George Osborne has today announced his last Budget before the General Election. The Budget has been described as one that ‘works for you’. However, the BBC put this better, calling it a ‘Budget of aspiration’. As, the pre-election Budget is a ‘plan’ of what would happen under a Tory government.

Growth:

Five years ago, our economy had suffered a collapse greater than almost any country. Today, I can confirm: in the last year we have grown faster than any other major advanced economy in the world. Five years ago, millions of people could not find work. Today, I can report: more people have jobs in Britain than ever before. Five years ago, living standards were set back years by the Great Recession. Today, the latest projections show that living standards will be higher than when we came to office. George Osborne

The UK has grown 2.6 per cent which is ‘faster than any other major advanced economy in the world’. However, this is still lower than the prediction of 3 per cent stated in December. The 2.5 per cent growth forecast in 2015 is up from the 2.4 per cent that was predicted in December. Another figure to come out of the Budget was that the jobless rate fell from 5.3 per cent this year. These are all successes of the coalition, and of course growth is a key issue to many voters, so it is logical that the Chancellor would start his Budget with this positive note.  In terms of the trade deficit these are the best figures ‘for 15 years’. The living standards are apparently ‘higher’ than in May 2010, though this is still disputed by Labour who suggest that even if households in figures seem to be ‘better off by an average of £900’ many are not seeing this benefit, but nevertheless, it seems that growth is indeed a strong point of this government. The last key point on growth mentioned in the Budget is the fact that inflation is projected to fall to 0.2 per cent in 2015.

Public spending/borrowing. 

Today we make that critical choice: we choose the future. We choose, as the central judgement of this Budget, to use whatever additional resources we have to get the deficit and the debt falling. No unfunded spending. No irresponsible extra borrowing. George Osborne

The deficit has halved since 2010 as a share of national income. A big point is that borrowing is set to fall from £97.5 billion in 2013-14 to 90.2 billion in 2014-2015, then to take a dramatic decrease to £75.3 billion in 2015-6, £39.4 billion in 2016-7, £12.8 billion in 2017-8 before reaching a £5.2 billion surplus in 2018-9. The GDP of the total amount produced is predicted to be 80.4 per cent in the financial year to the start of April 2015, predicting this will fall to 80.2 per cent, reaching 71.6 per cent in 2019-20. Debt as a share of GDP is to fall from 80.4 per cent in 2014 to 80.2 per cent in 2015-16 before falling in every year, reaching 71.6 per cent in 2019-20. Another piece of good news is that the public spending squeeze will end a year earlier than planned, with spending in 2019/2020 to grow in line with the growth of the economy. However, the Budget has also highlighted that an additional £30 billion savings will be needed.

Pensions:

So from next year, we will further reduce the Lifetime Allowance from £1.25 million to £1 million. This will save around £600 million a year. Fewer than 4% of pension savers currently approaching retirement will be affected. However, I want to ensure those still building up their pension pots are protected from inflation, so from 2018 we will index the Lifetime Allowance‘. George Osborne.

Pensions were lightly mentioned in George Osborne’s speech. The Lifetime Allowance for pension savings that can be accumulated free of tax will be cut from £1.25 million to £1 million from April 2016, saving £600 million annually, according to the Budget. Another future policy was mentioned as pensioners will be able to trade in their annuities for cash pots, with the 55 per cent tax charge abolished and tax instead being applied at the marginal rate.

Savings:

A whole section of George Osborne’s speech was based on Savings. However, a couple of new policies such as a new personal savings allowance, which meant that the first £1,000 interest on savings income was to be tax-free and then a £500 allowance for the 40 pence tax ratepayers. Also, annual savings limit for ISAs increased to £15,240. And, a ‘fully-flexible’ ISA will allow people to withdraw money and be able to put it back later in the year, without losing their tax-free allowance. One of the most talked about decisions is the new ‘Help to Buy’ ISA for first-time buyers, and received a lot of coverage on BBC two’s ‘The Budget’.

Health and Education:

The health budget will increase every year. In Autumn Statement 2014, the government announced £2 billion of additional founding for frontline NHS services. This will according to the Budget help meet growing demands and improve services that will kick-start the transformation set out in the NHS’s ‘Five Year Forward View’. The Budget also suggests that the NHS will need to find annual savings to meet demand and maintain good quality patient care.
Other issues included; consultation on the proposal to offer loans of up to £25,000 for UK students who are studying for PhDs and the mental health services are to get £1.25 billion in extra funding. Another aspect mentioned in the Budget was that there will be an introduction of ‘a range of initiatives to improve the effectiveness of education support staff, through a series of projects being run by the Education Endowment Foundation’.. Also, an apprenticeship voucher is proposed, a policy that will introduce an apprenticeship voucher scheme, putting employers in control of the funding, alongside their own, for the training that apprentices need.

Alcohol, tobacco, gambling and fuel:

There have been cuts on beer and cider duty by 1 pence and 2 pence. Also, a 2 per cent cut in excise duty on Scotch, whiskey and other spirits, but wine duty is frozen. There will be no change to tobacco and gambling taxes, with tobacco duties set to rise by 2 per cent above inflation. A new ‘horse racing betting right’ is to replace the 50 year-old horserace betting levy on British bookmakers. The last thing is that petrol duty is frozen, and September’s planned increase has been cancelled.

Business:

One of the bigger business points was the ‘Google Tax’ on ‘diverted profits’ will come into effect next month, aiming at firms moving profits ‘artificially offshore’. This is being seen in two lights, as some believe that multinational firms will be ‘pushed away’ from the British economy. Other things mentioned in the Budget is that the annual bank levy is to rise to 0.21 per cent raising an extra £900 million. Banks are also to be barred from deducting compensation for mis-selling from corporation tax. Another major announcement was that the supplementary charge on North Sea oil is to be cut from 30 per cent to 20 per cent and petroleum revenue tax to fall from 50 per cent to 35 per cent.

A link to The Budget: 2015 can be found here. A link to Osborne’s speech can be found here.