- Growth forecast 2013 is now 1.4% up from 0.6% predicted in March
- Chancellor boasts that borrowing and unemployment are also down
- But he warns that gains will be 'squandered' without years more austerity
- Young workers told: Work until you're 70 before you get state pension
- Tackling tax avoidance, evasion, fraud and error to raise £9billion
- Tax break worth £200 for some married couples from April 2015
- Rolling back green levies takes an average £50 off energy bills
- Petrol tax rise of 2p a litre planned for next year is cancelled
Autumn statement: George Osborne has told the Commons that repairing Britain's economy is not done and urged voters to stick with him after 2015
Growth in 2013 will hit 1.4 per cent official forecasts say, up from 0.6 per cent predicted in March.
But in his Autumn Statement the Chancellor warned higher growth, lower borrowing and falling unemployment would be ’squandered’ if he does not stick to his austerity programme.
'Britain's moving again, let's keep going', he said.
In a strident speech to the Commons, the Chancellor made clear he believes his economic plan has been vindicated.
He clashed angrily with Labour's Ed Balls, who desperately struggled to counter the argument that the government's approach has returned the country to growth.
Setting out political battle lines, Mr Osborne repeatedly pledged to 'secure the economy for the long term' as he made the case for voters to stick with him beyond the next election.
The Chancellor said he wanted to secure a 'responsible recovery to allow the Government to live within its means'.
But he warned that the nation’s debt mountain means the under-50s will have to work into their seventies and the young jobless should lose benefits as he ordered a fresh round of £3billion in spending cuts over three years.
He loud cheers from government MPs, Mr Osborne said: 'This country is working through its long term plan, bringing down the deficit and dealing with the debt. Spending less on welfare and making the big decisions on infrastructure.
'Living within our means and cutting tax on business. Making work pay and letting people keep more of what they earn.
'Confidence in the next generation, as they make their way in education and in the workplace. This statement shows the plan is working. It’s a serious plan for a grown up country.
'But the job is not done. By doing the right thing, we’re heading in the right direction. Britain’s moving again... let’s keep going.'
In March the Office for Budget Responsibility forecast growth of 0.6 per cent in 2013 anf 1.8 per cent in 2014.
But today it dramatically upgraded the figures for this year to 1.4 per cent, the highest in-year increase since 1999 and making the British economy the fastest growing in the developed world.
The economy is now expected to rise by 2.4 per cent next year, then 2.2 per cent in 2015, 2.6 per cent in 2016 and 2.7 per cent in both 2017 and 2018.
Good news: Mr Osborne said that growth in 2013 was upgraded from 0.6% to 1.4% and for 2014 upgraded from 1.8% to 2.4%
On the up: In March the Office for Budget Responsibility slashed growth forecast for this year to just 0.6 per cent, but the figure for 2013 and 2014 were dramatically upgraded today
AUTUMN STATEMENT: WHAT THE CHANCELLOR HAS ANNOUNCED
- Growth will be 1.4% this year, up from 0.6 predicted in March
- There will be an extra 400,000 jobs this year as a result
- Borrowing will be £111billion this year, down from £120billion
- Small surplus expected by 2018-19
- There will be an extra £1billion in spending cuts every year for three years
- Under-50s told they will have to work until they turn 70
- Fresh crackdown on tax avoidance
- 8million people to benefit from £200-a-year tax break for married couples
- Free school meals for 1.8million under-7s
- Tax discs to be scrapped and fuel duty rise for next September abolished
- Business rate rises capped at 2 per cent instead of 3.2 per cent as planned
- Details of how the government would cap £100billion of welfare spending
- Plans to ban jobless benefits for under-25s under 'earn or learn' policy
- Evidence that tax cuts boost the economy
- £50 to be knocked of energy bill rises as taxpayer pays for green levies
- £270 million for Quantum technology
- Rail fares capped at inflation for 2014
- 50 per discount from business rates if people take on empty business properties for three years.
Mr Osborne took aim at Labour's claim that it was a 'fantasy' that the private sector could create more jobs than those lost in the public sector.
'Businesses have already created three jobs for every one lost in the public sector and the OBR report forecasts this will continue with 3.1million more jobs being created by businesses by 2019, more than offsets the one million or so reduction in the public sector.'
Turning to business, Mr Osborne announced that business rate increases will rise by two per cent instead of a planned 3.2 per cent.
But he went further and announced a new scheme to reopen empty shops.
Someone opening a firm in an empty business property will get a 50 per cent discount on their business rates.
And all of the smallest firms will get £1,000 off their business rates, meaning many will pay nothing at all, helping shops, pubs and cafés across the country.
'We are backing British business all the way,' he added.
For motorists Mr Osborne confirmed that a planned 2p fuel duty rise for next September will be scrapped.
The coalition scrapped Labour’s fuel duty escalator and has cancelled a string of increase penciled in by Alistair Darling before the last election:
’Compared to the previous government’s plans, petrol will be 2p a litre less, £11 less every time you fill up,' he said.
Rail commuters expecting fares to rise by one per cent above inflation are offered help too, with fares only rising in line with inflation.’
In a bid to cut youth unemployment, firms will not pay national insurance if they take on under-21s.
After declaring that Britain is moving again, Mr Osborne’s speech was greeted by cheers from government backbenchers.
Labour’s Ed Balls was repeatedly drowned out by a wall of noise as Conservative and Lib Dem MPs who believe their economic plan has been vindicated by sharp upturns in growth.
Mr Osborne placed a heavy emphasis on sticking with his plan for the long-term, well beyond the next election in 2015.
The latest forecasts that borrowing will fall every year and by 2018 will be running a small surplus.
But Mr Osborne said: 'This will only happen if we go on working through our long-term plan.'
Mr Osborne went on: 'We will not let up in dealing with our country's debts. We will not spend the money from lower borrowing. We will not squander the hard earned gains.'
Lower unemployment, lower borrowing and stronger growth could be lost if he gave in to calls for a return to high spending, Mr Osborne warned.
'Let us be clear they could easily be lost. That's why we must work through this plan to secure the British economy for the long-term.'
An increasingly red-faced Mr Balls said the Chancellor was guilty of 'utterly breathtaking complacency' and said the Government was 'in complete denial' that living standards 'are falling year on year on year'.
Angry: Shadow Chancellor Ed Balls said the Government were in denial and said they had caused a cost of living crisis
Battle: John Bercow had to intervene as Ed Balls was hit with a wall of noise from opposition MPs as he responded to the Autumn Statement
Mr Balls said the Government had borrowed more in the last three years than Labour did during the 13 years the last administration was in power.
Turning to Mr Osborne in the House of Commons, the shadow chancellor said: 'As for your promise to balance the books by 2015, didn't you confirm today that in 2015 you are not balancing the books, you are borrowing £79 billion?
'For all your smoke and mirrors, you are borrowing £198 billion more than you planned in 2010. More borrowing to pay for three years of economic failure, more borrowing in just three years under this Chancellor than under the last government in 13 years.'
In charge: The Chancellor was with Lib Dem Chief Secretary to the Treasury, Danny Alexander, who have both been buoyed by better than expected economic figures
Message: The Chancellor promised 'responsible' policies as he prepared to set out to MPs how he will try to maintain growth
Young workers told: Work until you're 70 before you retire
Younger workers have been told they will have to delay their retirement into their 70s and beyond.The Government is to link future pension age changes to life expectancy so that people spend only a third of their adult lives in retirement.
The changes will start to affect everyone in their 40s, who will have to wait longer than expected before being able to draw a pension.
The state pension age will have to rise because official projections show we are all going to be living longer
The Treasury estimates £400 billion will be saved over 50 years. The Government has already announced that the state pension age will rise to 66 by 2020 and 67 by 2028, and these dates will not change.
But under current estimates of life expectancy, the principle being outlined by the Chancellor today in his autumn statement will mean that the state pension rise to 68 will come forward to the mid 2030s, from its current date of 2046, rising to 69 by the late 2040s.
Everyone in their 40s and under will be affected. Those in their early 20s will have to wait until their 70s before they are entitled to a state pension.
The Government said that future changes in the pension age will be based on the principle that workers should expect to spend about one-third of their adult lives, on average, in retirement.
Sources said the formula - which will be applied in a pension age review mechanism to be held every five years - should ensure that the country is able to offer 'decent but affordable' pensions to people in their old age while maintaining 'fairness across the generations'.
As a result of the announcement, people in different generations can expect to spend broadly the same proportion of their lives contributing to, and receiving, the state pension,' said a Government source in a statement.
The formula will be applied for the first time in a review shortly after the 2015 general election to fix the dates of the increases to 68 - which is likely to be brought forward from 2046 to the mid 2030s - and 69 which is expected to take place by the late 2040s.
Tax break worth £200 for some married couples
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Married couples where one spouse does not work full-time will be able to transfer some of their tax allowance to the other partner, saving them £200-a-year
Four million couples will benefit from a tax break worth £200-a-year for being married.
Stay-at-home mothers and women who work part-time will be the main winners, by switching some of their tax allowance to working husbands.
And David Cameron has signalled he wants to go further and increase the amount available to couples who tie the knot.
Traditional Tories have been pushing for the introduction of the a ,marriage tax allowance since the coalition was formed in 2010.
Mr Cameron made clear he thought marriage should be recognised in the tax system, but the idea was dismissed by Lib Dem leader Nick Clegg as old-fashioned.
'This desire of the Conservative Party to hand-pick couples through the tax system who conform to their image of how you should conduct your life, I don't think it's fair,' Mr Clegg has said.
The Prime Minister was also forced to deny reports that Chancellor George Osborne was resisting the idea, arguing it did not make sense politically or economically.
The marriage tax allowance will be introduced in 2015. A husband or wife will be allowed to transfer £1,000 of their tax-free personal allowance to their spouse. The Tory 2010 election manifesto promised a figure of only £750.
It will apply to those not using all of their personal allowance – either because they are at home looking after children, or work part time and earn less than £10,000.
Free school meals for all under-7s saving parents £430
Deputy Prime Minister Nick Clegg says free school meals will increase attainment and make pupils healthier
Every child under the age of seven will receive free school meals from next September.
More than 1.8million children in England will benefit from the policy, saving parents around £430 each year.
Deputy Prime Minister Nick Clegg insists the dinners will raise attainment, help children to concentrate and improve health.
But the policy triggered a furious coalition row over millions needed to upgrade and expand school kitchens and dining halls.
Providing the free meals will cost £600million-a-year, which will come from Treasury funds.
But an extra £150million was needed to provide the facilities for schools unable to cope with the surge in demand.
The Department for Education claimed an £80million underspend in schools maintenance budget earmarked for the work does not exist, which the Lib Dems dismissed as 'b*******'.
'The DfE are lying if they say there is no money,' a senior Lib Dem source said.
Downing Street backed Mr Clegg, and said the DfE would have to find the money. Mr Clegg said: ‘This not only encourages positive eating habits and helps improve concentration and performance in the classroom, but this will also mean significant savings for families.'
More than 1.8million children in reception, year one and year two will benefit in England will be given free school meals from next September, saving parents more than £430-a-year.
Where the idea of free school meals was piloted, pupils who had the hot lunch were found to be on average two months ahead of children who did not.
The poorest children saw the biggest improvements in their academic achievements, with a 23 per cent increase in the number of children eating vegetables at lunch and an 18 per cent drop in those eating crisps.
Being given a free lunch also saw between three and five per cent more children reaching target levels in maths and English – more than the 3.6 per cent rise seen after the introduction of a compulsory literacy hour in 1998.
The current free school meals scheme for underprivileged children in England costs £428million every year.
A school food review by Henry Dimbleby and John Vincent, founders of the Leon restaurant chain, recommended that Government offer free meals to all primary school children.
Extending it to all pupils up to the age of 11 would cost £1billion; the entire education budget is £57.2billion.
Fuel duty rise scrapped and rate frozen until the election
Fuel duty will not rise before the general election, after George Osborne found £750million to cancel a 2p-a-litre rise in fuel due next September.The Chancellor said he wanted to help struggling families in a meaningful way by reducing scrapping all of the rises which the last government had planned over several years.
The fuel duty freeze is one of the key measures Mr Osborne unveiled to counter Labour’s challenge that the coalition is failing to act on the cost of living crisis.
Petrol prices have risen sharply in the last decade, but Chancellor George Osborne said he was determined to hold down fuel duty until the general election in 2015
Mr Osborne will then have frozen duty for four years in total, at a cost to the Treasury of £22billion.
In the last decade the cost of petrol at the pump has risen from 74.6p to 130.25p.
Under Labour fuel duty rose from 45.82p per litre in June 2003 to 57.19p by the time of the 2010 election.
Under rises set out by Labour Chancellor Alistair Darling it peaked at 58.95p in 2011, but Mr Osborne then cut it to 57.95p, and has now ruled out any further rises.
Two thirds of the cost of petrol is made up of tax, either fuel duty or VAT. Tax accounts for more of the cost of petrol than in any other EU country.
Another £3billion in spending cuts over next three years
Cuts: Unprotected government departments are told to find another £3billion over the next three years
George Osborne has ordered another £3billion in spending cuts to fund a raft of giveaways in this morning's Autumn Statement.
The Chancellor told Cabinet ministers they must reduce spending in their departments by £1billion every year for the next three years.
But in a move likely to fuel anger among cash-strapped ministries, health, schools, foreign aid, local government, HM Revenue and Customs and spy agencies will all be exempt from the cuts.
At least £600million must be found to fund free school meals for the under-7s and another £600million to give some married couples a tax break worth £200-a-year.
There will also be help for small firms with the crippling cost of business rates and fuel duty will be frozen at a cost of £750million.
Mr Osborne told ministers that the new commitments had to be ‘fully-funded’ as he also battles to get the deficit down on his revised timetable.
Central departmental spending in unprotected ministries will be cut by more than £1billion a year from 2013-14 to 2015-16.
Some departments are already showing signs that they will underspend their budget this year, meaning the Treasury’s annual £3billion reserve used for unforeseen costs will be under less pressure.
The underspends will be clawed back by the Treasury and the reduction will be ‘locked in’ for another two years through budget cuts of 1.1 per cent.
In addition to existing underspends, departments are expected to identify further efficiency savings and to continue exercising strong financial discipline across all areas of their budgets, the Treasury said.
The Ministry of Defence will be allowed to carry over its expected underspend of £800million to next year.
The decision to exempt local government from the cuts will allow for a freeze in council tax 2014-15 and 2015-16.
Cash incentives to shift wind farms from land to sea
Controversial: The turbines have caused hostility in rural areas
Ministers are hoping to halt the creep of wind farms across the countryside by offering larger cash incentives to build them at sea.
George Osborne has secured a five per cent cut in wind power subsidies amid increasing concerns about the hostility turbines have caused in rural areas, and to head off a revolt by Tory MPs.
But the green levies paid to companies building them off the coast – and out of sight – will increase slightly in the coming years.
It does not mean there will be no new turbines on land, where there are already more than 4,000, but sources close to the Chancellor said that ‘protecting our natural environment’ was a key factor in the decision.
Payments to unpopular large solar farms – but not household solar panels – will also go down.
Treasury chief secretary Danny Alexander said the cuts were due to manufacturing costs falling.
But Renewable UK, which represents the wind industry, warned ministers against making these decisions for ‘political reasons rather than economic ones’ and said some smaller community-led wind farms onshore would be ‘lost’ as a result.
Household bills will not fall as a result of the changes yesterday, as other forms of green energy will now win higher subsidies.
Guy Newey, of the Policy Exchange think-tank: said: ‘We must wean renewable energy off the subsidy drip.’
Providers of green energy are given a fixed price for every unit of electricity they generate, and prices for the next five years were published yesterday by the Department of Energy and Climate Change.
The market price for power is around £50 per megawatt hour, but the government says they need a subsidy to compete with coal and gas.
Onshore wind, which was due to be paid £100 per megawatt hour (MWh) from next year, will now get £95, going down to £90 by 2017-18. Solar farms will get £120 per MWh, down from £125. But wind turbines at sea will get £155 per MWh going down to £140 in three years’ time.
Business rate rise capped at 2% and help for small shops
Ministers hope limiting rises in business rates to 2 per cent will stop more shops and businesses to survive
Shops and businesses will be promised help with the costs of staying afloat, including an expected freeze in business rates.
A planned increase of 3.2 per cent next year, based on September's retail prices inflation rate, will be scrapped and will instead be capped at 2 per cent.
The move has been welcomed by industry groups, who warned the annual tax on business premises was at risk of sending otherwise successful companies to the wall.
John Longworth, director general of the British Chambers of Commerce, said: ‘It is heartening that the Chancellor appears to be listening to business, and is planning to limit the damage caused by relentless business rates increases.
‘But a tax rise is still a tax rise. Although a cap on rates would spare businesses some £300 million in tax hikes, and reliefs help many of the smallest firms, companies of all sizes will still be paying hundreds of millions more in rates to the Exchequer next year than the £27 billion they are expected to pay in this year.’
Steve Radley, director of policy at EEF, the manufacturers' organisation, said: ‘Action on business rates, which are a fixed cost regardless of trading conditions, will help ease the pressure on margins.
‘But for industry, the top priority must be addressing energy costs that are racing ahead of its competitors abroad.’
End of the road for the traditional paper car tax disc
Abolished: Motorists will not have to display the documents in their cars from October 2014
Almost 100 years of motoring history has been torn up when the traditional car tax disc is abolished
From October next year, motorists will no longer have to display their road tax in the windscreen of their vehicles.
In another boost for drivers, fuel duty will not rise before the general election, after George Osborne found £750million to cancel a 2p-a-litre rise in fuel due next September.
Insiders say the tax disc – which was introduced in 1920 in the heyday of the Ford Model T – is unnecessary because they are rarely inspected by police nowadays.
The plans will save £7 million in administration costs.
Unfortunately for motorists, they will still have to pay Vehicle Excise Duty – but the Treasury claims that there will also be savings of £20 million for Britain’s hard-pressed motorists as a result of changes to the way car tax can be paid.
The number of windscreens checked for tax discs by officers has dropped 75 per cent in the last five years, thanks to the electronic vehicle register that is used by both traffic police and the DVLA.
A police source said: ‘The tax disc is no longer needed for enforcement purposes. ‘The police use numberplate recognition equipment. If they pull you over they can immediately tap into this database and see whether the car is taxed and insured and what the driver ought to look like.’
Officials said that both the police and the Post Office have ‘indicated their support’ for the abolition of the tax disc.
Motorists will also be able to pay their Vehicle Excise Duty monthly via direct debit and will become cheaper to pay for a six month period.
Green levies deal cuts £50 from average energy bills
The Big Six energy firms have agreed to pass on the £50 saving to customers
The government has done a deal with energy companies to cut green levies which are pushing up bills.
The taxpayer will fund some of the environmental schemes currently paid for by gas and electricity firms, allowing bills to be cut by £50 on average.
However, energy bills will still be higher than last winter, because the Big Six had planned to put up charges by more than £100.
The Government is cutting the cost of the energy company obligation (ECO), an insulation scheme delivered by major energy suppliers, in a move that should shave £30-£35 off bills, on average, next year.
The Department of Energy and Climate Change also announced it is establishing a rebate, saving the average customer £12 on their bill for the next two years.
Electricity companies will also take voluntary action to reduce network costs in 2014-15, funding a one-off reduction of around £5 on electricity bills.
In addition, energy firms will be given two years longer to hit targets on the insulation of homes, enabling costs to consumers to be spread out.
Most of the Big Six had already announced rise of more than £100 this winter, before ministers moved to reduce the impact of government schemes designed to help the poor and vulnerable insulate their homes.
But British Gas has said it will cut bills by £53 in January, SSE bills will fall by £50, while EDF said it would hold prices until 2015.
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