In the announcement of the 2015 Budget yesterday, George Osborne claimed that Britain is “walking tall again” and that the government has “a plan that is working”.
He cut 1p from beer duty, 2% from cider and whiskey and froze wine and fuel duty. The price of cigarettes will go up by 16p per pack as expected – the price of cigarettes is always raised to 2% above inflation.
In a crowd-pleasing promise, Osborne said that a Conservative leadership would make the first £1000 of interest earned on savings tax-free, meaning that 95% of people would pay no tax on their interest. Also, the new help-to-buy Isa will provide first-time buyers with a handout of up to £6000.
Other measures will include: relaxing pension rules as of April 2016 so that five million existing pensioners are able to swap their fixed annual payments for cash, digitalising annual tax returns, a new “crackdown” on tax avoidance, raising the rate of the bank levy to 0.21%, plans to encourage regional growth (such as a tidal lagoon to generate green energy in Swansea Bay), and tax cuts for North Sea oil exploration.
Clearly, however, the main people that appear to be set to benefit from the new budget are savers. But will they? Or is it just another helping hand to the rich, whilst the poor are left out in the cold? After all, how many people on low income are able to save enough for this to help them?
The new handout for first-time buyers may help them to secure a deposit, but critics say that that the “free cash” will just fuel property price inflation, and fails to address the key root of rising house prices – the undersupply of affordable housing.
Osborne also promised more headway on his promise to lift the higher rate tax threshold to £50,000, but again critics say that this isn’t exactly bombshell news. It will take a long time for the threshold to be raised to the £50,000 mark, and inflation and pay rises will drag more middle-income households into the higher-rate net anyway.
The digitisation of tax returns is clearly another crowd-pleaser for the millions that dread filling in the returns every January, but the critics are again cynical, saying that major government IT projects frequently fail, and could be financially worse for taxpayers. Kay Ingram of financial planners LEBC said to The Guardian: “At present over 25% of tax codes are incorrect. Without a mechanism for taxpayers to report their actual income and gains and to claim reliefs due, many taxpayers could end up paying more in tax than is due.”, which is surely worrying for taxpayers – and especially those that have ever experienced the frustrating unreliability of a computer.
The pension freedoms, however, seem an excellent all-rounder, freeing existing pensioners from their hated annuities whilst raking in extra cash for the Treasury – according to the budget documents, over £1bn between now and 2018.
Public spending cuts will end a year earlier than expected, supposedly undermining Labour claims that the Conservatives would take Britain “back to the 1930s”. In his response to the budget, Ed Miliband, party leader of Labour, said: “This is a Budget people won't believe from a Government that is not on their side”. He also claimed that the Conservatives wouldn’t be able to deliver the “colossal cuts” that they had promised, and so will “end up cutting the National Health Service”, calling it their “secret plan”. Ed Balls, the Labour Shadow Chancellor, claimed that the new budget “was a complete flop” and “changed nothing for the working people in our country”. In an article for the Daily Mirror, Balls wrote that “The Tories started the day with plans for extreme spending cuts. And they ended the day with plans for extreme spending cuts.”
With such a short period of time left before the General Election, this budget had the potential to change the political playing field. However, according to opinion polls, it did not: in fact, there has been no major shift votes since the start of January. So will George Osborne’s new budget change anything? Only time will tell. Or, as noted by politics.co.uk, is it simply a question a general change in public attitude towards the to-ing and fro-ing of the political world: is anyone listening anymore?