Osborne’s budget speech confirms further cuts but good news for whisky

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Wednesday, 19 March 2014 17:21

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  By Sean Martin
 
UK Chancellor George Osborne announced major changes to the UK’s tax and welfare systems in his budget speech today – while confirming the continuation of cuts with the assertion that “faster growth alone will not balance the books”.
 
Mr Osborne’s main announcements included a £119bn cap on welfare bills from 2015-16, an extension of the 15% stamp duty to include properties worth more than £500,000 bought by corporations, a change to personal tax allowance which will mean no tax has to be paid until £10,500 has been earned, a further 1p off a pint of beer and a higher rate tax threshold of £41,865.

He also said cash and stocks ISAs would be merged, the limit for tax-free savings is to be raised to £15,000 and that the tax rate on pensions is to be cut to 20%. 

The Chancellor painted a positive picture of the results his austerity measures have brought so far, saying that growth is up and cash borrowing has decreased to £108bn.  He went on to assert that the UK’s economy is growing faster than Germany, the United States and Japan and that the underlying deficit, currently down to 6.6%, would be turned into a surplus of 0.2% by 2018-19 if the UK keeps a Conservative government. 

On Scotland, the Chancellor promised to take into account the recommendation of the Wood Report when reviewing the tax regime relevant to North Sea oil revenues.  He said the government would introduce a new allowance for ultra-high pressure high temperature fields and that the Office of Budget Responsibility (OBR) had today revised down the forecasted tax receipts from the North Sea by a further £3bn. 

With a sideways look at the independence debate, he said this was “a reminder of how precarious the budget for an independent Scotland would be” but admitted that the Scottish economy was doing well and creating jobs. 

The SNP criticised the fundamental principles of the Chancellor’s budget speech following the Commons session, with Treasury spokesperson Stewart Hosie saying it was an attempt to “vindicate four years of austerity” and that it had “crumbled”. 

Mr Hosie added: “The coalition is still trying to balance the books on the backs of the poor.  Unfortunately for the Chancellor, he was forced to report that debt will not begin to fall as a share of GDP until 2017-18, the current account will not be in the black until 2017-18 and public sector net borrowing will not be £20bn in 2015-16 – it will be a much higher £68bn. 

“In Scotland we have suffered an 11% cut in fiscal DEL, a 27% cut in capital, a real-terms 9.9% cut in the overall budget, and the numbers announced today imply a further real-terms cut in the budget,” Hosie continued.  “It’s important we get on the record just how damaging this government continues to be.”

Labour leader Ed Miliband responded to Osborne’s speech by addressing the government as “the same old Tories” and criticising the Chancellor for neglecting to reference the 24 tax rises he has introduced since taking office. 

He added: “Today the Chancellor simply reminded people of the gap between his rhetoric and the reality of people’s lives.”

Mr Osborne also outlined a scheme to boost exports – doubling the amount of finance available to £3bn – and announced an extra combined £340m for repairs and maintenance of flood defences and potholes.  This was an acknowledgement of the devastation that hit parts of England recently due to poor flood controls. 

He has scrapped VAT on air ambulance services and inshore rescue boats and announced the same on inheritance tax for members of the emergency services.  Petrol duty was frozen, as was the duty on Scotch whisky and cider, while bingo duty was cut from 20% to 10%. The price of cigarettes, however, was increased.