Osborne planning summer Budget to hurry through his pre-election promises and cuts
Chancellor’s pre-election promises scrutinised by expert
GEORGE OSBORNE will deliver a summer Budget as work begins on identifying the next round of Government spending cuts.
The Chancellor will use his July 8 Budget to set out how the Conservatives will use their slim parliamentary majority to push through promises made in the party’s election manifesto.
The Treasury has said the Budget, coming just four months after the Chancellor last set out spending plans, will have a debt focus.
It will reveal the Government’s plan to deliver the savings set out in the election campaign and “get Britain paying down its debts in a fair and balanced way”, the Treasury said.
Officials say this will include protecting the NHS while making savings in Whitehall, cracking down on tax avoidance and reforming welfare to protect the most vulnerable while making sure the system is fair.
Plans to build on the Northern Powerhouse project are expected to feature in the Budget, as is a promise to increase by three million the number of apprenticeships in the UK.
Announcing the move, Mr Osborne said: “On the 8th of July I am going to take the unusual step of having a second Budget of the year, because I don’t want to wait to turn the promises we made in the election into a reality, and I can tell you it will be a Budget for working people.”
Throughout the election campaign the Conservatives came under repeated pressure to set out where £30bn worth of cuts would fall, with £12bn of those earmarked for as yet unidentified welfare cuts. With a majority of just 12 the Conservatives face a difficult task ushering the plans through the Commons.
WORKING PEOPLE, married couples and savers are all likely to benefit in the first Budget after the Conservatives’ surprise election victory, according to a financial expert.
Chancellor George Osborne will focus on delivering many of the Tories’ pre-election pledges when he announces his first Budget of the new parliament in June, said Simon Gray, tax partner at Leeds-based accountants and business advisers Hentons.
David Cameron predicted that the UK “is on the verge of something very special” in his election victory speech, saying: “We can make Britain a place where a good life is in reach for everyone who is willing to work and do the right thing.”
And Mr Gray said the first steps to delivering this commitment will be in the upcoming budget.
Mr Cameron has already promised to raise the personal allowance from its current level of £10,600 to £12,500 by 2020 and the Chancellor’s expected increase in the threshold is likely to free one million more of the lowest-paid workers in Britain from paying income tax, according to Mr Gray.
In a further boost for working people, Mr Gray said they don’t have to worry about an increase in VAT, income tax or national insurance over the next five years under a “tax lock” pledge with plans to introduce the legislation within the first 100 days of the new parliament.
“People can also expect the pre-election pledge that the state pension to be raised by inflation, wage growth or 2.5 per cent every year – whichever is the highest – to stay in force,” he said.
Mr Gray said that the Conservatives intend to lift the inheritance tax threshold for married couples and civil partners to £1m from April 2017, but only when the main home is left to children or grandchildren.
There is likely to be a reduction in tax relief on pension contributions for high earners on more than £150,000 a year.
“There should be a £1 reduction in the annual allowance (currently £40,000) for every £2 of earnings over £150,000,” said Mr Gray.
“So that for those earning in excess of £210,000 annually they will only get tax relief on £10,000 of pension contributions a year.”
He said estate agents are al- ready predicting that the value of Britain’s most expensive homes could jump by nearly a quarter over the next five years after “the spectre of a mansion tax” under Labour disappeared, according to Savills.
The Conservative’s surprise victory will also represent a huge relief for wealthy foreigners living in the South East who currently benefit from non-dom status, which Labour had pledged to abolish.
Political rhetoric aside, the Government’s ability to support households will be affected by the general state of the economy, however.
This week, the Bank of England Governor Mark Carney told the BBC that the central bank thought inflation may turn neg- ative “next month”, albeit only briefly, before rising again by the end of the year.
He did caution that Britain’s economy would continue to face headwinds from the weak global economy, the Government’s fiscal policy and the strength of sterling – which on Thursday hit a sixmonth high against the dollar.
“We get a bit of a dampening (on growth) from the currency, the strength of the currency,” Mr Carney said.
Interest rates, which have stood at a record low 0.5 per cent since early 2009, are more likely to move up than down, and will rise in a gradual and limited manner, Mr Carney reiterated.
The Governor also said it was important that the Government provide clarity on how it will proceed with a planned referendum on the country’s membership of the European Union.
Hentons has a team of 50 staff who work with a wide range of businesses from medical professionals and property investors, to manufacturers, academies and charities.
It offers accounts, audit, business strategy and tax advisory services.
We can make Britain a place where a good life is in reach for everyone... David Cameron in a speech delivered
before his election victory