Millions of workers to get tax cut in Budget
GEORGE OSBORNE will use his last Budget before the election to unveil a package of plans to please pensioners, home owners and the low paid.
The Chancellor will set out sweeping reforms to allow five million pensioners to trade in their savings for cash, and a tax cut for millions of working people on modest incomes.
The Coalition’s final Budget on Wednesday will also contain measures to speed up house-building, improve broadband links, and boost science and business growth across Britain to create “a truly national recovery”, senior government sources have told The Sunday Telegraph.
In his speech to MPs, Mr Osborne will insist he is shunning “pre-election gimmicks or giveaways”.
The Chancellor is unable to discuss details of the Budget ahead of his speech, but said that “hardworking people should be trusted to look after their own savings”.
“It’s your money. There are Labour politicians who don’t get this,” he said.
“They believe that it is the state’s job to keep as much of your money as possible and restrict what you can do with what is left.
“At the heart of our long-term economic plan is giving hard-working people real choice over their money and building a stronger, more balanced economy where people can save and invest for their future.”
The Chancellor’s annual financial statement to MPs represents the last chance for Tory and Liberal Democrat ministers to enact vote-winning policies in government, before the election, which is expected to be one of the most closely fought in history.
Parliament will be dissolved for the full-time election campaign at the end of the month, ahead of Polling Day on May 7.
Mr Osborne will use his speech to the Commons to stress his credentials as a responsible Chancellor who is focused on
spreading the economic recovery to every region of the UK.
However, economists have pointed out that he has more room for manoeuvre than in previous years, with the economy in better shape than expected, leading to speculation of a populist tax cut or another pre-election sweetener. In a series of Budget measures, the Chancellor will announce:
● A tax cut for millions of working people, with the personal income allowance rising again, to “around £11,000”. This will mean hundreds of thousands of people on low wages will not pay income tax at all, with millions more receiving a tax cut.
● Radical pension reforms will be proposed for consultation, to allow five million existing pensioners to sell their annuities for cash even though they have already retired. The plan, first disclosed in The Sunday Telegraph in January, is intended to give more people freedom to spend their savings as they choose rather than being locked into poorvalue schemes.
● Plans to build 45,000 more homes on “brownfield” land, in 28 housing zones across the country. Reforms to the “compulsory purchase” regime will propose paying home owners more than the market rate to sell their properties to the state to speed up developments such as highspeed rail projects or new towns and “garden cities”.
● Infrastructure reforms including plans for ultrafast broadband nationwide.
● A progress report on plans to stop banks and building societies hitting customers with “sneaky” mortgage fees, which can cost home owners hundreds of pounds.
● An extra £250million a year to treat children with mental health problems such as selfharming or anxiety, and extra help for new mothers suffering post-natal depression.
Agreement on the package between Conservatives and Lib Dems is said to have been particularly painful to reach as the Coalition is now in its final days. Senior Lib Dems are believed to have blocked a succession of Tory proposals, fearing that Mr Osborne would gain all the credit with the public on Budget Day.
Opinion polls are pointing to another hung parliament after May 7, with Labour and the Conservatives effectively neck-and-neck in recent surveys. Support for the Lib Dems has plummeted since they entered the power-sharing deal with the Tories in 2010 and has not recovered. Last night, Nick Clegg, the Lib Dem leader, effectively declared the end of the Coalition, saying that signing off the Budget was the last act that the two parties needed to complete in government.
“We have got a Budget on Wednesday,” Mr Clegg told his party’s spring conference in Liverpool. “That is now pretty well finalised in internal discussions. That is, in effect, the last act of significant decisionmaking by this Coalition.”
Mr Clegg made clear that he would be focusing on fighting the election campaign. He faces an uphill struggle that could result in him losing his own seat in Sheffield. The Conservatives, meanwhile, are pinning their election hopes on being seen as more trustworthy than Ed Miliband and Ed Balls on the economy.
The Tories received a boost this weekend when an independent report from the House of Commons Library praised the strong state of the economy and described Labour’s spending plans as “looser” than Tory proposals.
The report, a briefing for MPs of all parties ahead of Budget Day, said the Conservatives had “the most stringent” target to cut the deficit, while Labour’s plans would see “debt falling less quickly”.
“The 2015 Budget, the last of the current parliament, comes at a time when the UK economy continues to perform strongly,” the report says. “GDP growth in 2014 was at its highest since before the recession, the number and proportion of people in work have reached record levels, and by the end of 2015 unemployment looks set to return to its pre-crisis level.”
In his Budget, Mr Osborne is expected to say he will set out measures to deliver “a truly national recovery”. He will hail his package of measures as a “Budget for the long term”, insisting that it “will not be a Budget of pre-election gimmicks or giveaways”.
The Chancellor is expected to point to new analysis showing that if all parts of England outside London and the South East grew at the national average rate, then Britain as a whole could be an extra £90billion richer by 2030.
He will set out measures to invest in all parts of Britain and boost industries and local economies across the country, including: funding for “technology clusters”, investment in the chemical sector in the North East, backing the first phase of an energy research project in six universities in the Midlands; and plans to introduce “ultrafast” broadband internet around the UK.
● Ed Miliband yesterday dropped a claim that Tory spending cuts would take Britain back to a time when children left school when they were just 14 years old.
According to pre-briefed comments on Friday, the Labour leader had planned to say in a speech to activists that the Conservatives would cut “public services to the very bone so they hit their target of [taking] spending back to levels not seen since the 1930s, before there was an NHS and children left school at 14”.
But, speaking yesterday in Birmingham, he mentioned only the NHS, omitting any reference to schoolchildren.