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Budget 2015: Election launchpad
A Cicero Group analysis
MARCH
2015
1
Foreword:
Budget 2015 marks the lauchpad of the 2015
General Election.
With better than projected jobs, growth and
government spending data, the Chancellor is betting
on the improving economy to win the Election for the
Conservatives.
“We set out a plan. That plan is working. Britain is
walking tall again”, George Osborne proudly declared.
However, despite this good news, the Chancellor
knows that he has a problem. The polls are still too
close to call. So far, this has been a voterless recovery.
And so, the central message of this Budget that the
Chancellor wants voters to remember on polling day
is, “an economic plan working for you”.
He is hoping that voters will dismiss Labour’s narrative
on the ‘cost of living crisis’, and link his stewardship of
the economy to improvements in their own personal
circumstances.
In that regards, today’s announcement was full of
policies to turn voters’ heads.
Most eye-catching was the Help to Buy ISA, targeted
at first time buyers, with the Government making
a maximum contribution of £3,000 on £12,000 of
savings for a deposit. And there was more good news
for savers with further flexibilities introduced on ISAs.
The Chancellor has also significantly opened the door
to greater fiscal devolution through the announcement
of pilot schemes in Greater Manchester, Cambridge,
Peterborough and Cheshire East to enable these areas
to retain 100% of any additional business rate growth
beyond expected forecasts.
Ed Miliband responded effectively on what
Conservative deficit reduction will mean for public
service cuts in the next Parliament and focused in on
safeguarding the NHS – an issue Labour continues to
lead on in the polls.
Ultimately, the Chancellor wants us to believe we will
all be better off with his management of the economy
for another 5 years.
In 50 days he will find out.
I hope you enjoy this Cicero Special. It reflects analysis
from across our public affairs offering - financial
services, energy, health and Cicero Elections. We have
also included an international perspective from our Asia
Pacific Director, Andrew Naylor.
For further elections analysis, please see:
http://ciceroelections.com/
Tom Frackowiak
Executive Director
Cicero Group
There was also something for the crucial grey vote,
as the Chancellor confirmed plans to extend pension
freedoms to around 5m people who have already
bought an annuity.
And, as you would expect there were plenty of populist
measures, such as beer duty cut by 1p a pint for the
third year in a row and a freeze in fuel duty.
Key to the Chancellor’s narrative is also that the
economic recovery is not just about London and the
South. Therefore, the northern powerhouse idea has
been extended to Wales, the South West, Yorkshire
and Scotland.
2
Budget Statement: Key facts
Economic forecasts
Economic growth is revised as follows:
•
2.6 per cent to 2.3 per cent in 2016
2.6 per cent to 2.3 per cent in 2017
2.5 per cent to 2.3 per cent in 2018
Growth has also been forecast to be 2.4 per cent in
2019
Borrowing as a percentage of GDP will be the
following:
•
•
•
•
•
80.2 per cent in 2015-16
79.8 per cent in 2016-17
77.8 per cent in 2017-18
74.8 per cent in 2018-19
71.6 per cent in 2019-20
The Budget surplus will be reduced in 2019/20 to £7bn
from a previously forecast £23bn.
Business taxation
•
Increase the Bank Levy from 0.156% to 0.210%
from 1 April 2015.
•
Make compensation payments non-deductible for
corporation tax purposes through legislation in a
future Finance Bill.
•
No longer allow businesses to take account of
foreign branches when calculating how much VAT
on overhead costs they can reclaim in the United
Kingdom.
•
Conduct a broad review of business rates to ensure
that they are fit for purpose.
•
•
•
Introduce a new children’s television tax relief from
April 2015.
•
Introduce a new orchestra tax relief from April 2016
at a rate of 25%.
•
Abolish Class 2 National Insurance Contributions
(NICs) in the next Parliament and will reform Class 4
to introduce a new contributory benefit test.
Raised from 2.4 to 2.5 per cent in 2015
But revised down from:
•
•
•
•
qualifying expenditure, and extend the high-end
television tax relief.
Implement a package of measures to improve
the accessibility of R&D tax credits for smaller
businesses.
Increase the rate of film tax relief to 25% for all
Personal taxation
•
Increase personal allowance to £10,800 in 201617 and to £11,000 in 2017-18. The Marriage
Allowance will also rise in line with the personal
allowance.
•
Higher-rate threshold will rise in line with the
personal allowance, taking it to £42,700 in 2016-17
and £43,000 in 2017-18.
•
Introduce digital tax accounts, removing the need
for annual tax returns.
•
Issuance of more accelerated payments notices.
•
Farmers will be able to average their incomes for
tax purposes over five years.
•
Conduct a review into use of deeds of variation to
cut inheritance tax.
•
Taken together, all the new measures against tax
avoidance and evasion will raise £3.1bn over the
forecast period.
Tax avoidance
•
Legislation will be introduced in Finance Bill 2015
for a new tax on diverted profits from 1 April 2015.
•
Legislation will be introduced to implement
the UK’s Automatic Exchange of Information
Agreements and adopt the updated EU Directive
on Administrative Co-operation.
3
Budget Statement: Key facts
•
•
Introduce tougher measures for those who
persistently enter into tax avoidance schemes that
fail, and will develop further measures to publish
the names of such avoiders and to tackle avoiders
who repeatedly abuse reliefs.
Toughen sanctions for those who continue to evade
tax by closing the existing disclosure facilities
for tax evaders early. A tougher ‘last chance’
disclosure facility will be offered between 2016 and
mid-2017, with penalties of at least 30 per cent on
top of tax owed and interest and with no immunity
from criminal prosecutions in appropriate cases.
•
Widen the current scope of the Promoters of
Tax Avoidance Schemes regime by bringing in
promoters whose schemes are regularly defeated
by HMRC.
•
Increase the deterrent effect by introducing a
penalty based on the amount of tax that is tackled
by the General Anti-Abuse Rule (GAAR).
•
Target structures set up so that people with only
a small indirect stake in a trading company can
benefit from the relief.
•
Ensure that entrepreneurs’ relief on the disposal of
personal assets used in a business is only available
when someone is making a meaningful withdrawal
from that business.
Business support
•
Increase UKTI resources to double support for UK
supporters to China.
•
Additional funding for an ambitious series of trade
missions focused on regional strengths.
•
Introduce an Apprenticeship Voucher, to put
employers in control of the government funding for
training.
•
Require that companies must be less than 12 years
old when receiving their first Enterprise Investment
Scheme (EIS) or Venture Capital Trust (VCT)
investment, except where the investment will lead
to a substantial change in the company’s activity.
•
Introduce a cap on total investment received under
the tax-advantaged venture capital schemes of
£15m, increasing to £20m for knowledge-intensive
companies.
•
Increase the employee limit for knowledgeintensive companies to 499 employees.
•
Remove the requirement that 70 per cent of the
funds raised under SEIS must have been spent
before EIS or VCT funding can be raised.
•
The Financial Conduct Authority’s (FCA) ‘Project
Innovate’ will work with HMT and the Prudential
Regulation Authority (PRA) to investigate the
feasibility of developing a regulatory ‘sandbox’ for
financial services innovators.
•
The FCA, working with the PRA, will also identify
ways to support the adoption of new technologies
to facilitate the delivery of regulatory requirements –
so-called ‘RegTech’.
Pensions and savings
•
Change the tax rules to allow people who are
already receiving income from an annuity to sell
that income to a third party, subject to agreement
from their annuity provider.
•
Reduce the lifetime allowance for pension
contributions that benefit from tax relief from
£1.25m to £1m.
•
Index the lifetime allowance to increase annually in
accordance with CPI from 6 APril 2018.
•
Increase the flexibility of ISAs so that savers can
withdraw and replace money in the same tax year
without losing the tax advantage.
•
Introduce a new Help to Buy ISA scheme to
support those saving to buy their first home, with a
maximum government bonus of £3,000 for those
who save up to £12,000.
4
Budget Statement: Key facts
•
Introduce a new Personal Savings Allowance so
that the first £1000 of savings income is tax free for
basic rate taxpayers, and the first £500 for higher
rate taxpayers.
•
The automatic deduction of 20 per cent income tax
by banks and building societies on non-ISA savings
will cease from April 2016.
•
Extend the range of ISA eligible investments in
2015-16 to include listed bonds issued by a cooperative society and community benefit society
and SME securities issued by companies trading
on a recognised stock exchange.
•
Explore further extending the list to include debt
and equity securities offered via crowd funding
platforms, and consult in summer 2015 alongside
a response to the consultation on how to include
peer-to-peer loans.
Infrastructure/Housing
•
•
•
•
•
Designate the first 20 Housing Zones outside
London, and continue to work with the other 8
shortlisted areas.
£97m of funding and ring fencing of the local
50% share of business rate growth to support the
London Borough of Barnet and the Greater London
Authority’s (GLA) plans for the regeneration of Brent
Cross.
A new consultation into the compulsory purchase
regime to make it clearer, faster and fairer for all
parties.
Target of introducing ultrafast broadband of at least
100MB per second should be available to nearly all
UK premises.
•
Transport for the North (TfN) will shortly publish an
interim report, committing to build on the concept
of HS3 to develop a network of high quality rail
connections across the north – the TransNorth
vision.
•
The government will extend Enterprise Zones in
Manchester and Mersey Waters. The Humber
Enterprise Zone will be extended. The designation
of the Leeds Enterprise Zone will be changed
and the government will also extend the
Enterprise Zone at Tees Valley, for oil and gas
decommissioning.
•
A new devolution deal with the West Yorkshire
Combined Authority will give West Yorkshire new
powers over skills, business support and transport.
•
A pilot scheme in Greater Manchester, Cheshire
East, Peterborough and Cambrideshire to enable
the retention of 100 per cent of any additional
business rate growth, starting in April 2015.
•
Devolved powers to the Mayor of London over
planning and skills.
•
£1m to allow the LLC to create a comprehensive
database of public sector and brownfield land.
Energy
•
Introduction of a new Investment Allowance to
stimulate investment at all stages of the North Sea
industry life cycle.
•
Reduction in the Supplementary Charge from
30 per cent to 20 per cent and a reduction in the
Petroleum Revenue Tax from 50 per cent to 35 per
cent.
•
£20m of funding for a programme of seismic
surveys to boost offshore exploration in underexplored areas of the UK Continental Shelf.
An additional £16.8m of spending over the next
four years for flood defences.
Infrastructure/Housing
•
government is making funding available in 2015-16
to help progress the deal.
Open negotiations with local partners and the
Scottish and Welsh Governments for City Deals for
Cardiff, Aberdeen and Inverness. In Inverness, the
5
Budget Statement: Key facts
•
New proposals for legislation in the next Parliament
for competitive tendering of onshore electricity
transmission infrastructure.
•
The government has decided to enter in to the first
phase of negotiations on a Contract for Difference
for Swansea Bay Tidal Lagoon.
Innovation/R&D
•
Commit £400m to 2020-21 for the next round of
funding for cutting-edge scientific infrastructure.
•
Implement a package of measures to improve
the accessibility of R&D tax credits for smaller
businesses, including producing new guidance
aimed at smaller firms and setting out a roadmap
for further improvements over the next 2 years.
•
Health: The government is also committing £14m
over two years to invest in an Advanced Wellbeing
Research Centre (AWRC) in Sheffield, which will be
a world-leading research centre to design, develop
and implement physical activity interventions and
products to improve wellbeing.
•
Health: The government is now committing £20m
to Health North, to enable better care for patients,
and to promote innovation through analysis of data
on the effectiveness of different drugs, treatments
and health pathways.
•
Finance: The government will support the
development of innovative businesses across
the north through an £11m investment in tech
incubators in Manchester, Leeds and Sheffield. This
includes funding to develop an additional fintech
incubator in Leeds.
•
Energy: The government will invest an initial
£60m in a proposal by six universities across the
Midlands for a new Energy Research Accelerator,
a major project to develop the energy technologies
of the future. As part of the government’s creation
of science catapult centres across the country, it
is supporting a new Energy Systems Catapult in
Birmingham.
•
Energy: The government will extend the Oxford
Science Vale Enterprise Zone for advanced energy,
space and satellite science, and will extend
Discovery Park Enterprise Zone, subject to a
business case, allowing it to expand its operations
in life sciences and environmental technologies.
•
Motor: £100m for Research and Development into
Intelligent Mobility and driverless cars.
•
Tech: £40m for demonstrator programmes,
business incubator space and a research hub
to develop applications for Internet of Things
technologies in healthcare and social care, and
Smart Cities.
Higher education/academia
•
Remove the arbitrary cap on university student
numbers for 2015-16.
•
Assess options to strengthen partnerships and
cofounding between government, industry and
charities.
•
Introduce income-contingent loans of up to
£25,000 to support PhDs and research-based
masters degrees.
•
Review the availability of capital gains tax (CGT)
entrepreneurs’ relief on disposals by academics of
shares in such companies.
6
Budget Statement: Financial sector overview
In some senses, this Budget marks a return to some
form of normality for the financial sector, with no major
overhaul of regulation and no product lines getting
walloped by an unexpected change in policy. That
doesn’t mean it was a non-event for the sector – in fact
some of the most eye-catching initiatives announced
related directly to products and services the sector
provides. However, notwithstanding another tax hit for
the banks, there was a sense that for the first time this
Parliament the sector is being considered as part of
the solution rather than part of the problem.
A savings culture
Possibly the most eye-catching initiatives in the
Budget Statement were those aimed at building what
the Chancellor called a ‘savings culture’.
The decision to allow 5 million pensioners access
to their annuities without incurring a punitive 55 per
cent tax rate was already known but was reiterated
today. Instead savers will pay the marginal rate. Steps
are also being taken to create a secondary market
in annuities, a consultation for which was launched
today.
There were three further policies which will cheer
savers.
First, a major new flexibility in the ISA regime allowing
savers to withdraw and replace money in the same tax
year without losing the tax advantage – a change that
makes ISAs an even more attractive option for savers.
Second, the Chancellor announced a new ‘Help To
Buy ISA’, where the government will provide 25 per
cent matching for first time buyers saving for a deposit
up to a maximum government contribution of £3,000.
The Chancellor said that this will be ready for the
autumn.
Finally, the introduction of a Personal Savings
Allowance will mean income on the first £1000 of
savings will be tax free. For higher rate payers, this
allowance will be reduced to £500. The Chancellor
said that this will take 95 per cent of savers out of
paying tax on their savings.
However, what one hand giveth, the other taketh
away. Following the shock announcement of pension
freedoms in last year’s budget and the big increase
in ISA limits, there was some speculation that the
Chancellor might abolish the costly higher rate relief
on pension contributions as well. That was unlikely
and, having resisted doing it in the darkest days of
the recession, it would be odd to upset a core Tory
constituency just before an election. And so it proved.
Rather, the Chancellor has reduced the lifetime
contribution allowance for pensions contributions
reduced from £1.25 million to £1 million next year. This
will be indexed from 2018.
Financial innovation and competition
The Government published Banking for the 21st
Century, setting out its plans for a modern, competitive
banking sector that encourages new entrant banks
and non-traditional finance players such as peer-topeer lenders. Announcements include:
•
•
•
•
•
•
Digital currencies: Extending anti money laundering
rules to digital currency exchanges and investing
£10 million in research on the are
Current account switching: The government’s
midata tool will go live on 26 March alongside a
comparison tool from Gocompare
Mortgages: CML and Which? have published an
interim report on transparency and standardisation
of lending fees ahead of final conclusions in July
British Business Bank: Will shortly be inviting
expressions of interest from Credit Reference
Agencies and finance platforms that wish to be
designated by HM Treasury to receive SME data
from banks
Payments: Confirmation that the new Payment
Systems Regulator will become fully operational
from 1 April
Financial Regulation: The Financial Conduct
Authority’s ‘Project Innovate’ will work with
HMT and the Prudential Regulation Authority to
investigate the feasibility of developing a regulatory
‘sandbox’ for financial services innovators. The
FCA, working with the PRA, will also identify ways
to support the adoption of new technologies to
facilitate the delivery of regulatory requirements –
so-called ‘RegTech’
7
Budget Statement sector overview: Financial sector
The Government has made much of its desire to make
the UK a hub for financial technology. One area which
might seem prosaic but could prove to be significant
is a commitment to deliver an open Application
Programming Interface standard in UK banking.
An API allows organisations to share computerised
data in a standardised format. This would allow
FinTech companies to interface directly with banks,
opening the possibility for new, more convenient
financial services. In the long-term this could have a
very substantial impact on the UK financial services
landscape.
Public finances
This was not a cheap Budget for the banking sector.
We saw the time-honoured increase in the Bank
Levy, this time to 0.21% - which will cost the banks a
further £900m a year. The Chancellor also announced
that compensation paid to customers that have
been missold products such as PPI will no longer be
deductible from corporation tax bills. This will raise a
further £5.3bn across the forecast at the cost of bank
profits.
The Government’s exit from its investment in Lloyds
continues, with a further £9bn of disposals planned
this year. It also announced the sale of £13bn
mortgage assets the government acquired as part of
the failure of Bradford & Bingley and Northern Rock.
This will be used to pay down debt.
John Rowland
Executive Director
Cicero Group
8
Budget Statement sector overview: Energy
Although light on industry-specific measures, this
Budget spells good news for a number of areas of the
energy and infrastructure sectors.
Despite being trailed as the flagship energy
announcement, the Swansea Bay tidal lagoon project
received barely a passing mention by the Chancellor.
However, the confirmation that the Government is
entering negotiations on a Contract for Difference (CfD)
is not industrially or politically insignificant.
The scheme promises to underpin domestic renewable
technology innovation and magnify the UK’s worldleading reputation in the industry, while representing
a win for the Coalition’s minority party given the
scheme’s long term support from the Lib Dem Energy
Secretary Ed Davey.
This minor ‘green overture’ from the Chancellor,
however, paled in comparison to the Budget’s
measures in support of North Sea operators.
Answering industry calls for a more substantial
reduction in the Supplementary Charge than the
2 per cent announced in the Autumn Statement,
the Chancellor delivered the expected 10 per cent
reduction to 20 per cent and a reduction in the
Petroleum Revenue Tax from 50 per cent to 30 per
cent.
These tax cuts were paired with the introduction of a
new Investment Allowance and a £20m programme of
seismic surveys aimed at securing continued industry
commitments in the face of decreasing investment
appetite in the Continental Shelf.
These commitments to the North Sea are additionally
politically astute. Although they open the Government
up to criticism from strong proponents of the
decarbonisation agenda, the continued economic
vitality of Scotland’s North East is intrinsically linked to
staving off the ever-growing confidence of the Scottish
nationalists.
This Budget extends beyond North Sea operators and
the burgeoning tidal lagoon industry though. A new
exemption to the Carbon Price Floor for combined
heat and power plants was introduced, which is
expected to benefit 18 plants across the Midlands,
while energy intensive manufacturers were gifted
an acceleration of the delivery – to 2015-16 – of
compensation for small-scale feed in tariffs (FITs).
Energy technology and innovation was boosted
through a £60m investment in a new Energy Research
Accelerator, the establishment of a new Energy
Systems Catapult in Birmingham and an alteration
of the designation of the Leeds Enterprise Zone to
focus on energy and waste technology businesses.
Additionally Oxford science Vale Enterprise Zone will
be extended to include energy science.
Consumers, also known as voters, were neither
ignored nor forgotten.
The introduction of competitive tendering of onshore
electricity transmission infrastructure now facing
the onshore wind farm industry is wrapped in the
language of delivering consumer savings; while
the announcement to popularly scrap September’s
anticipated fuel duty rise was delivered with a
dedicated election slogan: “Ten pounds off a tank with
the Tories!”
Although energy policy has not formed the centre
piece of this Budget, the Government has both eyes
on May 7 now – and uncertainty for the energy sector
may yet lie ahead.
Sebastian Damberg-Ott
Energy Account Executive
Cicero Group
The Chancellor was not subtle in highlighting this
calculation, boldly claiming that an independent
Scotland could “never have been able to afford such a
package of support.”
9
Budget Statement sector overview: Healthcare
George Osborne’s last budget before the general
election, which looms ominously over Westminster,
contained little on the NHS, other than to remind us
of the efficiencies and savings needed. However,
there was a strong focus on boosting science and
innovation in the regions and globally, and the theme
of advanced manufacturing was touched upon
throughout the body of the budget.
Key healthcare announcements
Once again the biggest funding announcement, £1.25
billion for children’s mental health services, was set
out before Osborne’s speech. Ever keen to link his
party to investments and innovations in mental health,
Nick Clegg used his party’s spring conference to preannounce this extra funding.
•
Politically this is seen as a win for the Liberal
Democrats, or at least it will be portrayed as such over
the next 50 days. Notably, a funding increase of over a
billion pounds was not included in Osborne’s speech,
but appears in the accompanying ‘red book’.
Perhaps the more note worthy announcements came
in the form of science and innovation commitments.
Although small in monetary terms, their cumulative
impact is clear: the Conservatives are serious about
investing in science and technology to boost the
economy, as well as the nation’s health.
This included £14 million for the Advanced Wellbeing
Research Centre (AWRC) in Sheffield, to research
physical activity interventions and products to
improve wellbeing, and £20 million to Health North to
promote innovation through analysis of data on the
effectiveness of different drugs, treatments and health
pathways. A further proposal to help PhD students
and to double funding to UK Trade and Investment’s
activities in China (including a focus on healthcare
and life sciences) shows a commitment across the
value chain; from training researchers, to developing
research and to ultimately commercialising products.
•
•
•
•
•
•
•
•
•
•
Continuation of the NHS Procurement and
Efficiency Board’s work to deliver efficiency
savings, including in procurement, pharmacy and
property.
In the final year of this decade, 2019-20, public
spending will grow in line with the growth of the
economy.
£1m to help buy defibrillators for public places,
including schools, and support training in their use
to save more lives.
£14m over two years to invest in an Advanced
Wellbeing Research Centre (AWRC) in Sheffield,
which will be a world-leading research centre to
design, develop and implement physical activity
interventions and products to improve wellbeing.
£20m to Health North, to enable better care for
patients, and to promote innovation through
analysis of data on the effectiveness of different
drugs, treatments and health pathways.
Income-contingent loans of up to £25,000 to
support PhDs and research-based masters
degrees.
A near doubling of funding for UK Trade and
Investment (UKTI) activities in China, including a
focus on the advanced manufacturing, transport,
financial services, healthcare and life sciences
sectors.
£1.25bn of new funding for children’s mental health
services, spread over five years.
An additional £8.4m over the next 5 years to allow
the NHS across England to enhance current mental
health and support services to the most vulnerable
veterans.
New helicopters for the Essex & Herts, East
Anglian, Welsh and Scottish air ambulances.
Refund VAT to ‘blood bike charities’.
Fiona Cohen
Head of Healthcare
Cicero Group
The focus on research gives the announcements a
harder, economic edge. Osborne is clear to his Lib
Dem counterparts: you can take mental health, but I’m
having science and innovation.
10
Budget Statement: An international perspective
Budget Day is a major political event in any jurisdiction but
the drama and pre-budget build-up in the UK is unmatched
anywhere else in the world. There were certainly no news
helicopters hovering over Singapore’s Parliament whilst
Tharman Shanmugaratnam delivered the city-state’s annual
Budget a couple of weeks ago.
At Cicero’s Asia Pacific office we have been closely following
four Budgets over the few weeks – Hong Kong, Singapore,
India and China have all recently released their annual fiscal
and spending projections. It’s the differences in the scale
of total government spending that marks some of these
budgets apart. India’s Railway Minister Suresh Prabhu
recently announced an additional $137bn of investment in
his country’s railway network. For real comparisons though
we need to look at government spending as a % of GDP.
This is arguably the main issue of the forthcoming UK
General Election. The Chancellor grandly announced ‘we will
end this Parliament with Britain’s national debt share falling’.
There is a prevailing view in Asia that Asian countries have
been more prudent with their finances, and that the wealth
of Western nations including Britain has been built on the
crumbling foundations of credit. But a closer look at finances
in Asia reveals a rather mixed picture.
Country
Government debt %
GDP (World Bank,
2012)
Tax
revenue %
GDP (World
Bank, 2012)
Gross
savings %
GDP (World
Bank, 2012)
2015 GDP
growth
predictions
(IMF, 2014)
UK
97
25
13
2.7
China
23*
11 (2011)
51
6.8
Hong Kong
SAR
32*
14 (2010)**
27
3.3
India
50
11
30
6.3
Japan
196
10
22
0.6
Korea,
Republic of
34*
14 (2011)
35
4.0
Singapore
111
14
48
3.0
*Gross Government Debt % GDP (IMF, 2012)
** Tax Revenue & GDP (IMF, 2010)
Whilst Britain’s finances are more precarious than
government finances in Asia, debt levels in Asia are rising
and many are starting to predict this this region is heading for
trouble. China concluded its National People’s Congress last
weekend with a warning that the world should get used to a
new normal of lower Chinese growth. Debt, particularly at the
local government level, has exploded over the last five years
as the government sought to sustain economic growth after
Western consumption levels fell. This is unsustainable and
the Chinese government is starting to cut back. Singapore
has today just downgraded its economic growth forecast.
Again, government investment (particularly in infrastructure)
has been propping up the economic growth of late.
Two announcements that will have relevance for Britain’s
relationship with Asia are increased resources for UKTI
/ China-British Business Council and the government’s
decision to be a founding member of the Asian Infrastructure
Investment Bank. Set up by China, this new multilateral
development bank has both financial and geopolitical
significance.
Concern about US influence over the World Bank, and
US and Japanese influence over the Asian Development
Bank based in Manila, has prompted China to set up a rival
institution which it hopes will become a channel of Chinese
influence in the region. Whilst the creation of an additional
source of development funding is welcome – estimates
suggest that Asia needs an additional $50bn of funding for
infrastructure each year to meet the region’s connectivity
needs, the decision by the UK government to join is not
without controversy. Australia has been debating whether
to join and our biggest ally, the US, is suspicious of China’s
intentions.
Many say that in the 21st Century the UK’s place in the world
is diminished to all but irrelevance. The headlines suggest
not. The UK Budget is still of interest worldwide – a quick
sweep of the headlines in Asia suggests that the UK Budget
is still a newsworthy event overseas.
The media in Asia tend to be less antagonistic than their UK
peers when it comes to reporting their own national Budgets.
Recent headlines in Singapore included ‘Innovative jubilee
budget makes Singapore future’ and ‘Government shapes
the Budget in the interest of Singapore’s future’. Even the
Speaker of Singapore’s Parliament Halimah Yacob got
in on the act by summing up the Budget debate with the
statement that ‘there is a general consensus that this budget
has indeed lived up to its name of being a jubilee budget
to prepare us for the future and to build a fair and inclusive
society’.
We will have to wait a few days to hear Lindsay Hoyle’s
remarks (although one expects he will appreciate the political
neutrality required of his office). Whilst the Chancellor won’t
be holding his breath he can take comfort in how the Straits
Times is covering the UK Budget. Singapore’s main quality
daily is currently leading with the headline ‘Britain upgrades
election year growth forecast’.
Andrew Naylor
Executive Director
Cicero Group
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Budget Statement - Cicero Elections analysis
This was everything a political speech should be: A
well-balanced blend of tough talk and electoral treats.
But the challenge now comes as the Opposition and
press get to counter.
As the ‘no gimmicks’ Budget took pennies off pints
and told us the Tories had “put a tenner in the tank”,
the Chancellor skimmed around two key issues: where
the necessary cuts will fall in the next parliament, and
what more the Tories would do for the NHS.
The Conservatives’ task now is to sell their wares.
Positive jobs and growth statistics have failed to really
lift Tory polling figures over the last two years, so they
will be looking to these policies to cut-through the
public conscience.
These policies fit within the Conservatives’ overarching
narrative of giving people greater control of their
lives: whether it’s letting people keep more of their
paycheque, or empower how they save and invest.
The Tories are hoping that people link the party with
this empowerment, and trust them with their vote,
as the Conservatives have trusted them with their
policies.
However, this was a coalition budget, and two parties
had skin in the game when the Chancellor stood up,
and the Liberal Democrats have their own plan for
leveraging this Budget.
Tomorrow, in an unprecedented move, Danny
Alexander will set out an ‘alternative’ Liberal Democrat
Budget statement, clearly emphasising their different
priorities and outlining areas where the Lib Dems
would either go further or put a brake on Tory plans.
But today’s statement by the Chancellor already had
significant Liberal fingerprints on it – so much so that
the DPM even felt able to turn up for the statement.
Accelerating the personal tax allowance increase,
increasing spending on mental health services and
tougher action on tax evasion and avoidance are all
policies with a distinctly yellow tint. On the latter, the
confirmation of tough penalties for firms who facilitate
and promote aggressive tax avoidance is a bonus for
the Lib Dems since it was first mooted by the Chief
Secretary some weeks back, who said it would appear
either in the Budget or the Lib Dem manifesto. Many
assumed it would be relegated to the latter.
Despite their ‘wins’ in this Budget, the biggest
challenge for the Lib Dems will be ensuring they get
the credit where it’s due in the eyes of the public. There
has long been frustration around the personal tax
allowance increases, a policy George Osborne now
covets as his own. Tomorrow’s alternative Lib Dem
Budget statement is an initiative they may wish they’d
enacted five years ago – had they done so, the clear
yellow water may have been more visible all along, and
their Election prospects perhaps not quite so gloomy.
The Cicero Elections Team
If Osborne’s political strategy was to use his final
budget of this Parliament to blunt Labour’s election
campaign attack lines, it’s going to fall short. The
Chancellor had the Labour strategy in his sights, but
his firing seemed to be going off at half-cock.
significant NHS pledge in the budget.
The debate on living standards comes down to an
argument over which measures to use. That will
sail above the heads of most voters, and confirm
suspicions that politicians just spin the figures.
The Chancellor opted to double down on his existing
strong lines: the macro economy - recovery, jobs,
deficit reduction, low inflation, growth. Labour has
retained all its lines: the micro economy – low pay,
job insecurity, living standards, together with fairness,
looming cuts and the future of the NHS.
Critically for Ed Miliband, the Conservative’s hefty
spending cuts planned for 2016 and 2017 remain in
place (even if things ease off thereafter). Polling shows
the public to be anxious about further deep cuts.
Labour’s campaign opportunity here remains in play.
Perhaps most surprisingly of all, Labour’s trump
card – the NHS – retains its full value. The Chancellor
strangely passed on the opportunity to make a
Ed Miliband saw his opportunity, and immediately
linked the last two, launching his NHS ‘secret plan’
charge against the Conservatives.
We have 50 days more of the arguments already in
play.
James Plaskitt
Senior Counsel
Cicero Group
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Yatterbox is a social media monitoring service that identifies and tracks key influencers and
commentators who impact your organisation and its reputation.
What the 4,000 policy influencers in Yatterbox said about the Budget
Issue
Top positive tweets
Taxation
Lorely Burt MP (Liberal Democrat) @LorelyBurt
Simplifying tax and cracking down on the dodgers - big @LibDems win for
#Budget2015
Savings
Mark Wallace (ConservativeHome) @wallaceme
More freedoms for savers - some compensation for the pain of low interest rates
#Budget2015
Energy
Cheryl Gillan MP (Conservative) @CherylGillanMP
“@hmtreasury: We are opening negotiations on the Swansea Bay Tidal Lagoon
#Budget15 ” better option than Severn barrage
Issue
Top negative tweets
Help to Buy
ISAs
Andrew Neil (BBC) @afneil
Was the rabbit Help to Buy ISAs -- quite a small rabbit ...
NHS
Alison Seabeck MP (Labour) @alisonseabeck
Sharp work by @Ed_Miliband highlighting deep future cuts Chancellor omitted to
mention. No mention of NHS in budget speech
Energy
Caroline Lucas MP (Green Party) @CarolineLucas
Eye-watering tax breaks for oil & gas companies. Climate vandalism from Chancellor
just weeks after cross-party #climate pledge #Budget2015
Total #Budget2015 mentions
0
5,000
Top buzzwords
10,000
130,140
All of Twitter
Journalists
5853
MPs
Long term economic
plan
70
Northern Powerhouse
40
Britain walking tall
32
880
Devolved institutions
75
Peers
31
Most policymakers and journalists
use social media. To get alerted
when they mention your issues sign
up for a free trial at
www.yatterbox.com
13
Cicero Group is an integrated communications agency specialising in corporate PR, Government relations,
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understand more than any other agency the complex interaction between media, politics and policy. We have offices
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Communications
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Cicero has strong media and PR
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has grown from one client in the UK
to more than 200 in 22 countries
around the world today. Our public
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Verbal consultant reports and under-the-radar
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Government, Parliament, Whitehall, regulators, thinktanks, and industry sources.
Digital
For a communications strategy to be
successful in today’s world of 24-hour
media, integration with digital media
is essential, particularly through
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has worked with leading financial services organisations,
including GE and Invesco Perpetual, to deliver digital media
monitoring, consultancy and execution to ensure effective
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Cicero has managed thought
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In overseeing every aspect of the
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In a world where design is
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communication needs to be clear,
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we see the bigger picture and can integrate design
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strategies in new and engaging ways, while managing
your reputation through clear and consistent design.
Contact us
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[email protected]
+(0)20 7297 5966
+(0)7554 661500
@CiceroGlobal
14
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