|George Osborne, UK chancellor, and his Treasury team, in Downing St, London, March 19, 2014|
George Osborne, UK chancellor, today delivered his Budget Statement to
Parliament, setting out how the government will take further action "to secure
the recovery and build a resilient economy." He said the economy is now growing
faster than predicted and expectations for growth this year and next have also
been revised up by the Office for Budget Responsibility (OBR) – to 2.7% in 2014
and 2.3% in 2015. A record number of people are in work and the OBR now expects
employment to reach 31.4m by 2018. A deficit that reached 11% of GDP in
2009-10 is now forecast to fallen by half to 5.5% in the coming year and will be
eradicated by 2018-19. Meanwhile, also Wednesday
the Office for National Statistics reported that employment was up 105,000
from August to October 2013 and up 459,000 on the year to 30.19m for November
2013 to January 2014.
The increase in UK employment between August to
October 2013 and November 2013 to January 2014 was due to more self-employed
people; the number of employees fell over this period. Unemployment was down
63,000 from August to October 2013 and down 191,000 on the year to 2.33 million
for November 2013 to January 2014.
Osborne said Budget 2014 will help British businesses by:
- doubling the annual investment allowance to £500,000 until the end of
- offering the best export finance in Europe
- reducing energy costs, to ensure that the UK remains a competitive
location for manufacturing
Radical measures "to help savers at all stages of their lives and to give
people greater freedom over how they access their pension savings" were
announced. The Budget "introduces the most fundamental change to the way people
access their pensions in almost a century
supports households to save through a package of measures including reforming
the ISA into a New ISA (NISA) with a significantly higher annual limit and
cutting savings tax."
The chancellor announced:
- All tax restrictions on pensioners' access to their pension pots to be
removed, ending the requirement to buy an annuity
- Taxable part of pension pot taken as cash on retirement to be charged at
normal income tax rate, down from 55%
- Increase in total pension savings people can take as a lump sum to
- New Pensioner Bond, paying "market-leading" rates, available from
January to over-65s, with possible rates of 2.8% for one-year bond and 4%
for three-year bond - up to £10,000 to be saved in each bond.
- reduce taxes by increasing the level of the tax-free personal allowance
further, from £10,000 to £10,500 in April 2015
- cut the duty on beer by 1 penny a pint, freeze duty on cider and spirit and
abolish the above inflation duty escalator for wine
- increase the maximum Tax-Free Childcare support available to £2,000 per year
for each child
- help a further 120,000 households purchase a home by extending the Help to
Buy: equity loan scheme to March 2020
- reduce the cost of long haul flights by abolishing the top two bands of Air
- provide £140 million of new funding to repair flood defences that have
suffered damage in the recent severe flooding, and provide £200 million to
establish a potholes challenge fund.
Fuel duty rise planned for September will not happen
£7bn package to cut energy bills, including £18 per ton cap on carbon price
support, is forecast to save medium-sized manufacturers £50,000 and families
£15 a year
Help to Buy equity scheme for new-build homes is extended to 2020 and support for building of more than 200,000 new homes
John Cridland, CBI director-general, said:
“The Budget will put wind in the sails of business investment, especially for
manufacturers. This was a make or break budget coming at a critical time in the
recovery and the Chancellor has focussed his firepower on areas that have the
potential to lock in growth.
“The CBI has pushed hard for this significant and
much-needed energy package that will help keep manufacturing jobs in the UK,
while underpinning vital investment in new energy.
“The doubling and extension of the Annual
Investment Allowance, together with making the seed enterprise investment scheme
permanent, will be a shot in the arm for many medium-sized businesses.
“On pensions, what’s important is that people on
low incomes can make more informed decisions on defined contribution schemes.
For many, that will still mean taking advice and buying an annuity, but the
increased flexibility will be welcomed. We are pleased that the Government has
chosen to consult on the implications of making a similar change to defined
benefit pensions as stability for these schemes is essential.
"Changes to the ISA system reflect our call to help rebuild a savings culture."
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