Osborne's trickle of cash means North faces long wait for flood defences

GEORGE OSBORNE found cash for better flood defences for Yorkshire yesterday as his Budget revealed gaping holes in spending plans drawn up just four months earlier.
Chancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement.  Picture by Simon HulmeChancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement.  Picture by Simon Hulme
Chancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement. Picture by Simon Hulme

The Chancellor’s promise of a share of £150m raised through a rise in the tax on insurance premiums was given a cautious welcome in the region.

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However, the money represents only a fraction of the cost of all the improvements needed to avoid a repeat of the Boxing Day floods and it is likely to be several years before construction begins.

Chancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement.  Picture by Simon HulmeChancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement.  Picture by Simon Hulme
Chancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement. Picture by Simon Hulme

Treasury sources suggested further funding commitments could follow as detailed flood defence schemes are developed.

Funding to drive improvement in Yorkshire schools and investment in transport upgrades for the North were among a series of measures the Chancellor said were making Britain “fit for the future”.

But Mr Osborne could not disguise the growing pressure on the country’s finances as he confirmed £3.5bn of extra savings, over and above those set out in December, will have to be found to keep his plan to eradicate the deficit in public spending by 2020 on track.

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Forecasts for economic growth were revised down by the Office for Budget Responsibility (OBR) and the Chancellor is on track to break his own rule that Government debt should fall as a share of the economy every year.

Cartoon of George Osborne by Graeme BandeiraCartoon of George Osborne by Graeme Bandeira
Cartoon of George Osborne by Graeme Bandeira

Mr Osborne told MPs the country faced a “cocktail of risks” made up of slower than expected world growth and predicted improvements in productivity failing to materialise.

Admitting “storm clouds are gathering”, the Chancellor insisted that decisions he had taken since his first Budget in 2010 had ensured that the country was better prepared for turbulent times ahead.

He claimed his plans for further cuts, in addition to cuts to disability benefits announced earlier in the week, showed he was ready to “act now, so we don’t pay later”.

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However, the respected Institute for Fiscal Studies suggested he was downplaying the risks to his spending plans and OBR figures showed borrowing was set to increase “really quite significantly”.

Chancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement.  Picture by Simon HulmeChancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement.  Picture by Simon Hulme
Chancellor George Osborne speaks to pupils at St Benedict's Catholic Primary School in Garforth, Leeds, on the day after he delivered his Budget Statement. Picture by Simon Hulme

Labour leader Jeremy Corbyn described the Budget as “a culmination of six years of failure” and claimed it had “unfairness at its core” as cuts to welfare payments were accompanied by rises in income tax allowances.

Mr Corybn also targeted Mr Osborne’s claim to be building a “Northern Powerhouse” to rebalance the economy away from the South-East, telling MPs “there has been systematic under-investment in the North”.

MAIN POINTS AT A GLANCE...

• The British economy is growing faster than in any other major advanced country in the world and was “on course for a budget surplus”, the Chancellor said

Cartoon of George Osborne by Graeme BandeiraCartoon of George Osborne by Graeme Bandeira
Cartoon of George Osborne by Graeme Bandeira
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• An additional £3.5 billion of spending cuts will be made by 2019/20

• Corporation tax will be cut to 17% by 2020

• A new sugar tax will be imposed on the drinks industry, which will come into force in two years time

• Tolls on the Severn Crossings between England and Wales are to be halved by 2018

• There were moves towards greater devolution, with new powers over the criminal justice system given to Greater Manchester and the creation of more elected mayors, while the Greater London Authority is to retain all business rates by April 2017

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• All primary and secondary schools in England will be an academy, or be in the process of becoming an academy, by 2020

• The go-ahead was given to HS3 between Manchester and Leeds, the creation of a new four lane M62 motorway between Manchester and Sheffield and an upgrade of the A66 and A69, and Crossrail 2 rail link for Greater London will be commissioned

• An increase of 0.5% in Insurance Premium Tax to raise £700m for flood defences

• Fuel duty is frozen for the sixth year in a row, while duty on beer, cider, whisky and other spirits will also be frozen

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• In a boost for savers, from April 2017, the Isa limit will increase to £20,000 a year for everyone, and a new lifetime Isa will be created for under-40s with the Government to boost savings by 25%

• The tax-free personal allowance is being raised to £11,500 with the Chancellor declaring 31 million people will be paying less tax and 1.3 million of the lowest paid taken out of tax altogether

• Capital Gains Tax to be cut from 28% to 20%, with the rate paid by basic rate taxpayers down from 18% to 10%.