BUDGET 2016 LIVE: Follow all the announcements, analysis and reaction

The Chancellor of The Exchequer George Osborne will today lay out his Conservative Budget for 2016.

Chancellor George Osborne announces his budget. Photo: PA EMN-150928-134545001

You can follow all of the ins and outs of his speech as well as expert analysis and reaction here click here

• 1,15:

Major tax cuts were announced for the oil and gas industry, which has been hit by falling global prices.

The supplementary charge was slashed from 20% to 10% and Mr Osborne said he was “effectively abolishing Petroleum Revenue Tax”.

In a barb aimed at the pro-independence Scottish National Party, he said: “We are only able to provide this kind of support Reforms to business rates which will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017 were welcomed by loud cheers from Conservative backbenchers.

Mr Osborne said: “This is a Budget for small businesses.”

• 1.20:

Major tax cuts were announced for the oil and gas industry, which has been hit by falling global prices.

The supplementary charge was slashed from 20% to 10% and Mr Osborne said he was “effectively abolishing Petroleum Revenue Tax”.

In a barb aimed at the pro-independence Scottish National Party, he said: “We are only able to provide this kind of support to our oil and gas industry because of the broad shoulders of the United Kingdom.”

Reforms to business rates which will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017 were welcomed by loud cheers from Conservative backbenchers.

Mr Osborne said: “This is a Budget for small businesses.”

A package on infrastructure measures included a promise to “prepare the country for the arrival of 5G technology”, as well as housing and transport schemes.

“In this Government we are the builders,” Mr Osborne insisted.


Mr Osborne gave the go-ahead for a new High Speed 3 (HS3) rail link between Manchester and Leeds and the creation of a new four-lane M62 motorway, part of which runs between the two cities.

He will “develop the case” for a new tunnelled road from Manchester to Sheffield and upgrade the A66 and A69 which serve the North Pennines.

Mr Osborne said: “I said we would build the Northern Powerhouse - we’ve put in place the mayors, we’re building the roads, we’re laying the track.

“We’re making the Northern Powerhouse a reality and rebalancing our country.”

After ministers bore the brunt of public criticism during a winter of floods in Lancashire, Cumbria, Yorkshire and Scotland, Mr Osborne announced a £700 million boost to funding for flood defences and resilience.

The fund will be paid for by increasing the standard rate of Insurance Premium Tax by half a percentage point.

Mr Osborne said he was giving the go-ahead to the schemes for York, Leeds, Calder Valley, Carlisle and across Cumbria, with a review under way of other possible locations.

As expected, the Chancellor confirmed the process of “academisation” - taking all primary and secondary schools out of local authority control in England by 2020.

There will be a focus on schools in the North and a look at making maths compulsory to the age of 18.

There will be an extra £500 million to shift towards a “fair funding formula” for schools - aimed at addressing imbalances in the system - with an aim of getting 90% of schools that will benefit on to the new system by the end of the Parliament.

• 1.00:

Forecasts for national debt as a proportion of GDP have been revised upwards in each of the coming years - from 81.7% to 82.6% in 2016/17, then from 79.9% to 81.3% in 2017/18, from 77.3% to 79.9% in 2018/19, from 74.3% to 77.2% in 2019/20 and from 71.3% to 74.7% in 2020/21.

The deficit - the amount the Government spends above what it takes in - is forecast to fall next year to 2.9%. In 2017/18, it falls to 1.9%, then it falls again to 1.0% in 2018/19.

This compares with forecasts for public sector net borrowing in the November 2015 Autumn Statement of 2.5% in 2016/17, 1.2% in 2017/18 and 0.2% in 2018/19.

Mr Osborne said the UK was set to have a budget surplus of £10.4 billion in 2019/20 and £11 billion in the following year - meeting his fiscal mandate to achieve a surplus by the end of the Parliament and maintain it in subsequent years.

Tory MPs loudly welcomed Mr Osborne’s announcement that the richest 1% now contribute 28% of all income tax revenue - a higher proportion than at any point under Labour.

• 1.05:

The Chancellor announced a series of actions to tackle tax avoidance and evasion totalling £12 billion, including moves to end the use of “personal service companies” by public sector employees to minimise their tax liabilities.

A number of TV stars have faced criticism for their use of the tax loophole.

Mr Osborne repeated his mantra that “we are all in this together” as he said figures confirmed the richest 1% paid 28% of income tax revenue.

Insisting that the Government was acting “in a fair way”, he said: “Child poverty is down; pensioner poverty is down; inequality is down; and the gender pay gap has never been smaller.”

Announcing changes to business taxes to make it “fit for the future” he announced that corporation tax would fall to 17% by April 2020.

• 1.10:

Mr Osborne took a number of steps to help small businesses in the new world of online shopping and what he termed “the great unfairness” they face when they compete with global giants like Amazon and eBay.

New actions will tackle overseas retailers who who store goods in Britain and sell them online without paying VAT.

And UK micro-entrepreneurs who sell services online or rent out their homes through the internet will benefit from two new tax-free allowances each worth £1,000 a year.

The Chancellor also announced that he is permanently raising the threshold for small business rate relief from £6,000 to a maximum of £15,000 and for the higher rate from £18,000 to £51,000.

He said this would mean that, from April next year, 600,000 small businesses will pay no business rates at all, at an annual saving for them of up to nearly £6,000. A further quarter of a million businesses will see their rates cut.

• 12.45pm:

Mr Osborne said the economy was growing faster than in any other major advanced country in the world and was “on course for a budget surplus”.

He warned of a “dangerous cocktail of risks” from global economic instability but said Britain was well-prepared to handle it “if we act now so we don’t have to pay later”.

Mr Osborne said: “Britain has learnt to its cost what happens when you base your economic policy on the assumption you have abolished boom and bust. Britain is not immune to slowdowns and shocks.

“Nor as a nation are we powerless. We have a choice. We can choose to add to the risk and uncertainty, or we can be a force for stability.

“In this Budget we choose to put stability first. Britain can choose, as others are, short-term fixes and more stimulus. Or we can lead the world with long-term solutions to long- term problems.

“In this Budget we choose the long term. We choose to put the next generation first. Sound public finances to deliver security, lower taxes on business and enterprise to create jobs, reform to improve schools, investment to build homes and infrastructure - because we know that’s the only way to deliver real opportunity and social mobility.

“And we know that the best way we can help working people is to help them to save and let them keep more of the money they earn.”

The Office for Budget Responsibility has downgraded its forecast of UK economic growth in 2015 from 2.4% to 2.2%.

Figures are also revised downwards for the following years - from 2.4% to 2% in 2016, from 2.5% to 2.2% in 2017, from 2.4% to 2.1% in 2018 and from 2.3% to 2.1% in both 2019 and 2020.

• 12.50:

The OBR made clear that its forecasts were based on the assumption that the UK remains in the European Union following the June 23 referendum, though the body is not taking a side in the debate.

But - in comments which will be seized upon by the Remain camp - the independent financial watchdog warned that “a vote to leave in the forthcoming referendum could usher in an extended period of uncertainty regarding the precise terms of the UK’s future relationship with the EU. This could have negative implications for activity via business and consumer confidence and might result in greater volatility in financial and other asset markets.”

And the OBR added: “There appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated.”

• 12.55:

After record employment figures released this morning, the OBR is forecasting one million more jobs over the course of this Parliament.

Mr Osborne said that, far from predictions that new jobs would be low-skilled and part-time, some 90% are in skilled occupations and three-quarters are full-time.

The unemployment rate is falling fastest in the North East and employment growing fastest in the North West, while real wages are outstripping inflation, he said.

The OBR forecasts lower inflation, at 0.7% this year and 1.6% next year.

Mr Osborne said he will be introducing additional spending cuts totalling £3.5 billion by 2020 - lower than the £4 billion predicted when he said they would amount to around 50p in every £100 the Government spends.

• This morning:

The Chancellor is expected to say that, although the UK’s economy is “strong”, the “storm clouds are gathering again”.

Concerns about economic uncertainty will cast their shadow over Mr Osborne’s eighth Budget, with the Chancellor planning to impose a further £4 billion of spending cuts to allow him to meet his fiscal target of getting the nation’s finances into surplus by the next election.

He is expected to unveil “a Budget where we act now so we don’t pay later” in order to meet the “new challenge” facing the country.

Mr Osborne briefed the Cabinet on his statement, telling ministers that it delivered on the Government’s manifesto commitments while making sure the UK was well-prepared to deal “turbulent times” in the global economy.

The Prime Minister’s official spokeswoman said his comments were met with the usual banging on the table - a traditional sign of approval.

David Cameron wrapped up the meeting, saying: “This is a pro-enterprise, pro-infrastructure, pro-devolution Budget that fully lives up to what this Government is all about - transformation.”

Mr Osborne will make education reforms a key part of his plan to “put the next generation first”, but his plan to turn all English schools into academies has been attacked by the unions and Labour.

Shadow chancellor John McDonnell has also accused Mr Osborne of choosing austerity as a way to further his own ambitions to lead the Tory Party.

The Chancellor is set to announce that every state school in England will become an academy by 2022 as he unveils a £1.5 billion package of additional funding for education in the Budget.

The cash will also allow some secondaries to offer a longer school day, remaining open after the traditional “home time bell” at 3.30pm for five hours or more a week of additional lessons or extracurricular activities.

But the National Union of Teachers accused the Chancellor of “undoing over 50 years of comprehensive public education at a stroke”.

In a sign of the impact the economic “storm clouds” are having, the Financial Times reported that Mr Osborne will be forced to admit he has missed one target to cut Britain’s debt as a share of GDP this year.

The Chancellor has blamed uncertainty over the prospects of China and the eurozone for dispelling the sunny mood of the Autumn Statement four months ago, when he said that higher-than-expected tax receipts would allow him to avoid cuts.

All eyes will be focused on whether Mr Osborne hikes fuel duty for the first time in five years - raising £1 billion for every 2p on a litre at the pumps - despite pressure from Conservative MPs to hold back. He has already given in to backbench protests by ditching a mooted plan to reform tax relief on pensions.

And there is speculation that he will nudge up insurance premium tax, while charity Scope said disabled people were “anxiously awaiting” the Budget statement amid concerns they may face further cuts to their benefits.

Already trailed ahead of the Budget is a £300 million package of investment in transport infrastructure in the North of England - including a green light for the HS3 plan to improve east-west rail links - as well as £80 million to take forward planning for the £27 billion Crossrail 2 north-south railway line through London.

Mr Osborne is also expected to confirm plans for a new £1.2 billion fund to release brownfield land for 30,000 new starter homes, as well as trials of driverless cars on British motorways, and he will confirm plans to crack down on the abuse of personal services companies by public sector workers seeking to minimise their tax bills.

Writing in the Independent, Mr McDonnell said: “There is no economic justification for the Chancellor’s cuts. He has made a political choice to impose them. That has meant putting his own ambitions on the Tory leadership ahead of what is good for the country.”

Mr McDonnell accused the Chancellor of planning to target the most vulnerable to plug the holes in his economic plans.

“This constitutes a new low. Labour will insist that he steps back from the brink,” he said.