With the General Election only two months away, the 2015 Budget will be a chance for Chancellor George Osborne to secure as much support for the Conservatives before 7 May.
We look at who are the real winners and losers following the budget announcements.
It would appear that this was a budget for savers with George Osborne also revealing a number of plans that will support home owners and small businesses. With “long term economic plan” being the buzzword of the day, the Chancellor drew as much attention as possible to the progress of the coalition and pleaded with the electorate that we do not return to the chaos of the previous Labour government.
Here is a rundown of some of the beneficiaries of this year’s budget:
The Chancellor addressed the House of Commons by stating Britain can “stand tall” once again and is now able to once more “pave the way”. The UK economy grew by 2.6% in 2014 which was faster than any other advanced economy. It was highlighted that living standards are higher now than in 2010 with households on average £900 better off over the course of the last five years according to data provided by the OBR.
Key points from the 2015 Budget:
- Reduction in the deficit through £12bn savings on welfare
- Welfare spending set to be £3bn lower each year than predicted in December
- £5bn will be raised from tackling tax evasion
- 9m new jobs have been created by the coalition; a direct result of backing businesses in order to create jobs according to the Chancellor
- Number of people out of work fallen by 102,000 to 1.86 million since January
- Unemployment rate currently at 5.7% and is set to further fall to 5.3% by the end of the year
Pensioners/ lifetime savers
George Osborne promised in his pre-election budget that long term savers will be protected. It was outlined that the lifetime allowance will be indexed in 2018 to avoid being affected by inflation. Furthermore the lifetime allowance will be reduced from £1.25m to £1m. This is set to only affect 4% of savers and will raise an additional £600m a year in savings for the treasury.
These announcements in the budget contrast with the news that Labour will introduce tax relief reductions for high earning pensioners in order to fund a cut in university tuitions fees to £6000 a year. George Osborne also announced the law is to be changed to allow pensioners to access their annuities, with the 55% tax charge abolished and taxes applied at the marginal rate.
North Sea Oil and Gas
In his budget statement George Osborne said Petroleum Revenue Tax would be cut from 50% to 35% in order to support production amid difficulties amongst the gas and oil sector. To add to the revenue tax cuts, the supplementary charge for oil companies will be lowered from 30% to 20%; it is estimated that these changes will stimulate growth of up to 15%.
As expected, opposition leader Ed Miliband attacked a number of proposals put forward by the Chancellor highlighting the coalition’s achievement of halving the deficit despite promising to have it cleared within five years.
Labour leader Ed Milliband
Here is a rundown of some of the areas Ed Miliband believes will not benefit from today’s budget announcement:
Ed Miliband lambasted George Osborne’s plans of creating a northern powerhouse by providing more devolution to areas such as Yorkshire as well as allowing Manchester to keep 100% of its growth in business rates. The opposition leader pointed out that the current government is not supporting the north as 75% of the biggest cuts affected northern councils.
The opposition leader used some choice words to highlight the contrast in opinion council leaders in the north had toward the current government stating that the Mayor of Liverpool said the chancellor has “bludgeoned Liverpool”. He also quoted the Leader of Leeds City Council as saying the chancellor has failed to deliver the devolution they need.
Key points from Ed Miliband’s reply to the budget announcement:
- The promise of a £7 minimum wage was broken
- Under the current government there are more zero hour contracts in place than the populations of Glasgow, Leeds and Cardiff combined
- Rubbished claims of being “in it together” when it’s a yes for the bedroom tax and a no for the mansion tax
- Ridiculed the Prime Minister’s promise to balance the books within five years, but boasted that he’s halved the deficit
- The current governments plan will take twice as long to balance the books
Ed Miliband finished on what reforms a Labour government would introduce:
- The minimum wage to rise above £8 an hour
- Legislate new principles for working contracts
- Regular hours mean regular contracts
- Reduce tuition fees to £6000
- Abolish bedroom tax
- Develop a green investment bank
- Reverse the Conservatives millionaire tax cut
The 2015 Budget may be a pivotal moment in the lead up the the general election. The conservatives will be hoping to be buoyed by a fall in unemployment and a growth in economy with Labour relying on the current governments failings to balance the books as a means of drawing in as much support as possible.