Chancellor George Osborne this afternoon cut a penny off the price of a pint of beer and scrapped a planned hike in fuel duty in a Budget which he said would help struggling workers and businesses.
A planned increase in the amount of money people can earn before paying income tax has also been brought forward, Mr Osborne announced.
From April 2014, people will not have to pay income tax on the first £10,000 of their salary while corporation tax will be cut to 20 per cent by 2015 – down from 28 per cent in 2010 – in a move intended to show that “Britain is open for business”.
Tax-free child care vouchers worth £1,200 per child and increased support will be offered to low income families with children on universal credit to try to help parents balance family life with having a job while a flat rate pension worth £144 a week will be brought forward to 2016.
Catch up with the Budget as it happened and join the debate with more than 30 members of the Black Country Chamber of Commerce here:
Outlining his “aspiration nation” Budget with plans to build 15,000 more affordable homes, the Chancellor said mortgage costs had put home ownership out of reach of many people and pledged to commit £3.5 billion over three years to shared equity loans.
From next month borrowers will be able to get a loan worth 20 per cent of a new home in return for a five per cent deposit. Previously help was only on offer to first time buyers but the support will be open to anyone looking for a home worth less than £600,000.
On the fuel duty freeze he said: “We abolished the escalator and froze fuel duty for two years. I hear those who want me to do more to help them get by.
“Petrol will now be 13p a litre cheaper than it would be if we had not acted over past two years.
“For a Vauxhall Astra or Ford Focus that’s £7 less each time you fill up.” All alcohol duty will rise apart from beer. Instead of a 3p rise in duty planned by the government, it will be frozen altogether with beer duty cut by a further 1p. And fears of a triple dip recession appear to have been quashed.
While the economy remains sluggish, it is still growing albeit very slowly.
The Office for Budget Responsbility has reduced its growth forecast 0.6 per cent but predicts the UK will avoid a second quarter of negative growth along with 600,000 more jobs over the rest of 2013.
Mr Osborne confirmed that Whitehall budgets will be cut by one per cent after an £11 billion underspend this year, with protection for schools and health.
A cap on public sector pay rises of one per cent - well below inflation – has been extended to 2016. “They are difficult to justify when others in the public sector and those in the private sector have seen pay frozen or even cut”, the Chancellor said. The military will be exempt. The Government intends to take forward two major carbon capture and storage projects and offer new tax incentives for the manufacture of ultra low emission vehicles.
But it will exempt Staffordshire’s ceramics industry from a green levy on carbon emissions.
There was still grim news for the economy as borrowing was revealed to still be £61 billion, despite cuts in public spending designed to get it under control. It means the government will miss its own debt target by two years.
Mr Osborne said: “This is a Budget for people who aspire to work hard and get on.” Mr Osborne said the Government had cut the deficit by a third and helped businesses create 1.25 million new jobs.
But he added: “It is taking longer than anyone hoped, but we must hold to the right track.”
“I’m going to level with people about the difficult economic situation we face.
Hailing the efforts of working families who wanted to save for their retirement he said: “This is a budget for our aspiration nation.”
The fragility of the Eurozone is still causing problems.
The issue in Cyprus where savers face a raid of 10 per cent on their savings to fund a bank bailout, were “further evidence that the crisis is not over and the situation remains very worrying”.
The Chancellor confirmed that UK military and civil service personnel in Cyprus will be “protected in full from any tax on their deposits”.
The deficit, which has prompted the coalition government’s painful public spending cuts, has fallen from 11.2 per cent of Britain’s gross domestic product (GDP) in 2009/10 to a forecast 7.4 per cent this year.
It is expected to fall to 6.8 per cent next year, 5.9 per cent in 2014/15, then five per cent, 3.4 per cent and 2.2 per cent by 2017/18.
Borrowing is predicted to fall from £108 billion next year to £97 billion in 2014/15, then £87 billion, £61 billion and £42 billion in following years.
Infrastructure plans will be boosted by £3 billion a year from 2015/16, a total of £15 billion over the next decade.
Rounding on critics in the Labour party who want him to spend more money on helping to grow Britain’s economy, the Chancellor said: “They would return us to the double digit deficits of the last government, which would pose a huge risk to the British economy.”
He said Britain would have the lowest rate of business tax in any developed country in the world in a move intended to attract investment.
Responding to criticism of the abolition of the 50p top rate of tax he said: “Under Labour we had the worst of both worlds. When the 50p rate was introduced, the wealthy paid less.
Under this government the tax rates are more competitive and the wealthy pay more tax.”
He said too many people had been able to get away with aggressive tax avoidance as he unveiled the largest ever measures to tackle the problem with agreements with tax havens like Jersey, Guernsey and the Isle of Man to bring in billions of pounds in unpaid tax.
Tax avoidance scheme promoters will also be “named and shamed”.