• Budget 2012: flat-rate state pension confirmed – The Guardian, 21 Mar 2012
  • Cameron puts brakes on pension reform – Financial Times, 17 Sep 2012

In the 2012 Budget, George Osborne confirmed proposals to introduce an initial flat-rate pension of £140 per week for those with a 30-year national insurance record, starting in 2016.

The Guardian reported:

The government says the long-awaited change, which will see the current basic state pension and second state pension (S2P, formerly known as Serps) replaced by a single scheme, will cost no more than the existing state pension system.

This means that while those on low incomes who have made small or no contributions to S2P will benefit from a higher pension than they could currently expect, people who earn higher salaries will lose out. The current full basic state pension is £102.15 a week (rising to £107.45 from April 2012), but those at the top end of the salary scale can expect up to £180 a week in combined pension payments.

However, David Cameron has now u-turned on this pensions reform policy, as the FT reports:

David Cameron has demanded a rethink of flagship state pension reforms amid fears they could alienate core Conservative supporters, including the electorally crucial “grey” vote.

The Financial Times has learnt the prime minister personally put the brakes on the plan for a flat-rate benefit worth around £140 a week after realising that millions of people would either lose out – or fail to benefit from – the new system.

The policy, confirmed in George Osborne’s controversial March Budget, is the latest to be re-examined after ministers underestimated its potential political fallout. Ministers, already smarting from the row over the “granny tax”, recoiled at the prospect of another backlash from pensioners.

Potential losers include higher earners. They will no longer be able to boost their retirement incomes through the state second pension, which will cease to exist, although amounts already built up will be protected. Existing pensioners will also lose because the flat-rate pension will only be offered to those who retire after its introduction, expected in the next parliament.

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  • George Osborne gives go-ahead to 3p increase in fuel duty – Mail, 21 Mar 2012
  • Osborne u-turns – The Independent, 26 Jun 2012

In the 2012 Budget, George Osborne confirmed the fair fuel stabiliser. The Mail reported:

A planned rise in the price of petrol will go ahead as George Osborne refused to freeze or reduce the amount of tax motorists pay for fuel.

Despite pressure from hard-pressed motorists and businesses that rely on fuel, such as hauliers, there will be a 3.02p per litre hike in fuel duty from August.

But just three months later, the Government announced another u-turn. The Independent reported:

Petrol prices were due to go up by 3 pence in August and just this weekend the transport secretary Justine Greening insisted that the rise would go ahead.

But in a move underlining just how worried the government is about pressures on the cost of living the chancellor announced in the Commons that the rise would now be delayed until next year.

Mr Osborne said the £500 cost of the freeze would be paid for by larger than expected savings made by government departments.

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  • Tax changes could strangle major donations, says charity – Charities Aid Foundation, 21 Mar 2012
  • Government confirms u-turn on charity tax – The Guardian, 31 May 2012

In the March budget, George Osborne announced changes to tax relief, dubbed the “charity tax” – to the anger of charities.

The Charities Aid Foundation reported:

Major philanthropists may be put off making substantial donations to charities because of changes unveiled in today’s Budget.

Under changes to tax relief announced by the Chancellor, those wanting to make major lump sum donations could be hit by lower tax relief on donations of more than £200,000.

Following the announcement, the Charities Aid Foundation (CAF) has called for urgent talks with the Treasury to ensure caps on tax relief announced in the budget do not strangle major donations by wealthy philanthropists.

CAF fears that the changes could reduce the amount donated to charity by millions of pounds each year.

The government has now u-turned on the charity tax, as The Guardian reports:

George Osborne has announced his third u-turn over his budget this week by scrapping “charity tax” proposals that sought to remove tax breaks from wealthy donors to good causes…

The Treasury said it would go ahead with a proposed cap on tax relief – which is to be set at 25% of income or £50,000, whichever is greater – but that it would no longer include donations to charity. The main component of the cap will now be the amount of previous business losses that can be offset against future taxable profits.

Officials said the decision was not a u-turn, but the conclusion of a consultation the government promised as soon as it announced the measure in the March budget.

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  • How George Osborne’s new budget will affect VAT on caravans – Caravan Times, 22 Mar 2012
  • Caravan tax u-turn – ITV News, 28 May 2012

In the March budget, George Osborne announced a tax on caravans.

The Caravan Times reported:

As part of his annual budget, chancellor George Osborne announced various change in the tax system yesterday (March 21st), and several previously un-taxed goods including static caravans will now be hit with the standard 20 per cent rate of VAT.

This change will take place on October 1st of this year, and could also have an effect on some larger touring caravans to go along with the previously zero-rated static caravans.

A caravan that is “designed and constructed for continuous year-round occupation” will still be zero-rated, and exempt from the VAT but all other static caravans will be taxed at the standard rate, according to HM Revenue and Customs (HMRC).

However, the government has now u-turned on the caravan tax, as ITV News reports:

After complaints it would harm the East Yorkshire economy and cost hundreds of jobs the government has had a re-think over the so-called “caravan tax”. The plan had been to introduce 20% VAT on the sale of static caravans. Instead, this will be reduced to 5%. It is going to be introduced in April 2013.

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  • David Cameron argues for a pasty tax – Hansard, 18 Apr 2012
  • The u-turn on the pasty tax - The Sun, 29 May 2012

Arguably the most iconic u-turn from 2012 was the ‘pasty tax’. Before the Budget, food that was fully prepared by an outlet - which happened to be hot out of the oven but could be eaten cold - did not face a charge of VAT. The budget closed this ‘loophole’ by changing the rules so that any hot ready-to-eat food prepared by an outlet would face the full VAT charge.

David Cameron argued for the pasty tax on the ground of fairness when asked about the levy in Parliament in April:

Stephen Gilbert (St Austell and Newquay) (LD): “The prime minister will be aware that no VAT is chargeable on caviar, yet the government propose to charge VAT on the Cornish pasty. Can he tell me why that is fair?”

The prime minister: “I understand that feelings in Cornwall run high on this matter, but let me explain that what I think is unfair is that the same products that are subject to VAT when sold in a fish and chip shop can be sold in supermarkets without being subject to VAT. I do not think that that is fair and that is why it is right for us to redraw the boundaries.”

However, the government has u-turned on this. As The Sun reports:

In a dramatic U-turn, the chancellor caved in on his Budget plan to impose VAT on hot baked snacks like pasties, pies and sausage rolls.

His climbdown is a spectacular victory for The Sun’s “Who VAT all the pies?” campaign.

Mr Osborne admitted he was swayed by The Sun as he dropped his half-baked plans.

We led two months of protest after the Chancellor announced in his Budget that VAT would be slapped on all hot baked snacks.

And as he revealed his U-turn, he said: “I’ve listened to Sun readers and others and I’m glad we’ve got a solution that’s fair.”

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  • David Cameron’s claims about export support, 23 May 2012
  • Where are all the billions on boosting export – Factcheck, 24 May 2010

At PMQs on 23 May 2012, David Cameron said:

“That export scheme [The enterprise finance guarantee scheme] has been rolled into the export guarantee scheme more generally and the amount of export support is massively up on the last election, with billions of pounds in extra money being spent.”

However, Cathy Newman of Channel Four FactCheck’s investigation showed this to be a gross exaggeration:

“FactCheck asked the department for business, innovation and skills (BIS) how much money had been spent on supporting exports since the election. They said: “In total, £5.2bn of support has been provided to UK exporters since the election.”

“They added that £2.3bn had been spent in this financial year, and £2.9bn last year.

“But in the last year of the previous government, from 2009 to 2010, £2.2bn was spent.

“Which means that £800m has been spent over and above what was spent in the year running up to the election. We don’t know where the ”billions of extra money” is, and Mr Cameron’s department couldn’t help us. In fact, when we asked about this, his spokesman said he had been ”making a point”.

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  • David Cameron statement on Strategic Defence and Security Review – 19 Oct 2010
  • Government forced into u-turn on Royal Navy fighter jets, The Guardian – 10 May 2012

In October 2010, David Cameron dismissed Labour’s choice of Joint Strike Fighter jet as “more expensive, less capable” than the one he was now opting for.

The prime minister told the Commons:

“This is another area where the last government got it badly wrong. There’s only one thing worse than spending money you don’t have. And that’s buying the wrong things with it – and doing so in the wrong way.

“The carriers they ordered are unable to work effectively with our key defence partners, the United States or France. They had failed to plan so carriers and planes would arrive at the same time. They ordered the more expensive, less capable version of the Joint Strike Fighter to fly off the carriers. And they signed contracts so we were left in a situation where even cancelling the second carrier would cost more than to build it…

“We will build both carriers, but hold one in extended readiness. We will fit the “cats and traps” – the catapults and arrestor gear to the operational carrier. This will allow our allies to operate from our operational carrier and allow us to buy the carrier version of the Joint Strike Fighter which is more capable, less expensive, has a longer range and carries more weapons.

“We will also aim to bring the planes and carriers in at the same time.

However, he has been forced into a spectacular u-turn, and will indeed now purchase the “more expensive, less capable” JSF, as The Guardian reports:

The Ministry of Defence is to abandon plans to buy the preferred fighter for the Royal Navy’s new aircraft carriers, in an embarrassing U-turn for David Cameron.

The prime minister personally endorsed the decision to equip the over-budget carriers with “cats and traps” so they could catapult and recover a version of the F-35 joint strike fighter (JSF) from their decks.

But the cost of converting the carriers has already reached £2bn, and the JSF model Downing Street wanted has been beset by delays and technical problems.

The aircraft will now not be ready until 2023 at the earliest, forcing the government to revert to Labour’s original plans to buy the less capable jump jet model.

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  • Ofsted inspectors to enter schools unannounced – Daily Mail, 10 Jan 2012
  • Michael Gove in u-turn over unannounced Ofsted inspections – The Guardian, 5 May 2012

In January, it was revealed Ofsted would carry out unannounced school inspections.

The Daily Mail reported:

Schools are facing no-notice spot checks from Ofsted in a move which will effectively prevent teachers from ‘hiding’ unruly pupils from inspectors.

Inspectors will start making unannounced visits later this year in a bid to get a true picture of performance in schools.

The system shake-up comes less than a week after allegations surfaced claiming that some disruptive pupils are being bribed up to £100 to stay away from lessons during Ofsted inspections.

All schools will face the no-notice inspections from this autumn, the new Ofsted chief announced today.

Education secretary Michael Gove has now signalled a u-turn on no notice visits, as The Guardian reports:

In an apparent concession to school leaders, Gove suggested that Ofsted’s proposals for no-notice visits could be dropped.

Addressing the National Association of Head Teachers (NAHT) annual conference in Harrogate, North Yorkshire, the minister acknowledged there was a perception that Ofsted has become “an arm of the Spanish Inquisition”, storming in to deal with problems.

He told delegates there was a particular concern that “people fear it [no-notice inspection] sends a message that we don’t trust the profession, that Ofsted has become an arm of the Spanish Inquisition or Sean Connery’s Untouchables, that they have to be ready to storm in without any notice in order to deal with something that has gone drastically wrong. That was never the intention.”

Ofsted chief inspector Sir Michael Wilshaw announced proposals for no-notice inspections in January, saying it was vital that the public has “absolute confidence” in the integrity of inspections.

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  • David Cameron claims that exports have increased 20 per cent – 20 April 2012
  • Office of National Statistics Monthly Review of External Trade Statistics – March 2012

In April 2012, David Cameron claimed:

“Since the election, exports are up by 20 per cent.”

It is difficult to see how the Prime Minister could have made this assertion.

According to the ONS the level of Exports in April 2010, immediately before the general election was £36.2 billion. This had risen to £41.8 billion at the time of the claim, an increase of only 15.5 per cent.

Indeed, exports were already £40.2 billion by January 2011 meaning that exports only grew by 4 per cent in the 14 months prior to the claim.

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  • Osborne buries universal child benefit – New Statesman, 4 Oct 2010
  • Osborne makes botched job of his Child Benefit u-turn – The Daily Telegraph, 21 Mar 2012

At the Conservative Party Conference in October 2010, George Osborne announced the end of universal child benefit, stating that higher-rate taxpayers would become ineligible for it from 2013 onwards.

The New Statesman reported:

This means that all households in which at least one person earns £44,000 or more will lose out, although a family with two adults earning, say, £40,000 a year will not.

It’s a big political gamble for the Tories and it amounts to an average tax increase of nearly £2,000 a year (£1,000 for the first child and £700 for each subsequent child) for the families affected.

One and a half years later, the Chancellor u-turned on his policy. As The Daily Telegraph reports:

Osborne has been forced to perform a major u-turn in his budget, lifting the amount at which Child Benefit starts to be removed to £50,000. From there it will taper away. Above £60,000 it is removed entirely.

This concession is welcome as far as it goes. It is a U-turn. But unfortunately the chancellor has made a botched job of his manoeuvre.

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