and little thought-through measure - a key technical document that is usually published for budget measures (a Tax Impact Notice) has not yet been made available.

[Xenia]

I can certainly see how they may not like headlines - female millionaires employing nannies to get £2k a year tax break on employer NI; "save tax on your butler" etc

[nannynick]

Should it be of interest to anyone, HM Treasury have a Employment Allowance Calculator in beta testing, to help give an example of what happens in April 2014 for employers taking on staff.

Is there any latest news with regard to how "businesses and charities" is being defined, thus that it will certainly exclude small employers? Or are we still waiting for news on who it will and won't apply to.