Budget 2014

This is not a major moment in the economic history of our country. There was no massive new direction set, more taps on the tiller.

Overall, over the five years, it’s fiscally neutral.

It’s £5.5bn of tax cuts funded by about the same in spending cuts. There are adjustments here and there and re-announcements of the 40p tax threshold and the fuel duty decisions.

The boasts for the pension reforms are great, but have a look at the Office for Budget Responsibility (OBR) estimates for the savings ratio (p 106 of the red book) and you wonder if a flashing red light on savings has kicked off the attention now given to the issue.

It doesn’t look very healthy even after the changes.

Treasury says actually the reforms will not improve savings rates, but increase freedom of choice in savings.

The Treasury says mean annuity market rates and changes to the state pension mean risks normally blocked by the Treasury can now be considered.

The IFS (Institute for Fiscal Studies) is sometimes seen as all-powerful and all-knowing. Its commentators get deity-like respect.

So it is fitting that it’s a graduate of their world, the pensions minister, Steve Webb, who dreamt up some of the most complex pensions measures the Chancellor so proudly announced today.

The OBR says that  the longer term impact of some of the savings measures are “subject to considerable uncertainty” (p 6, para 1.9) though it agrees in the first instance people drawing down more money earlier should pump up tax receipts.

George Osborne’s daughter Liberty, sitting in the gallery with her mother, joined in Tory MPs’ cheers as her father stood up. The usher nearby smiled.

Sitting in front of them was her grandfather, Lord Howell.

Liberty didn’t join in the cheering at the end, but she may have been puzzling over the details of the reform of  annuities.

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