August 30 2014 Latest news:
Wednesday, March 19, 2014
George Osborne hailed the success of the coalition’s austerity plan as he delivered his fifth Budget today - insisting the government would be back in the black by 2018.
The Chancellor said the Office for Budget Responsibility (OBR) was predicting a 0.2pc surplus in 2018/19, meaning that he could deliver boosts to hardworking families and savers.
But he stressed that he would not loosen the purse strings despite economic growth being revised up, and the government would keep “putting Britain right”.
“I can report today that the economy is continuing to recover - and recovering faster than forecast,” Mr Osborne told MPs.
“We set out our plan. And together with the British people, we held our nerve. We’re putting Britain right.
“But the job is far from done. Our country still borrows too much. We still don’t invest enough, export enough or save enough.
“So today we do more to put that right. This is a Budget for building a resilient economy.
“If you’re a maker, a doer or a saver, this Budget is for you.”
Mr Osborne added: “It is all part of a long-term economic plan - a plan that is delivering security for the people of this country.
“In 2018/19 we won’t be borrowing at all. We will have a small surplus of almost £5 billion.
“Taken together, these new figures mean Britain will be borrowing £24 billion less than was forecast. That’s more than we spend in an entire year on the police and criminal justice system.”
Mr Osborne warned that cuts would continue, with a cap on welfare bills including housing benefit and tax credits.
Only the State Pension and the cyclical unemployment benefits will be excluded.
The move lays down the gauntlet to Labour to match the figure.
Mr Osbotrne said the cap would be set it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19.
The Chancellor told MPs: “None of these decisions are easy, but they are the right thing to ensure Britain lives within her means.”
And he added: “Britain should always be proud of having a welfare system that helps those most in need.
But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work.”
■ All tax restrictions on pensioners’ access to pension pots removed
■ Reform of taxation of defined contribution pensions to help 13 million people from March 27
■ Tax on cash taken out of pension pot on retirement to be reduced from 55% to 20%
■ Abolition of 10p starting rate of tax on income from savings.
■ Personal tax allowance to be raised to £10,500 next year; £800 average savings.
■ Higher rate threshold for 40p income tax to rise from £41,450 to £41,865 next month and then by further 1% to £42,285 next year; increase in personal allowance passed on to higher rate taxpayers.
■ Transferable tax allowance for married couples to rise to £1,050.
■ Tax on homes owned through companies to be extended from homes worth more than £2 million to those worth more than £500,000.
■ 15% stamp duty on homes worth more than £500,000 bought through companies.
■ Inheritance tax waived for emergency services personnel who “give their lives protecting us”.
■ VAT waived on fuel for air ambulances and inshore rescue boats.
Mr Osborne told MPs: “The economy is continuing to recover and recovering faster than forecast.”
He said the effect of the upgraded growth forecasts meant the size of the economy would be £16bn bigger than was predicted four months ago.
The Chancellor said no major economy in the world was growing faster than Britain - with growth ahead of Germany, Japan and the US.
Mr Osborne also said the OBR was now predicting earnings to increase faster than inflation this year - meaning workers will finally start to see their pay packets grow in real terms.
The Chancellor said the country still “borrows too much” but added: “As a nation, we are getting on top of our debts.”
He said the new fiscal forecasts meant Britain would be borrowing £24 billion less than was last forecast, more than the annual budget for the police and criminal justice system.
The Chancellor was said to be the toast of brewers, pubs and drinkers after announcing a 1p cut in the price of a pint for the second year running.
The industry said the move would protect 7,000 jobs, mainly of younger people working in pubs and bars.
Brigid Simmonds, chief executive of the British Beer and Pub Association, said: “This is fantastic news, and George Osborne is again the toast of Britain’s brewers, pubs and pubgoers.
“It also shows that the Government has understood our case, that taxes on British beer had become far too high, and action was long overdue.
“I hope this becomes a trend in future budgets for this British-made, lower-strength drink.”