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Series: Politics live with Andrew Sparrow

Previous | Next | Index Budget 2012 reaction and George Osborne interviews - Thursday 22 March

• George Osborne interviews - summary
• Lunchtime summary
• Afternoon summary George Osborne and his budget box. Photograph: Craig Shepheard/Demotix/Corbis

8.00am: There's a Westminster axiom which says that the budgets that go down badly on the day turn out, in the long run, to be the most successful ones. If that is true, then George Osborne must be brilliant. Because yesterday's budget is taking a pasting.

I'll be looking at the newspaper covering in more detail later, but here are two articles from the Guardian.

Here's Larry Elliott.

Even after the serial leaking, this was still a shocking budget. Shocking in the way it skated over the weakness of the British economy. Shocking in the way it ladled out still more pain to those dependent on welfare benefits. Shocking in the way it cut the tax burden for millionaires. Shocking in the way it sought to wriggle away from the abject failure of the government's strategy over the past two years.

And here's Jonathan Freedland.

Stinging the elderly is the kind of measure most politicians would avoid, if only because pensioners tend to vote. As pure politics, it was hard to fathom. One Labour veteran confessed himself baffled Osborne had held this back and leaked everything else: "We always tried to hold back the good news." But the move became harder to explain when set against the big one, the slashing of the 50p top rate. Aware that such a generous tax break for the highest-earners could render this the millionaires' budget, the Liberal Democrats had pre-spun it as the very opposite, a Robin Hood budget to raid fat cats and benefit church mice. Now that attempt looks forlorn.

I'll be covering the reaction to the budget throughout the day. George Osborne has already been giving some interviews and he will be on the Today programme at 8.10am. I'll be covering that live. And at 1pm we'll get the Institute for Fiscal Studies post-budget briefing.

8.10am: Evan Davis is interviewing Osborne. He is starting now.

8.10am: Evan Davis starts with a question from Ed Miliband's speech.

Q: Are you personally going to be better off?

Osborne says cabinet ministers earn less than £150,000. So he won't gain from the abolition of the 50p rate.

Q: But you have got other income.

Osborne says he is not a big winner. Then he says he is not a winner from the budget.

Q: But you're a 50p rate payer, aren't you?

I'm not, says Osborne.

Q: Did pensioners get off lightly during the period of austerity? Did that influence you?

Osborne says that did not influence his thinking.

He was rapidly increasing the personal allowance. It was going to over-take the age-related allowances. By freezing them, he will be able to subsume them in the new, big personal allowance. It is a simplification of the tax system, and it saves money.

Q: It's the biggest tax rise in the budget.

Obsorne says he acknowledged in his speech he would save money.

Pensioners will get a big pension increase, he says.

Q: But that is to compensate them for inflation.

Osborne says the government introduced the "triple lock" pension guarantee.

8.14am: Davis says he is surprised that Osborne is not trying to justify the increase on the grounds of inter-generational justice. Many people have written about this, including David Willetts in his book The Pinch.

Osborne says you do not make the system fairer by pulling one generation down.

He wants to create a country where young people have a future.

Q: But pensioners might have understood it if you had made a fairness case for pensioners paying more.

Osborne says he is freezing the allowance, not cutting it. The age-related allowance is complicated, he says.

As a result of the government's net changes, pensioners are better off, he says.

8.17am: Davis turns to the distributional impact of the budget.

Q: How do you see it?

Osborne says he has tried to spread the burden. The biggest burden is falling on the top 1%, and that does not always show up in the charts.

Q: The top decile are paying the most. But after that it's the bottom third.

Osborne says that belies the case that it is the people in the middle who are being squeezed most.

He says the government is cutting welfare payments. People getting £80,000 in housing benefit will not carry on getting those payments.

Davis points out that there are very few people in that category.

Q: You could say Osbornism is a belief that there is not much you can do on this. If you give too much to the poor, you give them an incentive not to find work. And if you take too much from the rich, they will avoid it.

Osborne says the gap between the rich and the poor grew and grew under Labour. He thinks income equality will improve by giving people the chance to get a good job. Education reform is important. Although we don't talk about it much, it is probably the most important thing the government can do to improve the economy.

Q: Is there no more you can do to raise money from the top 1%?

Osborne says he does not accept that. There is always more you can do to get money by closing reliefs and loopholes. Some tax reliefs are unlimited. They are being capped.

The 50p rate was a "con". It was a press release. It did not actually raise money. Robert Chote, director of the Office for Budget Responsibility, backed what the government was doing.

Q: Chote said the picture was uncertain.

Osborne says Chote said it was reasonable to assume that the 50p rate only raised £100m.

8.23am: Davis asks about child poverty.

Q: Are you still committed to the child poverty target?

It is a law, Osborne says. But Labour was off track. The government is looking at how to measure child poverty.

Q: You are not going to meet it, are you?

Osborne says he would like to eradicate child poverty "in this generation". (Under the Child Poverty Act, child poverty should be eliminated by 2020.)

Q: Are you going to meet it?

Osborne says he does not believe that moving people from one side of a poverty line to another addresses inequalities.

Q: What do you say to people who say you give money to those at the top to give them incentives, and you take money from the poor to give them incentives?

Osborne says he does not accept that.

The government has spent billions trying to improve the incomes of the poorest.

We are creating work incentives at the lower end, in the middle and at the top.

He says today's Glaxo investment announcement is the kind of thing he wants to see.

8.27am: More questions.

Q: Are people who avoid tax morally repugnant?

Osborne says he said in his speech that aggressive tax avoidance was morally repugnant.

Q: Why did you keep back the bad news in the budget (the tax raid on pensioners), not some good news? (It sounds like Davis has been reading Jonathan Freedland. See 8.00am.)

Osborne says negotiating budgets in a coalition is different. You cannot just produce a budget on the day. It was not a "do nothing" budget, he says.

This shows the government is not running out of steam. The government is setting the pace, he says.

8.31am: That was good. I particularly enjoyed Evan Davis's definition of Osbornism - laissez faire taxation, see 8.17am - but, as Nick Robinson pointed out, the most exciting thing was probably Osborne's willingness to say that he doesn't pay the 50p top rate of tax. The fact that he has answered this question now means that every other cabinet minister will come under pressure to answer.

I'll post a full summary of what Osborne said in this interview, and in others this morning, shortly.

8.50am: George Osborne has given at least four interviews this morning. Here are the highlights. I have taken some of the quotes from the Press Assocation and from PoliticsHome.

• Osborne said that he did not pay the 50p top rate of tax and that he would not gain personally from the budget. "I'm not a big winner from this budget," he said. Immediately afterwards, appearing to clarify his position, he added: "I'm not a winner from this budget." My colleague Polly Curtis is looking at this claim on her Reality Check blog.

• He claimed that GlaxoSmithKline was announcing the creation of 1,000 jobs in Britain because of measures in his budget.

GlaxoSmithKline, one of the world's largest companies, has chosen to create 1,000 jobs in Britain. It has done so because the budget has changed its view of Britain.

• He insisted that pensioners would not "lose cash" as a result of the budget. This what he said in one of his TV interviews.

No pensioner loses cash. No one watching this programme is a pensioner who is going to lose any cash as a result. They're not going to lose cash, we're going to increase the benefit. At the same time they'll be better off because the basic state pension is going up in a couple of weeks time by over £5 a week.

• He defended the decision to freeze age-related allowances for pensioners.

By freezing [age-related allowances] rather than increasing them with inflation we can basically subsume them in the big new single personal allowance which will be easy for people to understand, also easy for them to claim.

He denied trying to conceal the implications of this measure when he delivered his budget statement in the Commons. "I did tell parliament that it saved money," he said. And he claimed that this tax cut was attracting so much attention partly because it had not been leaked in advance.

The bit of news that people didn't have in front of them on budget day was the freeze in the pensions allowance, so that's grabbed some of the headlines the next day.

• He dismissed claims that the "squeezed middle" was being hit the hardest. When Evan Davis said on the Today programme that the Treasury's distributional analysis showed that the top 10% and the bottom 30% were losing out more than people in the middle, he accepted this was true. "It belies the classic media narrative that the people who suffer the most are the people in the middle", he said.

• He said education reform would do more than anything else to promote growth.

The best way to improve income equality in Britain is to give more lower income people the chance of a decent job and a decent education. That requires education reform. We don't talk about education reform too often in an economic context but it is probably the most important thing this government is doing to try and improve the British economy.

• He said everyone in work would benefit from the budget. "Everyone watching this programme who is in work is better off as a result of the budget," he said in one TV interview.

• He claimed that overally he was not cutting taxes for the rich.

We are not cutting tax for the rich, they are paying more on their property. We are getting more money from the wealthiest in our country, we're charging them more when they buy a house, we're stopping them having unlimited reliefs on their tax which they've had under the previous government, and we've got rid of a tax rate which everyone around the world looking at it said is costing us jobs and investment.

He also said the 50p top rate of tax was a "tax con" because it raised so little money.

• He played down the prospects of the government abolishing child poverty by 2020 as required by the Child Poverty Act. He criticised the standard measure of child poverty and repeatedly sidestepped questions about whether the government would meet the 2020 target set out in the Act. Instead, the government was adopting a different approach to child poverty, he said.

I don't believe that simply using a welfare system to move people from one side of a median income line to another is genuinely tackling poverty. If that approach had worked, then the previous Labour government, which build up these tax credits, would have succeeded. But actually the gap between the rich and the poor increased under that government. So we have got to try a different approach, which is life opportunities for people who currently don't have life opportunities.

• He said the coalition avoided the temptation to go for a "lowest common denominator" budget.

We've not gone for the lowest common denominator with this budget, which you might have expected with a coalition two years in. We've actually gone for the maximum ambition of a really exciting budget that is going to change Britain's economic fortunes for the better ... We raised the bar. We did not go for a do-nothing budget.

10.07am: John Bercow, the Speaker, has granted Labour an urgent question today about budget leaks. Labour have been tweeting about it.

Urgent Question in the House this morning @ChrisLeslieMP calling for a Budget leak inquiry

— Labour Press Team (@labourpress) March 22, 2012

10.12am: George Osborne told the Today programme this morning that GlaxoSmithKline was creating 1,000 jobs in Britain because of decisions taken in his budget. But the statement from GSK's chief executive, Sir Andrew Witty, makes it clear that the patent box reform was the one that made all the difference.

The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain. Consequently, we can confirm that we will build GSK's first new UK factory for almost 40 years and that we will make other substantial capital investments in our British manufacturing base.

As Labour figures have been pointing out on Twitter this morning, the patent box was first proposed in Alistair Darling's budget in 2009. Photograph: Dominic Lipinski/PA

10.23am: Ed Balls has also been giving interviews this morning. As you would expect, he has been focusing on the tax raid on pensioners. Here's a flavour of his comments. I've taken the quotes from PoliticsHome.

I'm sort of baffled as to why the chancellor should think it's a good idea to single out pensioners ...

Pensioners have worked all their lives, made often great service. When they become pensioners they then rely upon fixed incomes, they often can't work in order to supplement their income if inflation is higher, and we've always, for almost a century, recognised that in having a higher tax allowance for pensioners. George Osborne at a stroke just removes that. How's that fair?

10.38am: Imran Hussain, head of policy at the Child Poverty Action Group, has been in touch to say that he thinks George Osborne was wrong to say Labour's approach to cutting child poverty just involved moving children frome one side of a child poverty line to another. (See 8.50am.) As proof, he cites this passage, from page 10 of this report from the Institute of Fiscal Studies on child poverty (pdf).

Child poverty would have fallen over the period [from 1998 to 2009] if the relative poverty line had been anything from 43% up to 100% of the median household income; and the precise reduction in child poverty over the period would have been very similar for all poverty lines between 55% and 75% of the median (the poverty line that would have maximised the reduction in child poverty between 1998–99 and 2008–09 is in fact 65% of median income). Thus, there is not striking evidence that policymakers have been focusing efforts on a narrow set of children just below their chosen poverty line.

10.52am: Lord Heseltine is speaking in the House of Lords this afternoon in their debate on the budget. He has been a peer for 11 years, but he has not got round to speaking in the Lords before and so this will be his maiden speech.

And it could be interesting. Last month he told Prospect magazine that getting rid of the 50p top rate of tax in his budget would be a mistake because "people are suffering under the recession and ... it would be the wrong politics to remove the 50p, even though it doesn't actually raise significant sums of money".

11.20am: Today's papers will make grim reading in the Treasury, because many of them are focusing on the tax raid on pensioners. But the editorials are not quite so hostile. Here's a summary of what all the London papers feel about the budget, based on what they are saying in their editorials.


The Times (paywall)

There will be questions about how fair the Budget was. And there will be many anomalies that are exposed in the coming days that bring its fairness further into question. Broadly, however, it was right to swap high marginal income tax for an aggressive attack on the scandal of stamp duty avoidance and to cap the use of tax relief.

Broadly positive


The reception for this Budget has been shaped by unprecedented levels of pre-briefing, and weeks of unfortunate bash-the-rich rhetoric. Yet some good appears to have come from the negotiations within the Coalition, with the mansion tax, the removal of higher-income pension relief and council tax revaluation all meeting a merciful demise. Overall, Mr Osborne was right to stay focused on the essential truth: that we must earn our way out of our difficulties after years of living on tick (which might yet involve cutting spending further and faster). With so many uncertainties surrounding the European and global economies, the dangers are still out there. But at least this Budget did not make things worse – and may well leave the country better placed to benefit from recovery when, and if, it comes.

Financial Times (subscription)

The decision to cut the top rate of income tax from 50p to 45p from April next year will no doubt generate much political heat. While this newspaper would not have made this change at this stage, we acknowledge that the economic case for the higher rate is weak. It has not raised much money, and it is out of step with Britain's other major competitors in the G20 ...

Mr Osborne's third Budget, like his first, was a gamble. This, however, was more of a political wager than an economic one. While the risks of a divisive debate on personal tax rates are serious, the benefits of showing a coalition in action and coherent philosophy of rewarding work are not to be underestimated.

Broadly neutral


But by and large, this was a workmanlike Budget. With only one or two glaring exceptions, its measures push in the right direction. And they are likely to do the country more good than harm ...

Few will weep for the victims of his crackdown on stamp duty dodgers with houses worth more than £2million.

So far, so good. But this Budget also contains measures that are simply wrong.

Take the 'granny tax'. How, when pensioners are suffering so grievously from minimal returns on their savings, can he justify scrapping age-related income tax allowances, leaving 4.41million an average of £83 worse off next year?



For all the sound and fury, George Osborne's second Budget signified – not quite nothing – but not much more. Indeed, the Chancellor's statement yesterday was more striking for its political drumbeat, for its emotive references to "earning our way in the world" and "supporting working families", than for anything else. Not only was the all-in-it-together rhetoric about raising more tax from "those best able to pay" not entirely convincing. There was little more than warm words when it came to what Britain needs more than anything: economic growth.


Voters got their first real chance to see whose side George Osborne is on. Two years into his tenure, the chancellor delivered a budget that was not about the big picture of public spending, nor the cratering of the economy. Wednesday's red book barely changed the shape of public finances. For each tax giveaway the chancellor awarded, he made one tax or spending takeaway. In the jargon this is termed a "fiscally neutral" budget – and the politics of making any changes in one of those means that your priorities are immediately exposed. So it was with Mr Osborne's budget. He showed just who and what he thinks deserve the biggest handout; and the answer is a dismaying one.


Pensioners are already suffering poor returns on savings because of low interest rates and have been hit hard by high inflation. And while there has this year been a decent uprating in the basic state pension those who dutifully saved during their working lives still deserve to see some benefit from that.

The awkward truth is that a Government dominated by wealthy young men has been grossly insensitive to the plight of far-from-wealthy pensioners and this newspaper urges Mr Osborne to put right that wrong at the first opportunity.

Very negative


He called it a "Budget for working families". It amounted to a 58-minute kicking for Sun readers.

What did George Osborne do about the soaring fuel prices crippling family finances? Nothing.

In one stark sentence he waved away the desperation of our hard-up readers and Britain's struggling firms ...

The pain aside, this was a Budget of weak-willed compromise. The Chancellor said he was opposed in principle to high-earners getting child benefit — then caved in to pressure and allowed anyone earning up to £60,000 to carry on claiming.


The Chancellor of the Exchequer and Prime Minister were caught completely by surprise yesterday when the Budget began unravelling before Mr Osborne had even sat down, and Labour leader Ed Miliband tore it to shreds.

The truth is that neither Tory is as good as his self-generated publicity would have us believe. If they were, this pair of well-heeled muggers would've realised that stealing the pensions of the elderly, while stuffing the wallets of the wealthy, would go down like a lead balloon.

And here's a Guardian picture gallery with all today's budget front pages.

11.33am: Chris Leslie, the shadow Treasury minister, asks his urgent question about budget leaks. He asks for an inquiry into budget leaks.

11.34am: David Gauke, a Treasury minister, is replying.

He says that, as with all budgets, there has been much speculation. Much of it has been wrong.

But he also says that this was a coalition budget. Budget making in a coalition is different. Chancellors cannot just announce their decisions on the day.

As for whether there will be a leak inquiry, he says the Treasury does not comment on whether it is holding leak inquries.

11.36am: Chris Leslie says making announcements to the media before telling parliament is a breach of the ministerial code. George Osborne is treating parliament as an after-thought, he says.

Constituents expect parliament to be told first, he says.

Ministers and special advisers should be interviewed as part of a leak inquiry, he says.

The Economist described the budget statement as a newspaper review, he says.

Leslie mentions some of the leaks, including the Guardian's revelation that the 50p top rate of tax was going.

But ministers did not leak the £3bn granny tax, he says. (It's actually only worth £1bn a year by 2015, but Labour get it up to £3bn by treating that as a three-year figure.)

11.40am: Gauke says he cannot work out whether Leslie is complaining about information being leaked, or information not being leaked.

He says that there were at least five different stories about what exactly would happen to the 50p top rate. It is not surprising that one of them turned out to be correct, he says.

Gauke also says that budget leaks happened under Labour.

He is sure that ministers at the time would say it was all speculation.

But it is difficult to take Leslie seriously when Labour put budget details into the public domain in advance, he says.

11.43am: Jacob Rees-Mogg, a Conservative, points out that Labour opposes openness in relation to the budget, but favours it in relation to the NHS risk register. Doesn't that show that Labour's anger is "muddled or synthetic", he says. Gauke says he agrees.

11.44am: Labour's Ben Bradshaw asks if ministers will publish their tax returns. Gauke says that does not happen in Britain.

11.45am: Gauke says some information was put out by the government in advance of the budget. For example, the prime minister gave a speech on Monday, he says.

11.47am: Lorely Burt, a Lib Dem MP, says Labour are guilty of "rank hypocrisy".

John Bercow says she is allowed to make a general charge of this nature. But she cannot accuse an individual MP of hypocrisy.

11.53am: Labour's Helen Goodman says Geoffrey Howe institute a police inquiry into a budget leak in 1984.

Gauke says he thinks one announcement in the budget that was market sensitive related to stamp duty. He is sure the Treasury was not involved in leaking that, he says.

11.56am: Labour's Kevin Brennan says he is reminded of Captain Renault in Casablanca saying that he is "shocked" to discover that gambling is going on in the Café Américain. Gauke says that if Brennan is worried about leaks, he should round up "the usual suspects" who leaked under Labour.

12.01pm: A Labour MP asks Gauke if he will launch an inquiry into how many homes worth more than £2m were sold yesterday, evading the higher stamp duty charge that was reported in the Wednesday papers and came into force at midnight.

Gauke says he does not think anyone could find a home worth £2m and complete a purchase within 24 hours.

12.12pm: Matthew Hancock, a Conservative, says that when Labour first introduced the 50p top rate of tax, that was first announced in a newspaper.

12.14pm: At the Number 10 press briefing this morning the prime minister's spokesman declined to say whether David Cameron paid the 50p top rate of tax. It was up to individuals to decide whether they wanted to discuss their tax arrangements, he said.

As prime minister, Cameron earns £142,500. This on its own would not be enough to take him into the 50p tax bracket, which affects those earning more than £150,000. Photograph: Jonathan Hordle / Rex Features

12.28pm: Ed Miliband, the Labour leader, has renewed his attack on the budget. On a campaign visit with Ken Livingstone, he said that George Osborne had not been able to explain properly why he was cutting the 50p top rate of tax.

They're funding a tax cut for millionaires and that is totally wrong, it's totally unacceptable and frankly I think the government is going to have to come clean about why they've done this because they cannot give an explanation about why they're funding a tax cut for millionaires and hitting hard-working pensioners who've worked hard all their lives.

1.00pm: Here's a lunchtime summary

• George Osborne has insisted that pensioners are better off under the coalition government despite his refusal in the budget to increase the tax allowance for the over-65s. See 8.50am for a full summary of the comments he has been making in interviews this morning.

• Labour have challenged cabinet ministers to say whether they pay the 50p top rate of tax. After George Osborne told the Today programme that he did not pay the 50p rate, Angela Eagle, the shadow leader of the Commons, raised the issue in the chamber.

We were all astonished to learn from the chancellor this morning that he was not a top rate taxpayer. The hunt is now on for the name of his accountant who will surely find himself in spectacular demand. But given that the chancellor has answered the question, surely the rest of the cabinet should now do so.

Downing Street refused to say whether David Cameron was paying the 50p rate. But Sky has tried to establish which cabinet minsters might be liable for the charge.

• David Gauke, a Treasury minister, has refused to say whether the Treasury will hold an inquiry into the way budget details were leaked. Responding to an urgent question on this from Labour, he said: "It is the long-established practice of the Treasury to neither comment on whether a leak inquiry has been established, or on its conduct or outcome." But he also said it was unrealistic to expect all budget proposals to remain secret.

As with every budget, we have seen a vast amount of speculation and as ever a vast amount of it has proven to be unfounded. As the chancellor has said, a Budget produced within a coalition is different. The days of the Chancellor coming up with a Budget in secret are gone. This was not a Conservative or a Liberal Democrat budget, it was a coalition budget.

In the course of coalition budget negotiations, various proposals were raised, discussed and debated more widely than in the past, when the chancellor told the prime minister what was in the budget the day before, or even when the prime pinister told the chancellor what should in the budget the night before.

• Ministers have welcomed the news that GlaxoSmithKline is building a factory in Cumbria that will create up to 1,000 jobs. David Cameron said: "Our innovative life sciences strategy and ground breaking patent box are already making a difference, helping to grow this important industry and ensure the great discoveries of the next decade happen here in British laboratories." George Osborne claimed the GSK decision was a response to decisions taken in his budget, but GSK said it was responding to the patent box initiative first floated by Labour in 2009. (See 10.12am.)

• The Office for National Statistics has revealed that retail sales fell by 0.8% in February.

• Ken Livingstone has denied saying that Jews do not vote Labour. As the Press Association reports, prominent members of London's Jewish community have sent a letter to Labour leader Ed Miliband expressing their concerns about his party's candidate for London mayor. The letter reportedly claimed that during a meeting with Labour-supporting Jews on March 1, Livingstone said he did not expect the Jewish community to vote Labour "as votes for the left are inversely proportional to wealth levels, and suggested that as the Jewish community is rich we simply wouldn't vote for him". Asked on the campaign trail in east Croydon, south London, today whether he made the comments, he replied: "Absolutely not." He said: "It was a private meeting, it went on twice as long as we thought because we were having a very interesting conversation and we had a very nice meal together, and I don't recall anyone complaining about anything I'd said there, so I think this is a bit of electioneering from people who aren't terribly keen to see a Labour mayor."

• Unison has said that it is balloting its 450,000 NHS members on whether to accept the government's pension proposals.

• The Deparment for Education has published figures showing that 14.7% of 11-year-olds in England failed to get a place at their first choice of secondary school.

• Talks between the RMT and London Underground about an Olympics pay deal have stalled.

1.11pm: Lord Heseltine will be speaking in the Lords in the next few minutes. I'll be covering it live. Photograph: Richard Gardner/Rex Features

1.13pm: Lord Heseltine says he has been invited to look as aspects of the government's industrial policy.

The coverage of the budget focuses on economic forecasts and tax changes, he says.

The tax changes are of prime importance. It is well known that the government wants to improve competitiveness.

He has been asked to undertake a benchmarking exercise on this, he says.

It is hard to define an industrial strategy, he says.

But what cannot be denied is that governments play "a crucial role" in determining the effectiveness of economic performance.

He says that he probably privatised more things than any other ministers. He does not support wasteful subsidy, or "lame duckery".

1.16pm: Heseltine is still speaking.

Britain has some of the best companies in the world.

But is the average performance good enough?

And are standards high enough?

He says infrastructure needs to improve. But Britain's competitors are doing this all the time, he says.

If Britain wants to get ahead, it has to do it better.

Only a tiny proportion of young people will find jobs in the exciting new industries.

Heseltine says education is very important. He is "very critical" of what has happened to education over the last 100 years.

It is important to improve standards in literacy and numeracy, he says.

1.19pm: Heseltine is still speaking.

The new local enterprise partnerships have an important role to play.

Local government now focuses on local provision. More decisions are taken by Whitehall.

Every industry is "sponsored" by a government department. What does that mean in practice?

Are those who speak for industry and commerce prepared to tell "the slowest ships" in their sector that their failings might be down to them, not the government?

Getting decisions taken takes too long, he suggests. He makes it clear he is talking about planning.

He says he will report to the government on competitiveness by the autumn.

1.25pm: Well, that wasn't worth waiting 11 years for, I'm afraid. It was a perfectly sensible speech, setting out some of the issues he will consider in the review of competitiveness that he will be carrying out (announced yesterday), but it was very dull and he did not say anything about the 50p rate, or the politics of the budget. (See 10.52am.)

1.34pm: The Institute for Fiscal Studies budget briefing got going about half an hour ago. I have not seen their report yet, but my Guardian colleague Katie Allen has been posting the key findings on Twitter.

Here's a selection of her posts.

IFS: "hotch potch" of reforms hard to take as budget of truly tax reforming chancellor #budget2012

IFS cost of personal tax allowance change may be harder to cover than assumed in budget

IFS: budget part of trend towards encroachment of 40% tax on those with above average but modest pay #budget2012

IFS: 15% of taxpayers will be on higher rate next year vs 5% in late 80s #budget2012

IFS: Truth is we still don't know true effect of 50p tax on revenues #budget2012

IFS: strong case for more tax of expensive homes, stamp duty wrong way to do it #budget2012

IFS #Budget2012 budget may turn out to be less fiscally neutral than intended

1.42pm: And here's the story that my colleague Katie Allen has filed from the IFS briefing. It starts like this.

George Osborne's income tax giveaways in the budget run the risk of leaving the already overstretched public finances worse off, a leading thinktank has warned.

Presenting its analysis, the Institute for Fiscal Studies (IFS) predicted that the costs of taking lower earners out of income tax and cutting the rate for the super-rich may be hard to offset.

It also criticised a "hotch-potch of reforms" as a failure to make any real tax changes for the UK.

"Perhaps one worry for the chancellor as the dust settles on his third budget is that on his attempt to achieve a fiscally neutral package he has created some risks," said the IFS's director, Paul Johnson.

2.30pm: Save the Children have described George Osborne's comments on child poverty (see 8.50am) as "a tragedy for millions of poor families". This is from Sally Copley, head of the charity's Child Poverty.

The chancellor's admission that he's all but given up on the legal commitment to end child poverty by 2020 is a tragedy for the millions of poor families and children who are already on the edge. To make matters worse, yesterday's budget failed to put in place measures that would help these families work their way out of poverty, like childcare support or benefit changes so that they keep more money when they work. That's what's needed to make work a real solution for the poorest families.

3.20pm: Here's an afternoon reading list.

• Damian McBride on his blog explains how the budget making process used to work under Gordon Brown - and why he thinks George Osborne is not scrutinising all measures properly.

Even before the Budget documents had been published; even before I'd seen the Budget Decisions table, I knew something was wrong when George Osborne said the dread words: "We will also address some of the loopholes and anomalies in our VAT system."

"For example, at present, soft drinks and sports drinks are charged VAT; sports nutrition drinks are not." Blimey, I thought, that's Starter 328 from 2003 – Dawn Primarolo rejected that one before it even got to Ed Balls.

He continued with hot takeaway food. You're joking, I thought, not that old chestnut. I personally blocked that one back in 2005. "Some companies", he went on, "are using the VAT rules that exempt the rental of land to avoid tax." That's Hairdressers, I thought! Starter 318 every year. Gordon would never touch it.

Suddenly, I became worried for George Osborne. Where had the ruthless discipline of the previous two Budgets gone? If he'd let these kind of measures through the net, what else had he let through?

And what were his next words: "We should also simplify the age related allowances…many pensioners don't understand them."

• Kayte Lawton at the Staggers says the "granny tax" makes sense.

Removing the age-related allowances also makes sense because, on average, it takes much more from better off pensioners. It is true that the wealthiest fifth of pensioners do not lose much. They are not entitled to the higher allowances, which are reduced as income rises above £24,000. But IPPR analysis shows that the poorest fifth also lose very little. Most have incomes below the allowance so will not be affected by the freeze. The chart above shows that the biggest losses will be felt by the second richest fifth of pensioner households (those in the 4th income quintile). They are more likely to have two pensioners with incomes above the allowance but below the income limit.

• Joe Murphy at the Standard says Boris Johnson will save more than £12,000 from the abolition of the 50p top rate of tax.

• Rafael Behr at the Staggers says that Nick Clegg decided not to kill the health bill because he was told that, if he did, the Lib Dems would have to take responsibility for health.

There were, I am told, senior Lib Dem discussions until very late in the day about whether or not to kill the NHS bill. The key problem, it was decided - no doubt with the help of dark warnings from the prime minister - was that the quid pro quo for blocking Tory reform of the health service would be total Lib Dem ownership of the issue in the future. In other words, if Clegg wanted to block Lansley, he would have to accept having a Lib Dem secretary of state replace him in the next reshuffle and take responsibility for whatever happened next.

3.30pm: Here's an afternoon summary.

• The Institute for Fiscal Studies has described the budget as a "hotch-potch of reforms" that could leave the public finances worse off. It also said that an extra 1.3m people on "relatively modest salaries" would be forced into the higher-rate 40p tax bracket in the next few years. You can read full details of the IFS analysis on its website.

• David Cameron has defended the budget as "fair". On a visit to Bradford West, where he was campaigning with the Conservative candidate in next week's byelection, he said: "Every granny in Bradford West, as around the country, is going to be benefiting from the biggest ever increase in the pension that comes in in April - an extra £5.30 a week. At the same time the budget also delivered a tax cut for 24 million people in our country. We have now taken two million of the lowest paid people out of tax altogether so it's a good Budget for our economy and it's a fair budget for all our people."

• Ed Balls, the shadow chancellor, has said Labour will vote against the abolition of the 50p top rate of tax. "There will be a vote next week, we will vote against the 50p," he said in a Commons debate. "If there's a general election tomorrow, our manifesto will say clearly we would reverse it." But he has refused to say that Labour would commit itself to reinstating the 50p rate at the 2015 election.

• The Independent Commission for Aid Impact has said that British aid in Afghanistan is at "significant risk" from theft, fraud and corruption because the government does not have tight enough controls on how money is spent. Andrew Mitchell, the international development secretary, told the World at One: "This report makes it clear that they found no evidence of leakage of funds but they saw the risk downstream through the partners with whom we work, and we will address that."

• Lord Heseltine has made his maiden speech in the House of Lords - 11 years after becoming a peer. He used his speech to describe the issues he would consider in his new role leading a government competitiveness review.

We have some of the best companies in the world - they are out there winning every day. But is our average performance good enough and how can the underperforming tail be encouraged or persuaded to catch up?

• Jake Berry, a Conservative MP, has been forced to apologise to the Commons for suggesting there was something improper with Gordon Brown's tax arrangements. At business questions Berry called for a debate on the "morally repugnant use of service companies by those in public life to avoid paying their fair share of tax". He went on:

Can we particularly look at the tax arrangements of the Labour candidate for mayor of London and the recent publication of the accounts for Gordon and Sarah Brown Ltd?

Later John Bercow said that, even though Berry had told Brown he was going to raise the matter, Berry's question was not acceptable.

Advance notification to a member of an intention to refer to that member is of itself not sufficient. Much depends on what is then said. Where an accusation or implication as to possible improper conduct is made, that must be done either by a reference to the parliamentary commissioner for standards or on a substantive motion. It should not be in the course of a question. That was wrong and a discourtesy - I am sure unintentional.

Bercow asked Berry to apologise, which he did.

• A government review of the impact of European wildlife protection rules has found that they place virtually no burden on business.

That's it for today. Thanks for the comments.

I'm speaking at the Guardian's Open Weekend on Saturday. If any of you are going to be there, do come and say hello if you get a chance. It would be nice to have a chat.

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