UK & World News

  • 20 March 2014, 3:23

Budget 2014: 'For Makers, Doers And Savers'

George Osborne attempted to repay the public for the austerity years with rewards for workers, savers and pensioners in his Budget.

The Chancellor told the House of Commons the message from his statement was: "You have earned it; you have saved it and this Government is on your side."

At the centre of his fifth Budget was a new "super ISA" with a £15,000 tax free limit each year and the most "far-reaching reform" of the way pensions are taxed "since 1921".

Also among the rewards was the increase of the personal allowance limit - the amount you can earn before being taxed - to £10,500, which he said would be worth £800 to the average taxpayer.

Mr Osborne said: "This is a Budget for the makers, the doers and the savers."

However, Labour said it was a Budget for the "privileged few" and people were worse off under the Tories.

On the economy, the Chancellor heralded faster growth than anticipated saying the deficit was down and that Britain was on course to be back in surplus by 2018-19.

The Office for Budget Responsibility (OBR) had now forecast growth in 2014 of 2.7%, he said, and the economy would be £16bn larger than was forecast just four months ago.

The new ISA rules come into force in July and the significant increase in the tax-free saving limit was welcomed by many financial experts.

Pensioners were rewarded with the announcement of a "Pension Bond" offering rates of 2.8% for a one-year bond and 4% for a three-year bond, well above the market average.

Mr Osborne said there would be up to £10bn of these available to everyone over 65 from January 2015, designed to help those who have seen their pension pots hit by low interest rates. Pensioners will be able to save a maximum of £10,000 in each bond.

He also announced changes to annuity tax rules to give pensioners access to their own pension pots saying: "People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances."

However, not all welcomed the news saying that the rewards were for the rich and not for the poor.

Liberal Democrat peer Lord Oakeshott said: "How many families can save £15k a year?"

Mr Osborne also announced he would introduce a welfare bill cap to a £119bn in 2015-16 so that the costs of benefits would not be allowed to "spiral out of control" again.

He said: "In future, any government that wants to spend more on benefits will: have to be honest with the public about the costs, need the approval of Parliament, and will be held to account by this permanent cap on welfare."

The Chancellor said analysis published on Wednesday had shown the "rich are making the biggest contribution to the reduction of the deficit - because we are all in this together".

Other announcements included:

:: A new forgery-proof, threepenny bit-style £1 coin.

:: Scrapping on the duty escalator on wine and spirits, a freeze on duty on Scottish whisky and West Country ordinary cider, 1p off beer duty.

:: Duty on the fixed odds betting terminals described as the "scourge of the high street" to rise to 25%.

:: Duty on bingo halls cut from 20% to 10%.

:: Housing measures would see 200,000 new homes "getting Britain building".

:: An additional £140m on top of money already provided for repairs to flood defences - £200m for pothole filling.

:: A £7bn package to cut manufacturers' energy bills and a freeze on the "carbon floor" knocking £15 off domestic energy bills.

:: £2,000 tax-free childcare boost.

Mr Osborne also took the time to include a jibe for Ed Miliband with an announcement on the 800th anniversary of the signing of the Magna Carta next year.

He said: "King John's humbling centuries ago seems unimaginably distant. A weak leader, who had risen to the top - after betraying his brother, compelled by a gang of unruly barons to sign on the dotted line."

The Labour leader responded by saying that in his nearly hour-long speech, Mr Osborne "did not mention one central fact - the working people of Britain are worse off under the Tories, living standards down month after month, year after year".

He said: "Today the Chancellor simply reminded people of the gap between his rhetoric and the reality of people's lives."

During a live TV debate with Chief Secretary to the Treasury Danny Alexander, shadow chancellor Ed Balls said the Budget was "under-whelming" and a "damp squib".

He told Sky News: "We were sitting there waiting for the big moment ... he sat down and we thought, 'Did we miss it?'"

Mr Alexander insisted the Chancellor's statement underpinned the recovery and offered "support for working people, support for businesses to invest and also support for hard-pressed savers".

Paul Kenny, general secretary of the GMB, said: "This Budget reeks of the stuck-up complacency of the well-heeled elite."

However, businesses and manufacturers welcomed the measures.

British Chambers of Commerce director general John Longworth said: "Business wanted a Budget that was disciplined, focused, and geared toward the creation of wealth and jobs - and that's what the Chancellor has delivered."

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