George Osborne goes on the attack with Budget 2014

George Osborne this afternoon went on the attack, offering relief for tax payers, drivers and drinkers as he delivered a budget challenge to Labour.

Budget 2014
George Osborne delivers his budget this afternoon

The Chancellor used the penultimate Budget before the next general election to set out plans for a ‘resilient economy’, promising a return to growth while pledging ‘Britain would live within its means’.

He announced that that tax payers will no longer pay any tax on the first £10,5000 of their earning from next April.

He also revealed that September’s planned fuel duty price rise will be scrapped, while next week’s planned rise in beer duty will be cut by one per cent.

The cost of cigarettes will continue to rise by two per cent above inflation. There will also be a rise in the duty for fixed odds betting machines, although there will be a cut in bingo.

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Here's how the budget unfolded

The higher rate tax threshold will rise to £41,865 next month.

He warned that cuts would continue, with a £119 billion cap on welfare bills including housing benefit and tax credits. Only the State Pension and the cyclical unemployment benefits will be excluded.

The move lays down the gauntlet to Labour to match the figure.

The Chancellor told MPs: “None of these decisions are easy, but they are the right thing to ensure Britain lives within her means.”

And he added: “Britain should always be proud of having a welfare system that helps those most in need. But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work.”

Watch: Business leaders at Wolverhampton Grammar School to watch the Budget announcement

The Chancellor said that an additional £200 million will be made available to local authorities to help repair potholes, while an additional £140 million will be made available for repairs and maintenance to flood defences. And tax relief will be given on fuel for air ambulances.

Mr Osborne pledged that funding would be made available to support the building of another 200,000 homes. He promised £20 million to pay for repairs to cathedrals ahead of First World War remembrance services while pledging that the state will provide grants to the Magna Carta Trust to support the 800th anniversary next year.

Lending for exporters will be doubled to £3 billion and interest rates on that lending cut by one third, he announced. There will be a reform of air passenger duty so all long haul flights carry the same tax rate as currently charged for flights to USA. He also said the new ISA tax-free savings limit would be £15,000 up from £5,000.

The chancellor stressed that he would not loosen the purse strings despite economic growth being revised up, and the Government would keep ‘putting Britain right’.

“The economy is continuing to recover - and recovering faster than forecast,” Mr Osborne told MPs.