The Chancellor delivered a budget today that would have pleased at least one person, Lynton Crosby. Who he? Well, he’s the Conservative election strategist. For this budget has been crafted with skill to ensure victory in the 2015 general election.
Despite the event being about economic management it would be a very strange Chancellor that didn’t also have some populist measures in the package that would ensure tabloid headlines.
It doesn’t take much of a gift of prophecy to suggest that the tabloids will have headlines on cheaper booze, bingo and of course potholes. All of which have benefitted from the Chancellors largess.
The Chancellor clearly wanted to shore up his credentials as a future leader of his party, by appealing to his own backbenchers. Forget climate change and all that “green crap” advocated by those Liberal Democrats. Forget environmental targets he capped Carbon Price Support at £18 per ton of CO2 for a ten year period. Lovely, say the climate change deniers on his backbench.
Of course, there wouldn’t be many welfare recipients that would vote for his party, so they can be safely hit. After all this group has already been demonized by the tabloids and so no votes there. Capping the welfare benefit bill at £119 billion will be popular, but it will certainly hurt many of the poorest people in society.
Not so pensioners, at least the better off ones. They are more likely to vote for the Chancellors party and for this group he has more than excelled.
Many pensioners have been frustrated with the lack of flexibility they have with money in their pension pot and how small their annuities are. The liberalizing measures announced will make a real difference. Pensioner Bonds and raising the ISA levels will be welcomed by this group. Not a bad headline to be called the “pensioners friend” before 2015.
Here are some of the most important announcements.
Level of paying income tax will be raised to £10,500
Bingo duty reduced from 20% to 10%
Threshold for 40p income tax to rise from £41,450 to £41,865 next month and by a further 1% to £42,285 next year
Inheritance tax waived for members of emergency services who put their lives on the line in their jobs
Tax on homes owned through a company to be extended from residential properties worth more than £2m to those worth more than £500,000
All long-haul flights to carry lower rate of air duty.
Cash and shares Isas to be merged into single New Isa with annual tax-free savings limit of £15,000 from 1 July
The 10p tax rate for savers abolished
Amount of Premium Bonds you can hold will o be lifted from £30,000 to £40,000 in June and £50,000 next year and number of million pound winners doubled
Tax restrictions on pensioners’ access to their pension pots to be remove and no to buy an annuity
Taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate, down from 55%
Increase in total pension savings people can take as a lump sum to £30,000
A new Pensioner Bond will be introduced paying “market-leading” rates, available from January to over-65s, with possible rates of 2.8% for one-year bond and 4% for three-year bond.
Fuel, Alcohol and Tobacco
Beer duty cut by 1p a pint, duty on ordinary cider will be frozen as it will on whiskey and spirits.
Fuel duty rise planned for September will not happen
Tobacco duty to rise by 2% above inflation
State of the economy
Growth of GDP forecast to be up by 2.7% this year and 2.3% next year, then by 2.6% in 2016 and 2017 and by 2.5% in 2018
Twelve-sided £1 coin to be introduced in 2017
Budget to be capped at £119bn for 2015-16, rising in line with inflation to £127bn in 2018-19
Deficit forecast to be 6.6% of GDP this year, 5.5% in 2014-15 then falling to 0.8% by 2017-18 with a surplus of 0.2% in 2018-19
Borrowing forecast to be £108bn this year and £95bn next year, leading to a surplus of almost £5bn in 2018-19
Permanent £1bn reduction in government department overspends
Lending for exporters doubled to £3bn and interest rates on that lending cut by a third
As a consequence of the budget spend in England the Welsh government should receive an extra £36m to spend over the next two years, a little over 0.1% of its £15bn annual total budget.
The budget clearly was good news for business, the Chancellor has given them almost everything that they could have hoped for. It clearly helps the more affluent pensioner. The real losers are the poor and those in low paid jobs. The gap between rich and poor will continue to grow. And as for Wales it was announced that tomorrow will see the Bill giving the recommendations on tax and borrowing from the Silk Commission placed before the Commons. The Chancellor hoped that as a consequence the M4 relief road improvements would go ahead.