If the last budget was George's Epic Strut I dread to think what the Sun will come up with this time.

DaemonBarber said:

It's a fairly standard response from LotO. It's a toughgig to respond to the budget. This one perhaps more so given some of the tanks placed on Labour's lawn.

Both Tony Blair and William Hague said, Budget Day was the most difficult parliamentary experience for them as Leader of the Opposition.

You guys do realise that £9 an hour is not a living wage, and that the low-paid are likely to still face drops in their incomes after the tax-credit cuts, right?

Don't let that get in the way of your 2012-esque spin at what a genius Osborne is, though.

Patrick said:

There'll be acres of wailing and gnashing from Polly. But by 2020 the facts on the ground will be well established. The UK will be a freer, more competitive, more self reliant place.

Polly was already depressed yesterday;

http://www.theguardian.com/commentisfree/2015/jul/07/right-love-higher-wages-tax-credits

After today, nothing less than an extended break at the Tusken Villa will cheer her up...

Philip_Thompson said:

FrancisUrquhart said:

MarkHopkins said:

FrancisUrquhart said:

MarkHopkins said:

FrancisUrquhart said:

TGOHF said:

Pulpstar said:

FrancisUrquhart said:

Something to remember, £9/hr by 2020 isn't that much over an inflation rise in minimum wage every year.

2014 NMW: £6.50/hr

6 years at say 3% inflation (High side estimate) = £7.76

A fair bit over actually.

£9/hr only for over 25s though.

So basically it is just another band to the minimum wage. I would prefer to see it based upon time worked. Seems highly unfair that somebody joins the workforce at 16, works hard, gets trained and 3 years later an employer can still pay them £6.50.

Those are minimum wages, not targets or the amounts expected for trained workers.

I know, but we know what has happened and does happened with any of these things. It becomes the level of the ceiling give or take a bit.

Out of interest, I took a look last week at random jobs in the local paper across a wide variety of sector just out on interest and they all had something in common, £6.50/hr.

A lot of jobs put in the local paper are unskilled/starter jobs though.

Yes, sure, but we know there has been a real affect that minimum wage has anchored the top end of pay for unskilled and semi-skilled jobs. I am just saying that employers if they want can take on 16 years old and never pay them any more until 25.

It might also have a perverse affect that 25 year olds become less attractive to employ.

That's untrue. There are step changes at 16/18/21 and now 25. So a 16 year old gets an automatic pay rise after 2 and then another 3 years respectively.

I knew there was a step change, but I thought it was just 18. I meant to say employers taking people on at 18. But you are right, I stand corrected.

I still don't really like minimum wage based solely on age.

GIN1138 said:

Patrick said:

There'll be acres of wailing and gnashing from Polly. But by 2020 the facts on the ground will be well established. The UK will be a freer, more competitive, more self reliant place.

Polly was already depressed yesterday;

http://www.theguardian.com/commentisfree/2015/jul/07/right-love-higher-wages-tax-credits

After today, nothing less than an extended break at the Tusken Villa will cheer her up...

Is that why Jim (If we win the election) Naughtie ) leaving the Today programme.??/. Couldn't face interviewing hapless Labour shadow Cabinet members?

It is the fall in unemployment that has allowed George to produce this move on the NMW. A fair argument against NMW always was that it could increase unemployment. With the rosy statistics, it can be afforded to be increased above inflation.

Danny565 said:

You guys do realise that £9 an hour is not a living wage, and that the low-paid are likely to still face drops in their incomes after the tax-credit cuts, right?

Don't let that get in the way of your 2012-esque spin at what a genius Osborne is, though.

A fair point. But a Tory government accepting he principle of a living wage is a pretty big move. Remember how opposed they used to be to even a minimum wage. If Labour is clever they will welcome this.

SouthamObserver said:

Philip_Thompson said:

SouthamObserver said:

Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.

Companies will be happy to pay higher wages if taxes are cut which is the balance Osborne strikes.

Expecting companies to pay higher wages while increasing their taxes (as Ed proposed) was bonkers.

Big difference. Lower taxes = higher wages.

If companies willingly paid higher wages in return for lower corporation tax a compulsory living wage would not be necessary.

This is a good and very welcome move. Ditto on non-doms, ditto on BTR.

I said a while back that Osborne towers over all other Tory (and Labour, to be fair) politicians. Today proved that. I don't agree with his political views, but I do admire his ability to play politics and to set the political landscape. He is a rare example of a politician learning on the job. The contrast to the early years of the Coalition is marked.

Companies don't get to volunteer what their tax rates and minimum/living wage rates are. This is an exchange - cut corp tax and raise wages is roughly neutral. Increase taxes and increase wages is a double whammy.

TheScreamingEagles said:

williamglenn said:

If the last budget was George's Epic Strut I dread to think what the Sun will come up with this time.

https://twitter.com/tnewtondunn/status/618767298602663936

Oh God please not another front page like that again. I appreciate this budget but less of the vomit worthy sycophancy !

TGOHF said:

Sports Direct share price plunged on the living wage news - lol.

Arf

TGOHF said:

Danny565 said:

You guys do realise that £9 an hour is not a living wage, and that the low-paid are likely to still face drops in their incomes after the tax-credit cuts, right?

Don't let that get in the way of your 2012-esque spin at what a genius Osborne is, though.

What was in the Labour manifesto ? Lolza !

Indeed, the minimum wage rise in Labour's manifesto was insufficient too. But they weren't freezing/cutting tax credits meaning the low-paid would still have had a (modest) rise in their income, as opposed to a cut from this budget.

MarqueeMark said:

Plato said:

So what did you know in advance?! Did it appear?

MarqueeMark said:

Harriet's response is like someone who has just witnessed Pearl Harbour - and chooses to focus on the noise pollution on a Sunday morning.....

Only about the National Living Wage.... ;-)

Kevin in line for a junior ministerial job any time soon ?

The Living Wage is pure sound bite student politics. The whole concept stinks like a '60s income policy.

A couple of googlies there, but wasn’t there also supposed to be a curve ball too? #NLW?

Philip_Thompson said:

SouthamObserver said:

Philip_Thompson said:

SouthamObserver said:

Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.

Companies will be happy to pay higher wages if taxes are cut which is the balance Osborne strikes.

Expecting companies to pay higher wages while increasing their taxes (as Ed proposed) was bonkers.

Big difference. Lower taxes = higher wages.

If companies willingly paid higher wages in return for lower corporation tax a compulsory living wage would not be necessary.

This is a good and very welcome move. Ditto on non-doms, ditto on BTR.

I said a while back that Osborne towers over all other Tory (and Labour, to be fair) politicians. Today proved that. I don't agree with his political views, but I do admire his ability to play politics and to set the political landscape. He is a rare example of a politician learning on the job. The contrast to the early years of the Coalition is marked.

Companies don't get to volunteer what their tax rates and minimum/living wage rates are. This is an exchange - cut corp tax and raise wages is roughly neutral. Increase taxes and increase wages is a double whammy.

None of which demonstrates that businesses would voluntarily raise wages in the wake of a CT cut alone.

TheScreamingEagles said:

The other interesting thing from today's budget.
George Osborne really does look like someone who knows he wants to be Tory leader in a few years time.
Up to a few months ago, I always thought he'd prefer to be the Eminence Grise for the next Tory leader after Dave

I think I suggested sometime before the last election that if the Tories won then it would be Osborne who would be favourite to be next leader. This is assuming he would like the job. Lets remember that the next leader will have to fight the next election and if he lost he would not be leader for long.
What is important in respect of the next election is the expectation of the public and probably even now the expectation is that the tories will be winners.

dr_spyn said:

The Living Wage is pure sound bite student politics. The whole concept stinks like a '60s income policy.

True, but bear in mind that the prices and incomes policy in the 1960s and 1970s was seen by a majority of parliamentarians as a sensible, moderate and reasonable measure.

TGOHF said:

Sports Direct share price plunged on the living wage news - lol.

Not sure why, they will just hire people aged 18-24.

TGOHF said:

williamglenn said:

TheScreamingEagles said:

I reckon this will be the image/video of the day

The quiet man is here to bray.

Conservatives cheering the poor getting a pay rise - detoxification complete.

Well, technically that will only be the case if areas which have almost no votes for the Tories start increasing the Tory share, even if they don't win there, but as an issue it makes it harder to make the toxic point, on the face of it.

SouthamObserver said:

Philip_Thompson said:

SouthamObserver said:

Philip_Thompson said:

SouthamObserver said:

Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.

Companies will be happy to pay higher wages if taxes are cut which is the balance Osborne strikes.

Expecting companies to pay higher wages while increasing their taxes (as Ed proposed) was bonkers.

Big difference. Lower taxes = higher wages.

If companies willingly paid higher wages in return for lower corporation tax a compulsory living wage would not be necessary.

This is a good and very welcome move. Ditto on non-doms, ditto on BTR.

I said a while back that Osborne towers over all other Tory (and Labour, to be fair) politicians. Today proved that. I don't agree with his political views, but I do admire his ability to play politics and to set the political landscape. He is a rare example of a politician learning on the job. The contrast to the early years of the Coalition is marked.

Companies don't get to volunteer what their tax rates and minimum/living wage rates are. This is an exchange - cut corp tax and raise wages is roughly neutral. Increase taxes and increase wages is a double whammy.

None of which demonstrates that businesses would voluntarily raise wages in the wake of a CT cut alone.

I didn't say they would, I said Osborne struck a good balance - whereas the alternative the Opposition proposed of higher taxes plus higher costs was not balanced.

But of course having a level playing field means not just that costs are higher but that customers have higher incomes. If anything its slightly inflationary (and I think we can do with a bit more inflation currently when its zero).

With these changes to corporation tax/living wage/tax credits it kind of feels that the Government is shuffling money round in a circle

Low paid employees gain from companies due to living wage hike
The Government gains from low paid employees due to tax credit reductions
Companies gain from the Government due to reduced corporation tax.

Plato said:

Cuts in Corp Tax are superb news. Hope this gets the right level of coverage.

Which Western countries have rates lower or equal to 18%?

As I've said before, George has been very canny - insisting that the world rallies around the taxing of large global corporations SOMEWHERE - and then offering to be that somewhere with the lowest levels of corporation tax....

NLW annual rate is £13.1k working full time from next year, a rise from £11.8k, Labour can't oppose this introduction.

With 5 grand of tax free dividends and tax free cash savings interest ISAs have no basically become pointless except for those who've been stashing away the max for years.

GarethoftheVale2 said:

With these changes to corporation tax/living wage/tax credits it kind of feels that the Government is shuffling money round in a circle

Low paid employees gain from companies due to living wage hike
The Government gains from low paid employees due to tax credit reductions
Companies gain from the Government due to reduced corporation tax.

Sort of. What's happening is the Government is stopping a circle. Previously companies were taxed, employees were taxed, employees got money back in tax credits.

Now companies pay wages.

Which is a more sensible and simple system?

"£100k" Leslie really is rubbish.

williamglenn said:

DavidL said:

It now looks increasingly likely that George will never have a surplus as Chancellor. He deserves better.

The test of how effective Osborne has been will be in how many years we stay in surplus when we finally reach it. It's not much good rushing to achieve a surplus if you're forced into a rapid fiscal reversal as soon as trouble hits.

I agree.

As I said the last 6 years now have shown how deep a hole we were in. To have a deficit 12 years after the crash assumes an extremely long economic cycle. There is absolutely no question we will go into the next downturn with debt at at least double the level it was in 2007 as a share of GDP. This is not good and the Brown legacy.

Philip_Thompson said:

williamglenn said:

DavidL said:

It now looks increasingly likely that George will never have a surplus as Chancellor. He deserves better.

The test of how effective Osborne has been will be in how many years we stay in surplus when we finally reach it. It's not much good rushing to achieve a surplus if you're forced into a rapid fiscal reversal as soon as trouble hits.

No the whole point of running a surplus is in order to be able to run a deficit when you're in trouble. That is sound economics.

What would be bad is if we reach a tiny surplus then start running deficits again in good times.

According to the IMF, we have the worse cyclically adjusted deficit in the developed world.

But we shouldn't worry too much about the symbolic nature of a surplus. The key is reducing debt-to-GDP. If we assume 2.5% GDP growth through the cycle, and 1.5% inflation, that means that the budget deficit needs to (approximately) be less than about 3.5% through the cycle. If we can achieve that, we will see UK debt-to-GDP gently gliding down towards the 75% level on a 10 year view.

This kind of event shows Nick Robinson's style of reporting at its worst. It's all about party tactics to him with no interest in substance.

rcs1000 said:

Philip_Thompson said:

williamglenn said:

DavidL said:

It now looks increasingly likely that George will never have a surplus as Chancellor. He deserves better.

The test of how effective Osborne has been will be in how many years we stay in surplus when we finally reach it. It's not much good rushing to achieve a surplus if you're forced into a rapid fiscal reversal as soon as trouble hits.

No the whole point of running a surplus is in order to be able to run a deficit when you're in trouble. That is sound economics.

What would be bad is if we reach a tiny surplus then start running deficits again in good times.

According to the IMF, we have the worse cyclically adjusted deficit in the developed world.

But we shouldn't worry too much about the symbolic nature of a surplus. The key is reducing debt-to-GDP. If we assume 2.5% GDP growth through the cycle, and 1.5% inflation, that means that the budget deficit needs to (approximately) be less than about 3.5% through the cycle. If we can achieve that, we will see UK debt-to-GDP gently gliding down towards the 75% level on a 10 year view.

Both assumptions are optimistic. Within 10 years I'd expect a recession (its already six years since the last one ended so that's 16 years) so 2.5% isn't likely. Inflation is currently zero.

Furthermore I'd view 75% as too high anyway. Ideally I'd like to see our debt-to-GDP ratio back around 40% - however there's plenty of economic evidence that a debt ratio over 70% has a negative impact on long term growth. We need to get back below that and aim to reduce it further, not accept 75% as OK only to then see it explode above 100% next time there's a crash.