Former Chancellor Ken Clarke may not be your cup of tea (although a straw poll at Redwood has found an admirer or two…)
If Mr Clarke’s wisdom is to be believed, today’s Budget – like every other in living memory – will not change the outcome of the election in 50 days.
Tough talk in a week when even the Poll of Polls oscillates between a Labour or Conservative election win. It is too close to call.
If today is anything to go by, we can expect a bitter and bloody fight to the end with this Budget as a stimulating pit stop in an election campaign which might actually capture the public imagination due to its unpredictability.
Back to Budgets, not elections.
In the lead up to Mr Darling’s pre-election budget in 2010 he promised a “sensible and workmanlike” Budget with no giveaways. Given what followed, he then slammed the nation with a 10% tax on cider, alongside a four year freeze on inheritance tax thresholds: winners and losers at Budget time can be hard to judge.
On Sunday, Mr Osborne said something similar with his “no gimmicks” approach. Not many hours have passed since then where Budget stories haven’t been trailed. The long awaited review into business rates was announced and only last night London’s Evening Standard proudly confirmed that the GLA would regain control of many riverside wharfs and London sightlines to enable a housebuilding boom. Is this a signal that the government still believe the planning system is clunky? It’s hard not to disagree.
There may have been “no gimmicks” but we certainly had the trinity of clichés: “hard working people” with “fixing the roof” and “we’re all in this together.” Budget Bingo can be such fun.
But was it the Budget of the middle classes, as predicted? It is hard not to come to that conclusion with married couples’ tax allowance rising, a rise in the 40p tax threshold and petrol duty frozen. Mr Farage will no doubt have something to celebrate tonight: no increase on tobacco duty and a penny off a pint. Merci beaucoup, Monsieur Osborne.
Yes, a pre-election cocktail of good news. We are “walking tall” with both “the deficit and debt falling.”
Yes, a few obvious pre-election goodies to a country recovering from rationing. But will it be enough?
British business wants a Budget for British business: economic certainty, pro-growth and pro-EU. Anything less won’t cut the mustard. Mr Osborne exclaims, “we choose aspiration” and as the nation crawls all over the Red Book, we are looking out for the devil in the detail. Not too much on housebuilding or planning but with Manchester and Cambridge able to keep their business rates – expect more cities wanting the same – it’s wrong to say there were no giveaways.
Key Budget 2015 highlights direct from the BBC:
State of the economy
-UK grew 2.6% in 2014, faster than any other advanced economy but lower than 3% predicted in December
-2.5% growth forecast in 2015, up from 2.4% predicted in December, followed by 2.3%, 2.3%, 2.3% and 2.4% in the next four years.
-Record employment in the UK, with jobless rate to fall to 5.3% this year
-Trade deficit figures “the best for 15 years”
-Living standards “higher” than in May 2010, according to OBR data, with households better off by an average of £900 in last five years
-Inflation projected to fall to 0.2% in 2015
Public borrowing/deficit
-Deficit halved since 2010 as a share of national income
-Borrowing set to fall from £97.5bn in 2013-14 to £90.2bn in 2014-15, £75.3bn in 2015-6, £39.4bn in 2016-7, £12.8bn in 2017-8 before reaching a £5.2bn surplus in 2018-9
-Debt as a share of GDP to fall from 80.4% in 2014 to 80.2% in 2015-16 before falling in every year, reaching 71.6% in 2019-20
-Welfare bills set to be an average of £3bn lower each year than predicted in December, and interest charges on government gilts £35bn lower
-£13bn mortgage assets from Northern Rock and Bradford & Bingley to be sold
Pensions/older people
-Pension pot lifetime allowance to be reduced from £1.25m to £1m from next year, saving £600m annually
-Law to be changed to allow pensioners to access their annuities, with 55% tax charge abolished and tax applied at the marginal rate
-£25m to support army veterans, including nuclear test veterans
-Alcohol, tobacco and gambling and fuel
-Beer duty cut by 1p, cider by 2p, whisky by 2p. Wine duty frozen
-Tobacco and gaming taxes to remain unchanged
-New “horse racing betting right”
-Petrol duty frozen – September’s planned increase scrapped
Personal taxation
-The tax-free personal allowance to rise from £10,600 in 2014-5 to £10,800 in 2015-6 and £11,000 in 2016-7
-The threshold at which people start paying 40p income tax to rise by above inflation from £42,385 in 2014-5 to £43,300 in 2017-8
-Annual paper tax returns to be abolished
-Transferable tax allowance for married couples to rise to £1,100
-Review of inheritance tax avoidance through “deeds of variation”
Savings
-New personal savings allowance – first £1,000 interest on savings income to be tax-free
-Annual savings limit for ISA increased to £15,240
-“Fully flexible” ISA will allow savers to withdraw money and put it back later in the year without losing any of their tax-free allowance
-New “Help to Buy” ISA for first-time buyers will allow government to top up by £50 every £200 saved for a deposit
Armed forces
-A further £75m from Libor fines to go to charities for regiments which fought in Afghanistan and government to contribute towards permanent memorial to those who died in Afghanistan and Iraq and help renovate Battle of Britain memorials
-£25m to support army veterans, including nuclear test veterans
Business
-Tax on “diverted profits” to come into effect next month, aimed at multinational firms moving profits “artificially offshore”
-Annual bank levy to rise to 0.21%, raising an extra £900m. Banks to be barred from deducting compensation for mis-selling from corporation tax
-Supplementary charge on North Sea oil producers to be cut from 30% to 20% while petroleum revenue tax to fall from 50% to 35%
-New tax allowance to encourage investment in North Sea
-Review of business rates
-Automatic gift aid limit for charities to be extended to £8,000
-Farmers to be allowed to average incomes for tax purposes over five years
-New tax credit for orchestras and consultation on tax relief for local newspapers
Housing/infrastructure/transport/regions
-£15m church repair roof fund to be trebled
-Up to £600m to clear new spectrum bands for auction to improve mobile networks: commitment to deliver ultra-fast broadband to all homes
-New powers for Mayor of London over skills and planning
-Greater Manchester councils to be allowed to keep 100% of growth in business rates
-New inter-city rail franchise for south west of England
-Toll for Severn river crossings to be reduced from 2018
-Consultation on £1bn “tidal lagoon” in Swansea Bay to generate green energy