The Budget 2015: An Edelman Analysis

EDELMAN BUDGET 2015 BRIEFING OVERVIEW After a week of press briefings and speculation, this was a carefully constructed Budget appealing to the country, the electorate and the Conservative core vote.

After announcing this weekend that this would be a no gimmicks Budget, the Chancellor built on much of the positive work he started last year. Having learnt the lessons from 2012, which was a political disaster and saw the Chancellor’s personal ratings take a nose dive, this was a competent and solid display.

With strong economic data to support him, the Chancellor continued to drive a clear wedge between economic competence presented by the blue team and that of incompetence presented by the red one. Supported by strong economic data, with the economy expected to grow by 2.5% this year and 2.3% in 2016, 2017 and 2018, he confidently announced further infrastructure investment and greater devolution through the New City Deal.

This national message was supported with carefully constructed announcements for voters. The Chancellor built on the highly successful announcements of 2014 by extending annuity and ISA reform. In addition, a claim to pull “ten pound off a tank with the Tories,” reductions in beer, cider and scotch whisky, and increases in the personal allowance threshold, set the tone for what he hopes will be an election winning Budget.

This was a confident, solid and pragmatic Chancellor. The choice he presented to the country today is simple. Do we want “to return to the chaos of the past or do we choose the future?”

With speculation rife that the Prime Minister may go to the Palace sometime next week, the battle lines have been drawn. Let the final stage of this long battle commence!

Gurpreet Brar, Managing Director

BUDGET 2015 AT A GLANCE

Pensions Lifetime pension relief allowance is to be cut from £1.25m to £1m, with this projected to save around £600m.

National Insurance

Class 2 national insurance contributions for the self-employed are to be abolished in the next parliament.

Tax Avoidance

£3.1bn is to be raised from new measures intended to tackle tax avoidance and evasion.

Personal Savings

From April next year the first £1,000 of interest earned on all of an individual’s savings will be completely tax-free.

Tax Free Allowance

The personal tax free allowance is to go up to £10,800 in 2016 and then £11,000 in 2017, with the potential to deliver a tax cut for 27 million people.

Alcohol Duty

Business Tax

Beer duty is to be cut by 1p on a pint. Cider duty is to be cut by 2% and Scotch whisky duty by 2%.

Corporation tax is to be cut to 20% from April, meanwhile the current system of business rates will be reformed with an extensive review.

Devolution Greater Manchester is to be permitted to retain 100% of the extra revenue from increased business rates as it grows. A similar deal will also be offered to Cambridge, with other areas to be granted the same powers in the future.

Tax Returns End-of-year tax returns are to be scrapped in favour of “real-time” online accounts by 2020, with the aim of ending the annual rush to file tax returns.

Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK

NHS

EDELMAN BUDGET 2015 BRIEFING

£2bn of extra funding for the NHS every year until 2020, with a further £1.2bn in funding for GP Services over the next four years.

PARTY PERSPECTIVES BENEDICT MCALEENAN FORMER CONSERVATIVE CAMPAIGN MANAGER

ROB NEWMAN FORMER LABOUR SPECIAL ADVISER

Not a lot of people know this, but the original ‘Exchequer’ was a medieval accountant’s table, resembling a big chess board. So it feels apt that Osborne is the Tories’ idea of a chess grandmaster, each Budget rich in political strategy. Yet today was less a starting gun, more a parting shot. Much banterful laughter, directed at Danny Alexander, followed the “£10 off a tank with the Tories” line on fuel duty, remembering this is still a Coalition Treasury, not just a Tory one. Reforming inheritance tax, which spooked Gordon Brown so effectively in 2007, sums up Osborne’s intent. It attracts older, southern voters whose defection to UKIP could cost Tories dearly. But it also underlines his restraint – the policy is subject to post-election consultation, a Lib-Dem compromise.

It’s hard to resist the feeling that this Budget continued Coalition themes and a bolder break is yet to come.

STAKEHOLDER REACTION Faisal Islam

Labour hopes that at the election, people will ask themselves the classic question: “Are you better off now than you were five years ago?” The party claims that the answer is “no”, and that this is the first Parliament in 100 years where many are worse off at the end than they were at the beginning. When you couple this with what Labour says are the Tories’ broken promises on the deficit (which the Chancellor said would be gone by now) and the NHS (which continues to face extreme pressure), you have Ed Miliband’s election pitch: that while the Conservatives focus on making a few at the top of society better off, Labour believes that Britain succeeds when working people succeed. Labour wants to make this Budget and election a question about what kind of society and economy we all want to live and work in.

THE HEADLINES PREDICTED GROWTH

Sky News Political Editor

“Naked politics as Osborne announces review of “deeds of variation”, as used by opposition leader’s mother...”

2.6% 2.5% 2.3% 2.3% 2.3% in 2014

Isabel Hardman

Assistant Editor of The Spectator Magazine

“Britain the comeback country. Catchy. Cheesy to #budget2015”

in 2015

in 2016

in 2018

NATIONAL DEBT FORECAST

80.4% 80.2% 79.8% 77.8% 74.8%

Fraser Nelson

Editor of The Spectator Magazine

“Yorkshire created more jobs than France but so did corner shop around the corner from me. It took on one person. In France, employment fell.”

James Ball

Special Projects Editor of the Guardian

“Did we just spend £1m of our money so George Osborne could make an Agincourt joke in the budget?”

in 2014/15

in 2015/16

in 2016/17

Evan Davis

BBC Newsnight Presenter

“Households don’t judge whether their living standards are up or down on the basis of the figures the Chancellor quotes. #budget2015” Gaby Hinsliff

“Middle England, consider yourself seriously lovebombed #budget”

in 2017/18

in 2018/19

UNEMPLOYMENT

Down to

5.3%

INFLATION

Guardian Columnist

in 2017

0.2% in 2015

FOR MORE INFORMATION, PLEASE CONTACT: Gurpreet Brar

in 2015

BUDGET SURPLUS

£7bn

Forecast for 2019/2020 Down from earlier forecast of £23bn

0203 047 2466 gurpreet.brar@edelman.com

Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK