2011 United Kingdom budget

Osborne announced that the Office for Budget Responsibility had cut its growth forecast for 2011 from 2.1% to 1.7%, and for 2012 from 2.6% to 2.5%.[2]

In the June 2010 Budget and autumn spending review, he had already committed the Government to spending cuts to tackle the UK's deficit. He therefore made no further sweeping changes, but announced a Budget "about reforming the nation's economy, so that we have enduring growth and jobs in the future."[3]

Forecasts for borrowing had fallen to £146 billion in 2011, £122 billion in 2012 and £29 billion by 2015–16. The national debt was estimated at 60% of current national income, rising to 71% in 2012 before starting to fall back to 69% by 2015.[2]

The date of the Budget was announced by Sir George Young on 4 November 2010. Only a few weeks' notice had been given for the previous government's budgets, and this was one of the earliest budget date announcements on record.[10]

In his 2010 Autumn Statement, Osborne said the Office for Budget Responsibility had increased its growth forecast for 2010 from 1.2% to 1.8%, but reduced its predictions for the following two years. It had also reduced its forecast for public sector job losses, and did not expect a double-dip recession.

Osborne also announced "the most significant programme of corporation tax reforms for a generation".[11] The main area subject to change is the taxation of multinational companies on overseas earnings. However, Deloitte's head of tax policy, Bill Dodwell, said the proposals went no further than the previous government had already announced.[12] Detail was also lacking and, while some interim measures were expected in the 2011 budget, observers expected to wait until 2012 to see the full overhaul.[13]

Income tax personal allowances for people under the age of 65 were expected to be raised in line with the Government's commitment to raise the allowance to £10,000 over the course of the parliament, a key Liberal Democrat policy.[14] To pay for this, a range of measures were expected to close tax loopholes for the wealthy. An initiative to counter tax avoidance with a target of £500 million per annum was announced in December 2010, but the expected take had doubled to £1 billion by March 2011.[15]

Ed Miliband, Leader of the Opposition, responded with sarcasm to the Budget's stated goals of growth and recovery. He said that the economic slowdown in the last quarter was evidence that the Government was going "too far, too fast" to reduce the deficit, and accused Osborne of indifference to social damage.[16]

Miliband also claimed that the budget speech had sent Kenneth Clarke, Justice Secretary and former Chancellor, to sleep. A spokesman for Clarke denied this, but bookmaker Ladbrokes paid out on bets at 16/1 that Clarke would drop off during the speech.[17]

Robert Peston, the BBC's business editor, suggested that the Chancellor would be seen to have chosen "a principled Budget rather than a crowd-pleasing one".[3]

The Confederation of British Industry and other business groups welcomed the Budget, saying that it would create jobs. However, speaking for the Trades Union Congress, Brendan Barber welcomed some measures including help for apprenticeship and the cut in fuel duty, but said that overall it had been a "no change Budget".[3]

The changes in corporation tax were sufficient to encourage companies such as WPP to move their headquarters back to the UK.[18]

John Whiting, tax director of the Office of Tax Simplification, was disappointed that the review of National Insurance would not go as far as a full merger with income tax, even though this could have meant imposing higher taxes on pensioners.[19]

Countrywide research in the days after the Budget showed that the fuel duty cut had indeed resulted in fuel prices falling, but not by the 1p per litre announced by Osborne. Prices fell by an average of 0.6p per litre following the immediate duty cut; some motorists reported that fuel retailers had raised their prices prior to the Budget, meaning that despite the duty cut the prices were still the same or higher.[20] The increase in taxes on oil & gas production had widespread effects on the upstream industry - within weeks Centrica mothballed the main part of the Morecambe Bay gas field, responsible for 6% of UK gas supply. As an older field it paid 81% tax after the Budget.[21] Statoil immediately put on hold the US$10bn development of the Mariner and Bressay fields containing 600 million barrels of oil, with their head of international development and production saying "They’ve wanted more developments offshore U.K. and then they come and slam the door in our face...There are a lot of assets in the U.K. that aren’t all that interesting anymore now."[22] In response Osborne increased the Ring Fence Expenditure Supplement allowance for development costs, and Statoil resumed work on the fields.

• United Kingdom government austerity programme
• Late-2000s financial crisis
• Cameron–Clegg coalition
• United Kingdom national debt
• Taxation in the United Kingdom
• Whole of Government Accounts

• Budget coverage, Directgov
• Budget coverage, HM Treasury