UK Budget 2015 – Growth and fairness

Posted: Mar 19, 2015

The strengthening economy and positive steps to full employment are welcome signs of progress, but the continuing structural deficit shows that the job is far from done. The UK is not immune from the problems being experienced in Europe and other parts of the global economy. Abandoning the government’s long-term economic plan and the path of fiscal credibility would represent the most significant risk to the recovery.

Reflecting this ongoing commitment to responsible fiscal policy and returning the public finances to a sustainable position, the government is:

  • continuing the state’s exit from ownership of banks, by announcing plans to sell a further £9 billion of the taxpayer’s remaining shareholding in Lloyds Banking Group over the next year, and launching a major sale of £13 billion assets held from the forced nationalisation of Northern Rock and Bradford & Bingley
  • setting out plans for continuing to reduce the deficit in the next Parliament, with around £30 billion of consolidation in 2016-17 and 2017-18
  • setting a neutral fiscal assumption that Total Managed Expenditure will be held flat in real terms in 2018-19 and rise in line with GDP in 2019-20; consolidation will end a year earlier as a result of falling debt and improved borrowing
  • setting out further detail on the government’s aspiration to find £10 billion in further efficiency savings by 2017-18, and transforming the management of government land and property assets by implementing a new commercially-driven approach across the central government estate

uk-spending-2015

Growth

The government’s long-term economic plan is securing a sustained recovery and a more resilient economy. From April 2015, Corporation Tax will be cut to 20%, the joint lowest in the G20 and down from 28% in 2010. Budget 2015 sets out a comprehensive package of reforms to boost UK productivity and to create the right conditions for continued, balanced growth across all sectors and regions.

The government is:

  • setting out a significant package of support through the tax system to back British business, including freezing fuel duty for another year and substantially reducing oil and gas taxes to improve competitiveness in the North Sea
  • supporting long-term investment in the UK’s digital communications infrastructure, including by setting out a new ambition that ultrafast broadband of at least 100 Megabits per second should be available to nearly all UK premises
  • securing a truly national recovery by investing in infrastructure, housing, science and innovation across the whole of the UK, and building a Northern Powerhouse
  • supporting manufacturers by bringing forward compensation for small-scale feed in tariffs for energy intensive industries to 2015-16, and supporting the retail and hospitality sectors by cutting alcohol duty on beer, cider and spirits
  • developing a more highly-skilled UK labour market by strengthening support for postgraduate research and apprenticeships, and setting out plans for further investment in the UK’s world-leading science and innovation base
  • creating a dynamic economy that is the best place in the world to start, invest in, and grow a business, including through a package of measures to help unlock the potential of the sharing economy, improve access to finance and boost exports
  • backing business by launching a comprehensive review of Business Rates, piloting schemes that reward additional Business Rates growth, and radically simplifying tax administration by abolishing the annual tax return

Fairness

The government’s long-term economic plan is underpinned by a firm commitment to support those who want to work hard and get on, while continuing to support and protect the most vulnerable in society. To support employment, the government has prioritised reducing taxes for low and middle-income earners, by increasing the personal allowance from £6,475 in April 2010 to £10,600 from April 2015. At this Budget, the government is:

  • helping families and making work pay by further increasing the personal allowance to £10,800 in 2016-17 and £11,000 in 2017-18, and passing these gains on in full to higherrate taxpayers; as a result of increases to the personal allowance announced over this Parliament, the typical basic rate taxpayer will be £905 better off
  • rewarding savers with a new Personal Savings Allowance so that the first £1000 of savings income is tax free for basic rate taxpayers, and the first £500 for higher rate taxpayers; and increasing the flexibility of ISAs so that savers can withdraw and replace money in the same tax year without losing the tax advantage
  • introducing a new Help to Buy: ISA scheme to support those saving to buy their first home, with a maximum government bonus of £3,000 for those who save £12,000
  • investing in mental health services for children and young people, new mothers and veterans; and supporting people with mental health problems back to work
  • taking firm action to tackle tax evasion and avoidance, by introducing tougher sanctions for tax evaders, tax avoiders, and those who facilitate and promote avoidance
  • ensuring that the costs of the financial crisis continue to be recouped by increasing the Bank Levy from April 2015
  • restricting the lifetime allowance for pensions tax relief to £1 million from April 2016 and indexing it by inflation from 2018 so that everyone contributes their fair share to reducing the deficit

Download a copy of the UK 2015 Budget.

 

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