Budget 2016
Politics live with Andrew Sparrow

Budget 2016 live: Osborne hails 'sugar tax' on soft drinks but cuts growth forecasts

  • Budget 2016 key points
  • Live coverage, news updates and analysis
  • Osborne announces new ‘lifetime ISA’ for young savers
  • ‘Sugar levy’ on soft drinks to be spent on school sports
  • Growth forecasts cut but surplus target maintained
  • Restricts tax loopholes for big corporations
LIVE Updated 
 George Osborne presents his Budget to parliament.
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Jamie Oliver, the chef and a vigorous campaigner for a sugar tax, said the hancellor’s announcement that he will tax the soft drinks industry was “amazing news”. He posted on Instagram: 
We did it guys !! We did it !!! A sugar levy on sugary sweetened drinks ... A profound move that will ripple around the world ... business cannot come between our kids health !! Our kids health comes first ... Bold, brave, logical and supported by all the right people ... now bring on the whole strategy soon to come ... Amazing news.
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Jeremy Corbyn is responding to the budget now. He is delivering a decent speech, and getting a respectable hearing, although he has made little attempt to engage with the specific measures in the budget so far.
This is from the BBC’s Laura Kuenssberg.
— Laura Kuenssberg (@bbclaurak)March 16, 2016
Corbyn doing ok but so far entirely prepared speech - no response to what Osborne announced today..sugar tax, new pensions, mystery numbers
We will post more from Corbyn’s speech later.

Political snap summary: More surprises than expected, and a distinct Thatcherite flavour

Andrew Sparrow 
There was speculation about that being a boring budget, but in practice it was nothing of the kind. There were plenty of eye-catching announcements, although until we’ve had a chance to go through the numbers, it is hard to know how substantial any of these measures are. Recently the government has been playing down the prospects of a sugar tax, but Osborne has discovered his faith in interventionist, nanny state government with a levy that will be welcomed by public health specialists. The plans for lifetimes ISAs are at least a nod to the concerns of those in their 20s and 30s who cannot afford a house. But, overall, there was a strong Tory strain to these measures too. What he said about how his business rate reforms would help small businesses sounded like archetypal Thatcher (although she introduced business rates - but that’s another story) and, announcing his increase in the higher rate threshold, Osborne even evoked the memory of Nigel Lawson. He said it was the biggest cut of its kind since Lawson cut the top rate to 40p. That, of course, was a measure that helped the wealthy, and we’ll soon find out, from the red book, how regressive this budget is overall. Quite a lot, probably.
Updated 
Economists are swiftly pointing to the problem with the new Lifetime ISA for under-40s - it’s no use if you’ve got NO spare money to invest.
— Noble Francis (@NobleFrancis)March 16, 2016
Lifetime ISA of government giving under 40s £1 for every £4 they save is great for well off young. The poorer ones can't save...
— Aditya Chakrabortty (@chakrabortty)March 16, 2016
Still, a nice giveaway for rich parents. https://t.co/KfcqMgr7SJ

Economic snap summary: Borrowing up by £34bn, growth down.

Despite Osborne’s best efforts to talk up today’s budget, the bottom line is that Britain’s economy looks rather weaker than at November’s autumn statement.
Growth has been cut every year between now and 2020. And the new forecast of 2% growth this year could prove optimistic, if the global economy worsens.
And that means borrowing is higher than hoped. Osborne rattled through the deficit figures - but by my maths, Britain is going to borrow more than £34bn more than expected between now and 2019. 
A surplus is still on the horizon in 2019, but at the cost of £3.5bn of new spending cuts. And that ‘dangerous cocktail of risks’ on the horizon could still put that at risk.
Here’s the new deficit figures:
  • 2015-2016: £72.2bn, down from £73.5bn in the autumn statement
  • 2016-2017: £55.5bn, up from £49.9bn
  • 2017-2018: £38.8bn, up from £24.8bn
  • 2018-2019: £21.4bn, up from £4.6bn
  • 2019-2020: £10.4bn surplus, compared with a £10.1bn surplus
  • 2020-2021: £11bn surplus, compared with a £14.7bn surplus
— Danielle Haralambous (@DHaralambous)March 16, 2016
Slightly worse for a bit, then right back to where we were. #Budget2016pic.twitter.com/SHJQKsXppM
The cut in corporation tax to just 17% is a surprise, and suggests Osborne wants to lure more multinational companies to the UK. That might cause angst in Washington, where companies will soon be paying twice as much (unless they shelter cash overseas).
— George Eaton (@georgeeaton)March 16, 2016
UK corporation tax rate will be 22 percentage points lower than US rate by 2020 (39% vs. 17%). #Budget2016
Tax-wise, it was a relatively good budget for drivers who like a drop of whisky (not at the same time, guys). But the sugar tax will inevitably hit poorer families harder (like any flat tax).
— Abi Wilkinson (@AbiWilks)March 16, 2016
Like VAT, sugar tax will take a higher % of income of poorer people. It's a regressive tax dressed up prettily #Budget2016
The City’s verdict is in too. The pound has hit a two-week low, down one cent at $1.4060, as traders calculate that weak growth and higher borrowing = record low interest rates for a long time.
Updated 

Osborne raises basic rate tax allowance and the higher rate threshold

Osborne turns to income tax.
  • The personal allowance to go up to £11,500 from April next year. This will give 31m people a tax cut, and means people are paying more than £1,000 less in income tax than in 2010, he says.
  • The higher rate threshold to rise to £45,000 from April next year. This will take people out of the higher rate who should never have been covered by it, he says.
And that’s it. The statement is over.

Under-40s to be allowed to open lifetime ISAs, with government contributing

Osborne turns to pensions.
He says his proposals on pensions were criticised by the Lib Dem former pensions minister, Steve Webb. He said Osborne was planning to abolish the lump sum.
Osborne says his reaction was to keep the lump sum, and abolish the Liberal Democats.
  • The ISA saving to go up next year from around £15,000 to £20,000.
  • Anyone under 40 will be able to open a lifetime ISA. For every £4 you save, the goverment will give you £1 until you are 50. The money can be used to save for a pension, or for a home. It will help people who cannot save for a pension. And the government will consult on whether to make it work like the US 401k schemes. And people will be able to roll their help-to-buy ISAs into these schemes.
Osborne says too many people in their 20s have no pensions or savings.
He wants to help, he says.
Osborne says he is going to abolish class 2 national insurance contributions for the self-employed.
  • Headline rate of capital gains tax cut from 28% to 20%.
Shares in some of Britain’s drinks companies are sliding, following news of Osborne’s new sugar tax :
— Nick Fletcher (@nickfletchergdn)March 16, 2016
Sugar tax on drinks sends Britvic down 3%, Irn Bru maker AG Barr down nearly 5%
Osborne turns to drink.
  • Beer duty and cider duty to be frozen.
  • Duty on whisky to be frozen.
  • Other alcohol duties to rise in line with inflation.

Fuel duty to be frozen

Osborne turns to petrol duty.
It was frozen in the last parliament, he says. That saved £7bn.
A fuel duty increase was pencilled in for this year. But he knows that it poses a cost to families, he says.
  • Fuel duty to be frozen for the sixth year in a row, Osborne says. He says this will save the averae driver £75.
Updated 
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